Operations departments in businesses and companies are responsible for ensuring everyday tasks remain on track and are completed in time. The operations department also maintains the efficiency of production processes while also ensuring teams are making the best decisions for the business. If you think of a business as an organism, the operations manager is responsible for the functioning of the different parts of this organism.
They are the brains that keep everything on track. Like the brain monitors and manages various functions in the body, operations management has several functions that we will explore in this article.
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Operation is a Critical Part of Any Business
Operations are involved in almost any function in the business. For example, any size business that wants to make a new hire has to talk to the operations team for a cost-benefit analysis of this action.
For production teams that want to create new products, they have to talk to the operations team so they can work out with the responsible teams to find out if there is enough demand and a market large enough for the new product.
Because of how many modern businesses do and have to keep an eye on, operations managers might spend more time managing some functions than they do managing others. It all depends on what the company or business does. If you don’t ship products, for example, there is no need to be concerned about supply chain management.
However, it is still important to understand all the functions of operations management, so you are prepared in case the business pivots and you need to understand these functions.
Also Read: 4 Areas of Your Business You Need to Manage Better
Operational Planning
Operational planning is a key function and part of operations management. Operational management entails managing inventory and controlling it, monitoring the production of goods, ensuring team members are faring well and are performing up to the set standards, and planning the production of goods.
Operations management is meant to uphold operational efficiency and operational planning helps with this aim. Businesses should always keep an eye out for new advancements that can remove operational bottlenecks and thus help improve operational efficiency and enhance operational strategies.
Operational planning calls for resourcefulness. Every operations manager has to manage a team while ensuring the company continues thriving. To succeed in both aims, they need to think fast. This includes situations where they do not have the tools they need but have to be resourceful enough so they come up with solutions that utilize the tools and resources at their disposal.
Finance
Finance is a crucial part of operations management because every business must find a way to increase revenues, keep costs low, and increase profits. Operations managers must ensure that the company and business have the monetary resources to expand when business leaders make decisions.
Remember that most business decisions have financial backing behind them, whether the business is hiring, introducing new products, or wants to take advantage of new technologies. Operations managers must ensure there is a large enough budget to support these decisions and changes.
Operations managers might be required to create budgets that support production goals, help the business find investment opportunities, and manage resources by allocating budgets.
It may seem like these financial functions of operational management overlap those of the finance department. The main difference is that the finance department is concerned with money and budgets that have to do with sales (marketing, customer acquisition, etc.) or people (salaries, etc.) while operations managers’ financial functions are limited to those that have to do with production processes.
Every operations manager who has financial responsibility must possess strong financial planning skills. Financial planning ensures that there is not only enough budget to allocate to strategic goals and objectives but that this budget goes to where it is needed most.
Operations managers must also know how to source vendors who sell at affordable prices. This ensures they can create high-quality products that fit within their customers’ budgets.
Product Design
While product designers are the creatives who visualize and design new products, the operations team is the one responsible for gathering information from the market on what it needs and what products need to be introduced to it.
Once the operations team identifies market trends and customer needs, of course in collaboration with other teams like the marketing team, they pass this information to the designers so they can create the best products for the market.
The operations team is responsible for consolidating and organizing marketing data so it can be used in decision-making processes, communicating the results of a product launch to the design team, and giving product design direction when developing new products.
With a challenging market, creating a finished product that satisfies the customers’ needs requires a lot of research. Without crucial research and insight from the operations team, designers would not know what the market needs and what to create.
A key skill in this area is data interpretation. An operations manager must be able to interpret the data they get for their team and turn it into directions everyone can follow.
The main goal in doing this is to ensure the design team comes up with a product that matches and even exceeds what is currently available in the market.
Once there is a plan for the development and launch of a new product, the operational manager should communicate this to all teams using available communications channels. Tracking information, action items and feedback is crucial for this to work.
Quality Control and Assurance
Product design is inherently linked to quality control and assurance. Once the design team is done with a product, the operations team must ensure it meets set quality standards. Testing a product is crucial at this point so that it contains no defects when it is released to the public.
Operational managers have to inspect products, identify any issue through risk analysis, create tests that control the quality of all products that leave the business, and document deficiencies and defects for improvement purposes.
The standards and levels of quality control will vary depending on the industry, and one of the things an operational team must do when doing product research is to find out the expected quality in their given industry.
Once you understand the quality standard that is expected and that you need to meet, you use these results to formulate product quality control and assurance management strategies.
Products are rarely of the best quality after one round of production. Businesses have to go through many rounds to create a quality product that is up to the standard their customers expect. This iteration process can produce a lot of waste in terms of materials, time, and other resources, waste that is usually passed down to the customer as increased cost.
