Operations management (OM) is the administration of business practices to create the highest possible level of efficiency within an organization. It is responsible for transforming materials and labor into goods and services in the most efficient way possible to maximize the profits of a company. An operations manager plays a key role in the success of an organization, often by analyzing data to create financial budgets, developing production objectives, and improving the workflows of different departments. To be an effective operations management professional, it is essential to understand the processes that are fundamental to what a company does and ensure that they flow and work together seamlessly.
Operations managers use real-time information from managers and field employees doing the work to optimize operations. They also use operations management KPIs to make informed decisions and coordinate efforts across the supply chain and the organization as a whole. In addition, operations management helps to drive technological advances within an organization, ensuring that processes work properly and guaranteeing profitability. It is also responsible for finding suppliers who provide the right products at reasonable prices and who have the capacity to deliver the product when needed.
Within any production facility or organization, adequate and advantageous operations management is crucial to ensure that production runs smoothly even when unexpected situations arise. A service operations manager must ensure that all services provided have a high-quality outcome. Operations management is vital for any company that depends on logistics and supply chain management. The responsibilities of an operations manager include providing overall direction for the company's operations, financial planning, and allocating resources for specific projects and service offerings.
The specific functions of an operations manager usually depend on the type of product or service the company produces. For example, an operations manager must collaborate with the marketing team to understand the needs of customers and ensure that the products manufactured or the services provided meet those needs. Service operations apply operations management rules to a service, that is, to an intangible good. As operations management develops, it will increasingly interact with other functional areas to create answers to complex interdisciplinary problems.
Operations managers use numerous formulas, such as the economic order quantity formula, to determine when and what size an inventory order should be processed and how much inventory to keep available.