Operations management setup

Every organisation has an operations function, whether or not it is called ‘operations’. To some (especially those professionally involved in management of operations!) operations management involves everything one organisation does. In this sense, every manager is operations manager.

Wikipedia defines operations management as an area of business concerned with the production of goods and services, and involves the responsibility of ensuring that business operations are efficient in terms of using as little resource as needed, and effective in terms of meeting customer requirements. It is concerned with managing the process that converts inputs (in the forms of materials, labour and energy) into outputs (in the form of goods and services).

Operations traditionally refers to the production of goods and services separately, although the distinction between these two main types of operations is increasingly difficult to make as manufacturers tend to merge product and service offerings. More generally, operations management aims to increase the content of value-added activities in any given process. Fundamentally, these value-adding creative activities should be aligned with market opportunity for optimal enterprise performance.

What do operations managers do?

Operations managers are responsible for managing activities that are part of the production of goods and services. Their direct responsibilities include managing the operations process, embracing design, planning, control, performance improvement, and operations strategy. Their indirect responsibilities include interacting with those managers in other functional areas within the organisation whose roles have an impact on operations. Such areas include marketing, finance, accounting, personnel and engineering. (Source: Open University UK)

What are operations manager’s responsibilities?

  • Human resource management – the people employed by an organisation either work directly to create a good or service or provide support to those who do. People and the way they are managed are a key resource of all organisations. Operations manager works together with HR organisation in the company and departmental managers on improvement of working skills and knowledge of employees in operations. This includes monitoring of work processes on a daily basis. Based on results, operations manager will, together with department managers, develop skills development plan for each employee in order to improve individual productivity.
  • Asset management – an organisation’s buildings, facilities, equipment and stock are directly involved in or support the operations function.
  • Cost management – most of the costs of producing goods or services are directly related to the costs of acquiring resources, transforming them or delivering them to customers. For many organisations in the private sector, driving down costs through efficient operations management gives them a critical competitive edge. For organisations in the not-for-profit sector, the ability to manage costs is no less important. Let me add that efficient operations require efficient information system. When precise information move quickly from one workgroup to another it speeds up operation by reducing idle time and improving productivity. Operations manager is responsible for providing necessary resources for managing information and enabling efficient communication in operations.
  • Collecting payments – invoicing for goods and services is responsibility of operations manager and therefore collection of payments for those invoices as well. Good analysis and payment collection process setup will secure cash for organisation. It increases its potential to grow existing operations and negotiate better deals with vendors.

Operations managers act on three levels: strategic, tactical and operational

  • Strategic (long term) level

– Responsible for, and decisions about:

  • What to make (product development),
  • How to make it (process and layout decisions) – or should we buy it,
  • Where to make it (site location),
  • How much is needed (high level capacity decisions).
  • Tactical level (intermediate term)

– Address material and labour resourcing within strategy constraints, for example:

  • How many workers are needed and when (labour planning),
  • What level of stock is required and when should it be delivered (inventory and replenishment planning),
  • How many shifts to work. Whether overtime or subcontractors are required (detailed capacity planning),
  • Plant layout and structure,
  • Project management methods,
  • Equipment selection and replacement.
  • Operational level

–Detailed lower-level (daily/weekly/monthly) planning, execution and control decisions, for example:

  • What to process and when (scheduling),
  • The order to process requirements (sequencing)
  • How work is put on resources (loading)
  • Who does the work (assignments),
  • Quality control and inspection
  • Traffic and materials handling
  • Inventory management
  • Equipment maintenance policies

What skills do operations managers need?

  • Must have knowledge of:
  • Advanced operations technology and technical knowledge relevant to his/her industry,
  • Interpersonal skills and knowledge of other functional areas,
  • The ability to communicate effectively, motivate other people, manage projects, and work on multidisciplinary teams.
  • Multi-disciplinary working, for example:
  • Supply Chains – management of all aspects of providing goods to a consumer from extraction of raw materials to end-of-life disposal,
  • The interface with Marketing – determining what customers’ value prior to product/service development,
  • Operations Management / Finance Interface – capital equipment and inventories comprise a sizable portion of many firms’ assets in addition to normal operating costs,
  • Service Operations – coping with inherent service characteristics such as simultaneous delivery/consumption, performance measurements, etc.,
  • Operations Strategy – consistent and aligned with other strategies and legal requirements,
  • Process design and Improvements – managing the innovation process.

One response to this post.

  1. Reblogged this on SBI Training Solutions and commented:
    Some words about operation management


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