Operations management is the administration of business activities to achieve objectives, maximize productivity, and increase profitability. It involves overseeing the organization's production processes to create the highest level of efficiency, and analyzing work functions to determine what equipment upgrades would improve productivity. This includes manufacturing operations, office functions such as computer networks and office equipment, and improvements to the building itself. An operations manager is responsible for ensuring that the necessary tools exist to facilitate efficient communication within the organization, and for creating a budget to implement changes that will improve the company's efficiency. Operational efficiency is the relationship between a company's inputs and outputs, which determines the overall performance of a system.
Operations can include customer service processes such as marketing, or supply chain systems such as inventory management. An efficient service reduces unnecessary business expenses, such as labor and inventory costs, increasing revenues and bottom line. To create and maintain operational efficiency, operations managers must continuously monitor processes to identify which functions are ineffective or out of date. Productivity and efficiency are often used interchangeably, but they are quite different. Operational efficiency refers to completing a task with fewer resources, be it time, effort or capital.
On the other hand, productivity is the ability to do more with an average amount of resources. To improve productivity, companies should focus on allocating established resources to optimize the outcome of an operation. To enhance the efficiency of a process, managers would try to reduce the resources needed to execute a competent function. For example, to improve the efficiency of inventory control, warehouse managers would try to reduce the time needed to perform routine cycle counts and enter inventory quantities. With inventory software, warehouses can automate standard procedures, saving time and labor costs.
Productivity and efficiency can be further improved by an integration system that links stock software with other processes such as a point of sale (POS) system to permanently track incoming and outgoing products. By analyzing revenue collection procedures, the operations manager can create ways to quickly collect revenues to ensure that the company has cash available. Operations management systems allow different departments in an organization to work together to achieve common business objectives. Documentation and review processes can provide enough information about operations to allow management to identify inefficiencies. The operations manager then develops a training program together with the departmental manager that employees can undertake to improve their personal productivity. An operations management system (OMS) allows organizations to provide solutions to setbacks they may encounter in an operating environment more quickly, giving them a competitive advantage in their industry.
By comparing operations with peers Building relationships between peers and suppliers allows companies to compare their operational performance with that of other members of their industry. Managing operations requires extensive business knowledge, strong communication skills and long-term thinking. When companies use technology such as advanced software to improve operational efficiency, they must ensure that the solution also undergoes routine evaluations. While operations management is the management and control of functions and operations, project management is the management and control of project activities.
