What Is Operations Management?
Operations management (OM) is the strategic administration of business practices aimed at maximizing efficiency within an organization. It involves optimizing the conversion of materials and labor into goods and services to enhance the organization’s profitability.
The primary goal of operations management teams is to strike a balance between costs and revenue to achieve the highest possible net operating profit.
Key Takeaways
– Operations management focuses on efficiency and profitability within an organization.
– It entails converting materials and labor into goods and services effectively.
– The aim is to optimize net operating profit by managing costs and revenue.
Katie Kerpel / Investopedia
Understanding Operations Management
Operations management encompasses the utilization of resources such as staff, materials, equipment, and technology. It involves acquiring, developing, and delivering goods based on customer needs and company capabilities.
Strategic issues handled by operations management include determining manufacturing plant sizes, project management methods, and implementing IT network structures. It also addresses inventory management, quality control, materials handling, and maintenance policies.
Operations management focuses on optimizing raw material use to minimize waste. It involves employing formulas like the economic order quantity formula to make inventory decisions efficiently.
The role of an operations manager revolves around understanding and coordinating company operations for success.
Operations and Supply Chain Management (OSCM)
Operations management plays a crucial role in inventory management throughout the supply chain, known as operations and supply chain management (OSCM).
To excel in operations management, professionals must understand and streamline essential processes efficiently, requiring a strong grasp of logistics.
Operations managers grasp local and global trends, customer demands, and resource availability to ensure timely and cost-effective production. They manage inventory levels, source materials effectively, and liaise with vendors for quality goods at reasonable prices.
Operations management extends to delivering goods to customers promptly, ensuring quality and soliciting feedback for continuous improvement across departments.