Uncovering the secrets behind operations management

Summary

Operations management is the implementation of business strategies to create the highest level of efficiency possible within an organization. Operations managers have specific responsibilities and require key skills, which we discuss in this article.

If you have a business, it has to operate somehow. This is nothing new. In fact, records of historical businesses, such as inventory lists, transactions and ledgers have been traced all the way back to the ancient Sumerians in 5000 BC. Documenting business operations is almost as old as civilization itself.

While we're far past the age of writing down business transactions on a piece of cloth, learning the responsibilities and practices of operations management will help you create a more effective business.

What is operations management?

Operations management is the implementation of business strategies in order to create the highest level of efficiency possible within your organization.

Operations management involves planning, organizing, and overseeing processes such as inventory management, the production process, service operations, and other business processes. The goal of an operations strategy is to make these processes more efficient, so you can balance cost and revenue and generate the highest possible profit.

Responsibilities of operations management

There are many different responsibilities when it comes to effective operations management. Here are a few of the responsibilities an operation manager may encounter when working.

Business forecasting

When your company does well, there’s more demand for products which impacts business operations. That’s why understanding how to forecast potential business as market demands change is important as an operations manager. Operation managers are responsible for monitoring things that can influence seasonal bottlenecks, production scheduling, capacity planning , and general production scheduling.

Learning how to both track and analyze these shifts in business is one of the major fundamentals of operations management. As an operations manager, you should also spend time understanding how these changes can affect both production scheduling and business processes.

Supply chain management

A supply chain is the organization of people, businesses, and information needed to create a product. Understanding how your supply chain works is especially important if your product requires any raw materials from outside sources, as these resources directly affect the production of goods.

If the supply chain is disrupted, it can greatly affect normal business operations. A fantastic operations manager doesn’t just monitor the supply chain—they also proactively prevent bottlenecks. To do this, use problem-solving skills to avoid supply chain issues and keep the production process flowing. This helps keep profits up, despite any supply chain management issues.

Understanding product development

Product development refers to the entire process of designing and creating a final product that will go to an end consumer. While an operations manager isn’t responsible for the creation of the product itself, they need to know how products are made from beginning to end. This responsibility is also known as production management. Depending on your company structure,  it typically falls to the official operations manager or someone specifically in charge of production management.

In addition to knowing how a product is developed, operations managers need to keep tabs on how the product is performing in the market. This helps them inform any decision making in the future to ensure their product meets customer demand.

Delivery management

In this context, delivery management refers to delivering the final product to the end consumer and ensuring that it meets customer satisfaction requirements. To do this, you must first understand quality control processes, general quality assurance, and other forms of quality management.

Part of delivery management is implementing review workflows to ensure the products you deliver are up to your company’s standards. In addition, operations managers ensure that the final product makes it to the end consumer in a safe and efficient manner. This can include reviewing shipping logistics and packaging, or even working with the end customer to ensure they’re satisfied with their product.

Skills of an operations manager

Operations management professionals require specific skills to accomplish the many responsibilities of their role. Here are a few skills that operations managers have.

Organizational skills

Operations managers are project managers for an entire production process. They know the ins and outs of every little step that goes into production systems, and they need to keep all of that information neat and organized. This is doubly important when operation managers share this information cross-functionally. Using a work management tool can help keep all of the important information organized for all stakeholders. A work management tool can help assign tasks to specific owners and keep due dates clear so there’s one source of truth for everyone on the team.

Coordination skills

Operations managers need to know how to move a project from one stage to the next, without any hiccups. This includes coordinating with cross-functional teams, streamlining automation, and meeting customer demands. If the inputs (resources such as money, people, or hours worked) outweigh the outputs (deliverables you expect to produce), the operations manager may suggest optimizing the process somewhere along the production line. Also, make sure you coordinate changes with key stakeholders to ensure clarity, drive optimization, and support continuous improvement.

