Whether you’re a big or small business and no matter what product you manufacture or service you provide, you’re always looking to deliver the highest quality and greatest value for your customers. One way to achieve these goals is through operations management.
Learn what operations management is and its key functions. We’ll also discuss the various roles and skills required to succeed in this growing field. Operations management can be applied to any industry and will help you better run every aspect of your business.
What Is Operations Management?
Operations management (OM) is the process of administration of business operations and/or production management in order to achieve specific goals such as increased productivity and higher profitability. This is done by creating the most efficiency possible in various business operations, such as turning labor and materials into goods and services.
To provide such efficiencies, operations management should focus on balancing the company’s costs with its revenue as this results in the highest net operating profit possible. Company resources, such as staffing, materials, equipment and technology, are all part of the optimization process of operations management.
Related: Operational Plan Template
The needs of the company’s clients and customers drive operations managers to acquire, develop and deliver those goods and services. Other strategic issues at the heart of operations management include the size of manufacturing plants, information technology networks and project management methods, such as work-in-progress levels, raw materials acquisition, quality control, materials handling and maintenance policies.
Supply chain management as it relates to operations management is critical in controlling inventory and materials. To avoid waste, operations managers must understand company processes and make them flow together better. That involves logistics, understanding global trends, customer demand and resources. Therefore, operations managers must build relationships with vendors who can deliver timely, cost-effective materials to deliver goods to customers faster.
Managing those resources to boost efficiency and reduce waste requires project management software. ProjectManager is award-winning project management software that helps you manage your resources in real time. Manage your human resources and add their availability, including PTO and global holidays, to make it easy to assign work. Then get a real-time view of their productivity on our color-coded workload chart. If your team is over-allocated, simply re-allocate work from the chart. Balancing workload increases productivity and improves morale, which also increases productivity. Get started with ProjectManager today for free.
10 Key Functions of Operations Management
Operations management is more than just resource management, though that’s part of the larger picture. For a company to better its operations, they have to focus on each of the many departments and how they function. An operations manager has to look at the various departments in the company to ensure they’re working efficiently. When all parts work together, the company thrives. In general, you can divide operations management into 10 key functions.
1. Finance & Accounting
Accounting is all the financial transactions within a company. There needs to be policies and procedures for things like expenses, data management and making financial reports. The latter is one of the most important aspects of finance and accounting as it provides the data that shows where there’s waste that can be removed and other ways to boost efficiencies to run the business more effectively without spending more.
2. Supply Chain Management
Supply chain management is the process of controlling goods and services as they move from raw materials to finished and delivered goods. The purpose is to streamline the channel to increase value for customers and for the producing business to make a profit and gain a competitive advantage in the marketplace. Operations managers want to manage this process to fulfill their obligation to the company.
3. Production Management
Production is turning resources into goods and services. Therefore, production management is about controlling the activities that are involved in making those products. This involves planning, coordinating, monitoring, administrating and judging the quality of the inputs and output of the production process. The operations manager is accountable for all the industrial operations, such as the quality, expense and quantity of the production.
4. Inventory Management
Another aspect of operations management is inventory. Operations managers have to identify which and how much stock they need to order for a product and when they need it. This involves being able to track inventory from the point of purchase and through the manufacturing cycle. An operations manager keeps track of trends in the business to ensure the company has enough stock to fulfill its orders, but not too much that it takes up valuable warehouse space. There also must be a way to alert operations when stocks are low and need to be reordered.
5. Quality Management
Ensuring the quality of the product or service being produced in the company is also under the purview of quality management. Quality management is about reviewing the tasks and activities of production to make sure they’re meeting the quality expectations that have been set. Therefore, operations managers come up with a quality policy and the creation and implementation of quality planning and assurance. They’re also responsible for quality control and quality improvements.
6. Business Forecasting
Operations managers are part of the planning of goods and services production by providing predictive analytics that helps businesses save resources and reduce expenses. To do this they use business forecasting, which is making informed guesses based on certain business metrics. These include sales growth and predictions for the economy. The more accurate these business forecasts, the better adjustments a business can make to optimize its strategies and change its current operations to take advantage of what’s to come.
7. Strategic Planning
In fact, strategic planning is a big part of operations management. That’s because strategic planning is how an organization’s leaders figure out what their vision for the future will be. They use that vision to define the company’s goals and objectives. These goals and objectives will be a lodestar that the company and its employees will follow through planning that comes out of the strategy.
