Operations Management – Definition

Cite this article as:"Operations Management – Definition," in The Business Professor, updated August 6, 2019, last accessed November 26, 2020, https://thebusinessprofessor.com/lesson/operations-management-definition/.


Operations Management Definition

Operations management is the type of management where business activities of a company are administered in order to improve the efficiency of a business organization. It emphasizes on efficient conversion of materials and labor into products and services so as to increase the firm’s profits. The teams strive to strike a balance between the costs and revenues of the firm for earning the maximum net operating profit.

A Little More on What is Operations Management

Operations management refers to the efficient utilization of materials, equipment, technology, human resources, etc. Operations managers buy, create, and deliver products as per their clients’ needs and preferences.

Responsibilities of Operations Management

Operations management deals with many strategic problems such as ascertaining the size of production plants, methods of project management, and executing the model of IT networks. Considering the operational problems, the firm deals with inventory management such as raw materials, goods involved in work-in-process, purchasing raw materials, quality control, proper handling of materials, and the way they are maintained.

Operations management involves the optimum utilization of raw materials, and their minimal wastage. There are many formulas such as EOQ or Economic Order Quantity that operations managers use for knowing the quantum of inventory order that needs to be processed followed by its time, and the quantum that needs to be held on hand.

Supply Chains and Logistics

Operations management controls inventory management by using supply chain. The team of operations management apprehends trends occurring in domestic and international markets, the demands of customers, and the existing resources for the process of production. It revolves around acquiring materials and utilizing manpower in an economical and convenient manner so as to match the expectations of customers. For making sure that more quantum of inventories are on hand, managers measure the inventory levels. Operations management has the primary task of finding vendors or sellers who deliver the required goods at affordable rates and at the correct times.

Delivery Management

Operations management also ensures the delivery of final product to customers within the given time frame. Also, they emphasize on following up with customers after making sales so as to know if the product meets their preferences and expectations. Ultimately, the operations management collects the feedback obtained and sends the required information to several departments so that they can use the same in product improvement.

Ideal skill sets of operations managers

A person working in the operations department of the company must know about different processes taking place therein. Besides reassessing the existing structures, they create fresh concepts and processes. Productivity and organization are the two factors that drive the performance of an operations manager. This task also needs a sense of creativity and brand new ideas.

References for “Operations Management

Was this article helpful?