Resources for Operations Management

Operations Management

Operations management refers to the sector of a company’s management that observes a business’ operations and makes changes in design where necessary. The goal of the operations manager is to make the production of goods and services both efficient and effective. These managers come up with ways to use the least possible resources to make the best quality product while striving to meet the customer’s expectations and requirements. Operations management is all about overseeing the process of the conversion of raw materials into the finished product or service. If you want your business to function as smoothly as possible, then you should consider implementing an operations management division.

Benefits

Organization

Operations management oversees the system of operations within a company. Operations refers to the conversion of inputs such as labor, capital, and materials into goods and services. For this conversion to take place, many decisions must be made, including what to produce, how, where, and in what facility, how to train employees, how to raise the quality of a product, and how to lower expenses and improve productivity. Having an operations management team to make or, at the very least, supervise all these decisions can help create a more organized, united system of operations. Operations management ensures that no one department is working independently of another, and that all operating decisions are made cooperatively.

Forecasting

A sizeable portion of operations management is forecasting. Forecasting requires a manager to gauge future opportunities and make judgment calls that will help a company be more productive and streamlined with its operations. These forecasts can be qualitative or quantitative. John Kamauff’s “Manager’s Guide to Operations Management” describes the latter as involving a specific, quantifiable decision. Quantitative forecasts are not simply “yes, order the inventory” but “order 1,000 units.” An organization can benefit from these judgment calls and from having them be issued by an operations manager who, by virtue of his or her post, has access to the entire system of operations.

Competitive Advantage

Operations management workers have a hand in all the factors that influence a consumer’s buying decision, from product type to employee training. They are therefore in an ideal place to adjust the operating process as needed to maintain a competitive edge. Operations managers remain aware of new companies entering the market and can address their own company’s system in response.

Financial and Risk Management

Operations management includes financial and risk management within its scope. Operations managers may oversee an organization’s quarterly or annual budget, create financial reports, and monitor cash flow. They may also communicate with legal counsel and attend to any legal problems the company may face, as well as handle insurance policies. This broad reach allows them to ensure the company’s efficiency and effectiveness.

Pitfalls

Complex Analysis

Business operations involve a complex array of overlapping processes. Useful advice takes into account the size of the business, the industry in which the business operates, and management's deviation from best practices recognized as standards for similar companies. Written advice without direct assessment of the existing management structure can lead a business astray.

Unique Business Culture

Every business has a unique personality and a company culture that impacts the overall style of management. Often, a company's perceived culture is one of its greatest intangible assets that attracts talent and generates a reputation as a great place to work. Any operational advice affecting management can have an unanticipated negative impact on the company's work atmosphere, particularly when the advice is provided outside of a direct evaluation.

Interior Processes

A company's operational structure is the arterial network that supplies the body of the business with what it needs to function. While it can be helpful to use outside operational tools from a theoretical standpoint, it is as important to customize the advice for the business as it is for a person to obtain a correct diagnosis from a doctor before self-medicating.

Disgruntled Employees

Anything that impacts the way employees work has the potential to disrupt their sense of accomplishment and satisfaction with their jobs. Using a static document to evaluate systems can create concern over retroactive performance standards and unrealistic expectations. It is often advisable to involve employees in the change process from the beginning and make the design of the tools to be used an interactive activity.

Inadequate Capacity

In business, case studies analyzing decisions made by individual companies drive the development of models, standards, and accepted practices. Based on this input, templates and guides present advice that is in line with normal scenarios. Every business has its own unique set of circumstances, however, and such tools are only useful if there is someone on staff who understands the reasoning behind the tool and can customize it to meet the company's particular needs. Small companies sometimes lack the expertise to put these tools to the best use.

Pricing

How Much is an Operations Manager?

According to the U.S. Bureau of Labor Statistics, the mean annual wage for operations managers was $107,970 in May 2008, with a range from $45,410 to $37,020. Operations management is earned as a degree in most educational institutions.

Training Costs and Employment

Training costs for an operations manager may be small at first. The fact that operations managers are trained through educational programs helps reduce the cost of training initially. However, additional training for new operations, such as a department of business and finance, may be required. Continued education may also be something your company would want to support by sending the operations manager back to school for a higher level of education. Costs vary for schooling depending on the institution.

Conclusion

Operations management oversees the inner workings of your company’s production of goods and services. This small sector of management adds a greater level of organization to your business’ production capacity and can increase its efficiency and effectiveness. An operations manager’s keen insight into the way your company works allows him to make accurate forecasts of the materials necessary for production. Equally valuable is an operations manager’s insight into your competition and their productive capacity. Every business is unique and has its own culture and particular processes. When searching for an operations manager, make sure that he fits your business’ needs and tendencies. Though they do not come cheap, operations managers can end up saving you a lot more money in the long run.