What is operations management? Definition, types, examples

Effective operations management is core to business success, but traditionally has run in the background without a lot of fanfare. That’s not the case these days.

Ongoing disruption to the global supply chain and the growing need for business agility have put the spotlight squarely on operations managers.

Companies are reexamining and rethinking their processes to improve efficiency so they can navigate constant change and put their business on solid footing. They’re leaning on operations managers to get it right.

Every business, no matter the size or industry, needs effective operations management to drive profitability, achieve long-term success, and win competitive advantage.

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What is operations management?

Operations management is the planning, organizing, and oversight of business practices that maximize efficiency and assure company processes are driving value. It involves preparing and supervising the practices that turn resources such as labor, equipment, and raw materials into goods and services.

Operations managers work to ensure a company achieves the highest operating profit by carefully balancing cost and revenue. They work closely with other teams to increase productivity, deliver high-quality products and services, and ensure customers are satisfied.

Large organizations usually have a chief operations officer (COO) while smaller businesses might assign the duties to another high-level role. Either way, it’s a highly strategic position involving strong planning, organizational, and communication skills.

Operations management is closely associated with supply chain management: Managing the process of sourcing material, turning it into product, and delivering it to customers.

What are types of operations management?

There are many types, or aspects, of operations management. An operations manager role can vary widely, depending on business size and industry. They might have a broad range of responsibilities or focus on one area.

1. Product design and development
2. Planning and management of manufacturing facilities
3. Purchasing/procurement
4. Forecasting
5. Capacity planning
6. Inventory management
7. Quality control
8. Delivery to customers

Functions related to managing operations also can be broken down as strategic or tactical; the tactical functions carry out the overarching strategies or goals.

Examples of managing business operations

Given that every business needs to operations management to function, there are many examples across industries. Moreover, every industry can have a wide range of operations functions.

Here are a few examples:

• Healthcare

  – An operations manager of a healthcare facility is generally responsible for ensuring efficiency in delivery of high-quality care. That can include overseeing administrative costs, managing claims and billing, and legal compliance.

• Manufacturing

  – A company that makes home appliances, for example, has processes for sourcing materials, managing factories, maintenance, overseeing inventory, and ensuring quality.

• Restaurant

  – An operations manager for a restaurant or chain of restaurants is usually responsible for facility maintenance, employee training and supervision, financial planning, inventory management, compliance, and payroll.

• Retail

  – In an industry that can span multiple environments, from brick-and-mortar to e-commerce and single stores to chains, business operations can encompass many functions, including sourcing, inventory, staffing, logistics, store management, and customer service.

• Transportation

  – Operations management for a transportation company includes overseeing vehicle maintenance, fuel supply, routing, staffing, and communication, among other functions.

Supply chain management and business operation managers: The difference

In smaller companies, an operation manager’s responsibilities may include supply chain functions like managing the processes and systems for sourcing and delivery.

Supply chain managers work with suppliers to collect materials, oversee manufacturing of product, and delivery to customers. They evaluate suppliers and negotiate contracts, assess supply chain risks, manage purchasing, and oversee logistics. By comparison, operations managers may be focused more on internal production processes.

Strong supply chain management is critical for increasing efficiency, reducing costs, improving customer satisfaction, and driving revenue for a company.

In 2023, supply chain challenges can make for a wild ride.

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How operations management impacts customer experience

The way a business manages its processes is directly linked to the customer experience it provides.

When a company delivers quality products and services to customers in a timely manner, customer satisfaction soars. In contrast, a delayed or wrong order will damage CX and drive customers to the competition.

Customers want their wishes met, on time and at a good price. They expect brands to live up to their promises and deliver products as advertised. This requires understanding what customers want and need, and using that to inform operations management. Listen to their feedback to adjust processes as needed.

Customer experience isn’t just about front-end touch points; it requires integration with back-end operations such as inventory and fulfillment in order to really shine.

According to a McKinsey report, companies can spot operational improvements that will improve CX by analyzing customer journeys. For example, one bank looked at how customer satisfaction was impacted by how long it took to apply for an account and receive an account card.

Understanding breaking points can help businesses zero in on operational improvements that will boost CX, researchers said. Implementing those improvements could involve advanced analytics, intelligent process automation, and/or a lean approach.

Operational excellence, bottom-line benefits

Satisfied customers prove that your operations and processes are doing what they’re supposed to: deliver value.

Effective operations management has become more vital than ever as market conditions continue to churn in the wake of the pandemic.

Only with the best planning and oversight of its myriad processes can a business remain resilient, achieve its long-term goals, and outlast the competition.

With intelligent ERP, the possibilities are endless.

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