To reduce this waste and the final cost of the product while also ensuring the best quality, many businesses embrace lean manufacturing practices. These practices are meant to eliminate waste in your manufacturing processes that do not add value to a product or increase the final cost to the consumer.
To better understand quality assurance, control, and reliability philosophies as well as modern methods of quality improvement, operations managers can complete an advanced degree in lean manufacturing.
There are several amazing Online Masters in Lean Manufacturing courses available for operational managers who want to use lean manufacturing practices not only in quality control and assurance but across all their operational management functions.
Forecasting
Forecasting remains one of the best ways to future demand for a given product or service. For better forecasting results, operational teams must ask themselves what the future demand for their product will look like, what promotions they can plan to capitalize on future demand, what additional storage might cost, and how much sourcing the required materials for the increased production volume will cost the business.
Data-driven decision-making is crucial in forecasting because it is no longer enough to base forecasts and predictions on gut feelings. The good news is that your business might already be collecting the data it needs for this level of forecasting.
Analyzing past data and extrapolating it depending on prevailing trends is a great place to start. Once you are happy with the forecast, you should pass it on to other departments so they can start planning for everything the business needs to do to take advantage of or adjust to the results of the forecast.
Strategy
Strategy is one of the broadest functions in operational management because it encompasses monitoring, analysis, and operational planning. Strategic management aims to ensure all product and manufacturing decisions are aligned with business goals.
Some of these goals include improving production systems, ensuring customer satisfaction, and gaining a competitive edge while keeping costs low.
As an operations manager, you can take advantage of various strategies for meeting these business goals. Some of these include:
- Ensuring collaboration amongst teams – Collaboration increases production and enhances communication that supports productivity, reduces miscommunications, and eliminates errors.
- Analyzing inventory – Analyzing your inventory can help you better meet the needs of your customers resulting in improved customer experiences.
- Being more conscious of the environment – Going green can endear you to customers, keep customs invested and save you money.
Creative thinking is crucial when formulating strategies as it allows you to come up with ideas that you can tie into the fundamentals of operational management. To develop new strategies, you need to think logically and critically through various concepts.
Research and the right data help and you can use what you learn from both to ensure your team makes the best strategic decisions.
Supply Chain Management
Every business that ships a product needs a supply chain system that makes shipping finished products, production, and sourcing of materials easier. Most businesses have dedicated supply management departments, but an operations manager is responsible for all internal supply chain management issues that are related to production.
All supply chains are cyclical, and they flow from the raw material supplier, your supplier, manufacturer, distributor, and retailer, and finally to the customer.
This chain is more cyclical than it is linear because once your products reach your customers, you have to source new raw materials to produce more goods and the cycle starts all over again.
Operational managers have to understand that not all businesses have to follow this cycle. Businesses can skip one or even several parts of it depending on what they do. For example, small businesses that send products directly to their consumers might not need a distributor or retailer.
Problem-solving skills are crucial in supply chain management. Supply chain issues have to be solved as quickly as possible because a breakdown in one part of the chain can cause costly bottlenecks that reverberate down the rest of the chain.
Operational managers can learn more about problem-solving skills they can apply to supply chain management and those in their teams will appreciate it.
Why is Operational Management Important?
Every business can benefit from some or all of the functions of operational management. Different types of businesses will benefit from different functions, and that is alright. For example, a tech company might not focus on supply chain management, instead of finding strategy and finance to be more important for what they seek to achieve.
The operations team functions as a go-between between different departments in a sizable business, This is because all departments and teams are often involved in the production process in one way or the other and operational management has to align decisions made by these departments to business goals.
Operational management also plays a crucial role in ensuring operations keep running smoothly and ensuring there are no conflicts and miscommunication between teams.
Operational management can help keep team members happy. They do this by ensuring the best work environment and an organized workplace that team members are excited to work in.
By getting involved in budgeting and finance, operations management also ensures the resources a business or company has are used in the best way possible. Reducing costs and stretching budgets are just two of the ways they do this.
It also enhanced collaboration while also improving productivity and helping teams achieve their objectives. Improving decision-making builds trust between you and your team which results in better delivery to customers.
By checking all big decisions, operations managers assess whether the ideas leaders put forth to align with goals. This helps a business remain focused on its goals and objectives, ensuring they are met.
Lastly, operational management enhances the functionality and efficiency of product delivery processes. By improving these processes, operational management helps team members complete tasks faster thereby increasing productivity.
Also Read: Big Changes You Should Make for Your Small Business
Conclusion
Operational management is meant to help operational managers make smarter decisions while ensuring leaner production. They do this by completing the functions we have discussed above while also ensuring all departments work collaboratively with each other.
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