People skills

Operation managers interact with many different people, from outside service providers to the COO of the company. To ensure you’re communicating at work effectively, delineate between real-time updates and asynchronous reports . This can help your team members understand what information is most important to them at the time of reading. Pay attention to nonverbal communication , and use active listening to ensure you accurately understand each stakeholder. If necessary, consider developing your conflict resolution skills as well, since you may run into conflicts you need to resolve during your day-to-day work.

It's also important to forge and maintain consistent partnerships with vendors. Operational managers can do this by regularly connecting with outside vendors that they work with. Creating strong bonds with high-quality vendors can give your business a competitive advantage. Whether it's discounts on raw materials or priority on orders, forging partnerships can help your business in the long run.

Fundamentals of relevant technology

While an operation manager doesn't necessarily need to be an expert on technology, you will need to know the fundamentals of the technology your company uses. If your team uses specific software for information systems, inventory, production line management, or cross-functional coordination, make sure you know how to use these platforms.

4 operations management theories

There is no one correct way to manage operations. Luckily, businesses have developed different operations management methodologies to help business operations run more smoothly. Check out these four operation management theories to get started.

Business process redesign (BPR)

Business process redesign is the act of analyzing and designing workflows and processes within a company. The goal here is to optimize processes to increase efficiency, improve profits, and reduce excess.

The success metrics of a BPR are often related to profitability. To effectively run a BPR, set clear goals and clearly identify what parts of the process you would like to improve. Once you’ve implemented the BPR, make sure to connect with stakeholders to evaluate its effectiveness. For example, if a team implements a BPR with the goal of increasing the number of products per day, the team can easily measure their effectiveness by comparing the difference of products produced in one day before implementing the BPR, and after.

Reconfigurable manufacturing systems

Reconfigurable manufacturing systems is a modular system that allows for rapid changes in response to a sudden change in the market. This type of system allows companies to quickly modify their processes in response to competition.

One of the benefits of a reconfigurable manufacturing system is sustainability. Oftentimes, reconfigurable manufacturing systems create products that are in the same category. Take the COVID-19 pandemic for example: a textile company that created sustainable clothes could have pivoted their systems to manufacture face masks when the demand increased.

Six Sigma

Six Sigma is a type of operation management methodology that focuses on process improvement. The goal of Six Sigma is to ensure that 99.99966% (yes, you read that correctly) of products developed by the process are free from any defects.

Six Sigma was developed by American engineer Bill Smith when he was working for Motorola in 1986. The term comes from statistics, specifically from the field of statistical quality control. There are two main methodologies of Six Sigma: DMAIC and DMADV.

DMAIC is used to optimize existing processes. DMAIC stands for:

Define the system.

Measure the key aspects of the current processes.

​Analyze the data and verify cause and effect.

Improve or optimize current processes based on data analysis.

Control the future state processes.

DMADV is used for creating new products or process designs. It's also known as DFSS (Design for Six Sigma). DMADV stands for:

Define design goals that are consistent with customer demands.

Measure and identify specific characteristics that are critical to quality (CTQ).

Analyze to develop and design alternatives.

Design an improved alternative.

Verify the design and set up pilot runs.

Lean manufacturing

Lean manufacturing is a process of systematically eliminating waste within the manufacturing process. This methodology is a form of continuous improvement. Based on the Japanese philosophy of kaizen , lean processes aim to eliminate three types of waste: muda, mura, and muri.

Muda (wastefulness): Practices that consume resources but don’t add value.

Mura (unevenness): Occurs through overproduction and leaves behind waste.

Muri (overburden): Occurs when there is too much strain on resources.

By eliminating these three different types of waste, lean manufacturing processes aim to reach peak efficiency, ultimately resulting in higher profits.

Organize workflows with work management software

Operations management requires organization and a deep understanding of different workflows. Streamline your operations management by using one of our ready-made templates. Check out UDN Task Manager ’s operations project plan template below.