Operations management: maximising efficiency within organisationsPosted on: February 13, 2023
A business cannot be successful without effective operations management. As well as underpinning the practical, day-to-day running of a business, it’s a foundational aspect of longer-term viability, profitability and ultimate success.
The volatility of the last few years – from ruptures across the global supply chain to the heightened demand for business agility – has highlighted the importance of robust operations management. Increasingly, leaders are evaluating and rethinking their models, processes and practices in order to improve organisational resilience and navigate what feels like almost-constant change in our globalised world. However, alongside great challenges, there also exist great opportunities; advances in various technological, data and information applications, for example, has enabled leaders to take greater strategic and operational control over key areas of their businesses than ever before.
Brands and businesses worldwide require leaders and management teams with the skills and understanding to remain ahead of the latest developments and thinking in the operational management space.
What is operations management?
Operations management is concerned with aligning, managing and improving business processes and practices in order to maximise efficiency. As such, it deals with all aspects of operating system design, decision-making and implementation. It is fundamental to smooth project management, helping to ensure that high quality products and services are delivered at the highest possible operating profit. In addition to, and as a result of, the business benefits already mentioned – increased profits, streamlined systems and greater resilience – operations management is critical to maintaining competitive advantage.
An operations manager is responsible for converting inputs – such as labour, technology and raw materials – into outputs, while balancing cost and revenue. The role encompasses a wide range of key business operations, which generally include:
- procurement and sourcing
- supply chain management
- forecasting and inventory management
- quality control
- production and manufacturing processes
- systems and process design
- delivery management.
The specific nature of operations management varies considerably, and will be dictated by elements such as company size and industry. A smaller business, for example – with a less-complex operational remit – may have a single individual overseeing all operations, while a larger one is likely to have specific individuals overseeing certain aspects within a vast system. Similarly, a transport company’s operations will involve vehicle maintenance, while a restaurant chain’s will include hygiene and food safety compliance, and a manufacturer’s the proper sourcing of materials.
Either way, operations management influences every part of a business. It supports and informs wider operations strategy and is critical to achieving key performance indicators (KPIs) and wider goals and metrics.
Tools to support operations management
The area or element of operations that requires support or optimisation dictates the tool or process that a business may use to achieve results. For example, a retailer handling customer orders may benefit from order processing, shipping status, warehouse management and demand forecast tools, whereas a manufacturer seeking to improve their production process workflows may utilise tools such as bottleneck analysis, continuous flow and error detection.
Six Sigma is a popular, and powerful, example of a tool that aids the streamlining and optimisation of operations functions. It’s used by industries worldwide – from healthcare, banking, and retail to automotive, pharmaceutical and fast-moving consumer goods (FMCG).
It’s a business methodology focused on quality improvement in service operations. It was first developed by Bill Smith, a Motorola engineer, who used it to reduce variation in the company’s electronic manufacturing processes – which led to a significant reduction in product defects. Six Sigma has been labelled the “perfect process” – it aims for no more than 3.4 defects per million units or events – and uses the DMAIC roadmap of Define, Measure, Analyse, Improve, Control. Since then, other sectors have used it to achieve similar operational excellence. Eliminating errors save crucial time, money and resources across the operations function.
What skills does an operations manager need?
As one of the most critical functions of a business, it’s no surprise that operations management requires individuals with a set of specific skills.
The role of the operations manager is a highly strategic one. Alongside leadership, organisation, and communication, Indeed list a number of core competencies:
- Technical proficiency – from product automation to software and data processing.
- Risk analysis – pinpointing potential challenges and designing solutions ahead of time helps to mitigate risks.
- Product development – whether adapting an existing line or developing new products, the skills and experience to contribute to design, development, quality control and delivery is invaluable.
- Strategic and capacity planning – this includes helping teams to meet objectives, anticipating outcomes, and interpreting information and inputs that help inform business processes and decisions.
- Budgeting – managers need to make sensible, informed decisions around cash flow to support business activities and budgeting efforts. A solid understanding of business finances also helps to track costs, revenue and profit and produce financial reports.
- Adaptability – ever-evolving environments require individuals with the means to think and act quickly without losing sight of the best routes forward and desired outcomes. Remaining alert, open-minded and flexible are all integral traits for managers working and problem-solving in changeable, pressurised settings.
The best operations managers understand how to use data to drive evidence-based decision-making – understanding that personal biases and past results can only tell us so much – and make use of technology to gain efficiency. Workforce and process automation, which is becoming increasingly mainstream and a staple of many business environments – can assist in the optimisation of operational capabilities, using data-led engineering and design.
There are also competing demands spanning sustainability, business dynamics, time management and operating in global and international environments to juggle, requiring leaders with the ability to prioritise, innovate and apply creative problem-solving skills.
Understand the fundamentals of effective operations management
If you’re keen to embed processes and practices that drive value, choose the University of Sunderland’s online International MBA programme.
Ready to take the next big step in your career? Bring your skills to leadership roles in fast-paced, international business environments – across both the public and private sector – that require strategic direction and innovation. You’ll develop understanding of operations management, global strategy, human resources, big data and technology, entrepreneurship, finance and marketing, together with the tools to apply your new skills to challenging, real-world situations.