7 Functions Of Operations Management
Operations management is the supply chain management team in charge of the daily business operations. These supply chain professionals follow 10 standard operations management principles to optimize the scheduling, production planning, inventory control, procurement, and quality control processes in their manufacturing organization. In addition to process management, they are also tasked with continuous improvement initiatives and utilize operations research and process improvement to gain a competitive advantage.
To better understand operation management in a lean manufacturing environment, it is helpful to break it down into its core functions.
Global Strategy
Strategic management looks at the global supply chain and how well it is achieving the organization’s business objectives. Operations strategy looks at high-level performance metrics / KPIs including:
- Customer Satisfaction – Is the supply chain providing products and services that consumers are satisfied with?
- Marketshare – Do consumers choose these products and services over those produced by the competition?
- Profitability – Is the organization able to deliver these goods profitably?
Global operations managers then use business analytics to assess the performance of the remaining 6 operations functions/processes and how well they are helping the organization achieve these core goals.
Business strategies at the global level vary, but they may focus on sales targets, how to make better use of human resources, or the best way to make use of raw materials in terms of less waste and more money for the business.
Supply Chain Configuration
Essentially, it is the operations manager’s job to ensure that the supply chain is properly set up. From purchasing raw materials, through the production of the product, and even on to the sale of the finished products to customers, these are all dominos that need to be positioned correctly to ensure that every aspect of the supply chain is running correctly. This will prevent delays and lead to faster production and quicker sales.
IT operations management, which involves managing the production systems within the context of the organization’s IT infrastructure, is another critical component of supply chain and operations management.
Business operations managers oversee the integration and optimization of management systems like enterprise resource planning (ERP), manufacturing execution systems (MES), and manufacturing resource planning (MRP). They ensure that these information systems work well together and support critical business processes.
Operations Management
Looking at the ops of a business involves considering all activities that are required to turn raw materials or human efforts into a product or service that can ultimately be sold to customers. This includes activities like production scheduling, production planning, and control, capacity planning, assembly line configuration, materials management, and logistics planning.
An operation manager is constantly looking to find ways to make operations run smoother by eliminating bottlenecks. They often utilize management science techniques, like Six Sigma, Agile, and Kanban to drive gains in day-to-day process efficiency.
Forecasting
Operations management is also in charge of forecasting, or simply put, predicting the demand for the product in the future. Marketing operations and sales operations are an important input into this process because planned marketing promotions and sales initiatives can dramatically impact product demand.
Forecasting has a direct impact on production and is crucial to a business’s success. Too many products and a business will be left with storage costs and potential waste, too little, and a business won’t be positioned correctly to meet customer demand.
Finance
Being focused on finances in operations management is essential, not only for the profit of the business but also in ensuring that the product supplied to customers is of a high standard. The delicate balancing act between creating a good or service that is satisfactory to the customer, but also allows for a fair profit for the business, is an essential part of operations management.
Product Design
This is where operations management focuses on the way the product is designed. The most important aspect here is to make sure that it suits market trends and is a durable product that customers will favor. For example, customers are becoming increasingly concerned about is how the production of a product affects the environment. An operations management team might therefore design a product with a ‘greener’ state of mind to ensure that the production of a product has less impact on the environment, making it more attractive to customers.
Quality Management
Quality management also comes under the umbrella of operations management. Here the operations management may have a dedicated team that ensures consistency. They must rectify any defects, ensure that the quality is consistent, and ensure that each product is ready for sale.