8. Business Process Management
Business processes often called operational processes, are activities that are critical to a company adding value and staying competitive in the market. These linked tasks end with a service or product so they’re connected to almost everything an operations manager is responsible for overseeing.
9. Product Design
Product design is a very important part of operations management as operations managers are all about achieving high consumer satisfaction. The design is crucial to attracting the customer from the myriad choices they’re exposed to. Your product must have something that gives it a competitive advantage.
10. Human Resource Management
Human resources are the recruiting, hiring, deploying and managing of a company’s employees. While historically, human resources and operations management have been separate, there’s an administrative overlap, such as payroll and other admin issues. Operations explain and moderate the effects of human resources activities. Beyond pay, there’s training, communication and staffing.
Key Operations Management Roles
Operations management includes managing logistical processes and the overall supply chain, overseeing production and ensuring quality, making and building vendor relationships as well as ordering, warehousing and managing materials. Therefore, there are often different operations management roles. We’ve highlighted some below.
Generally speaking, an operations manager is responsible for all activities related to the production of whatever goods or services a company produces. This is a more high-level position that deals with formulating operational strategy, improving performance, procuring materials and other resources and securing compliance.
A purchasing manager is the head of a team that works to procure materials necessary for the production of a service or product that the company produces. Their job is to get the best quality materials for the lowest prices. They also evaluate suppliers, negotiate contracts and review product quality.
A production manager oversees the production process, coordinates all related activities and ensures that there are enough resources on hand when they’re needed. Some responsibilities that fall under this operations management position include planning workers’ schedules, estimating costs and preparing budgets to make sure that the workflow meets required deadlines.
Human resource (HR) managers plan, coordinate and direct the administrative functions of a company. This includes the hiring processes and onboarding of new employees. They also act as a liaison between the company’s management and its employees. They will advise executives in strategic planning as it relates to staffing.
Operations Management Skills
Operations management is a key part of running any successful business. Because of the wide array of responsibilities that rest on the shoulders of an operations manager, they require a wide array of skills. These skills must support the company’s strategies and enhance efficiency, which means operations managers need both hard and soft skills. They must have the technical know-how and can work well in a team setting. The following are some of the skills required for strong operations management.
- Being able to recognize and address customer requirements
- Managing every member of the team
- Working according to a set of standards
- Understanding automation, data input and software
- Expertise in data processing
- Knowing how to develop new products
- Applying risk assessment
- Planning strategy
- Administering the operating budget
- Making quick decisions
- Solving problems
- Strong communication
- Being well-organized
- Managing time
- Excelling at teamwork and collaboration
- Being a leader
- Thinking critically
- Monitoring performance
Related: Operating Budget Template
ProjectManager Helps With Operations Management
For a job as all-encompassing as operations management, you need software that has a breadth of features that can touch on all these disparate disciplines. ProjectManager is award-winning software that helps operations managers plan, manage and track their work in real time. They can share files, comment and catch issues and resolve them quickly. There are automation and recurring tasks to streamline processes and reduce waste while increasing productivity.
Plan on Robust Gantt Charts
Before you can automate workflows, you have to have a plan. Our Gantt charts make it easy to organize your tasks, link all four types of task dependencies and then set a baseline to capture that plan and compare it to your actual progress. You can see where you are in real time and if you’re falling behind reallocate resources to get back on schedule. Operations managers can also track resources and costs to keep to their budget.
Planning is only part of operations management. Operational plans must be monitored. Once you set a baseline in the Gantt chart, you can track your progress and performance across all project views. But to get a high-level view of project metrics, you’ll want to toggle over to the live dashboard. There’s no time-consuming configuration as with other lightweight software solutions. We’re ready when you are with easy-to-read graphs and charts that give you real-time data on workload, time, costs and more.
If you want more detail than a dashboard can provide, it’s easy to generate one of several reports with only a keystroke. Each report, whether the status report, portfolio report, variance or more, can be filtered to show only the information you want to see. It’s also easy to share reports with executives to keep them updated.
ProjectManager is cloud-based project management software that empowers operations managers. Use task management, risk management and resource management features to stay organized, analyze data, locate problems and keep everything running smoothly. Get started with ProjectManager today for free.