Operations Management

Definition

Operations management (OM) plans, organizes, and continuously improves the processes that produce and deliver goods or services. Its goal is to maximize efficiency and profitability by coordinating people, materials, equipment, technology, and information across an organization.

Key takeaways

• OM administers business processes to maximize organizational efficiency.
• Operations managers design, coordinate, and refine workflows across departments.
• They balance operating costs with revenue to improve net operating profit.

Core responsibilities

Operations managers typically:
* Design and optimize production workflows and facility layouts.
* Oversee inventory, raw materials acquisition, work-in-process, and finished goods.
* Implement and enforce quality-control standards across production and delivery.
* Coordinate cross-departmental activities (production, IT, procurement, logistics).
* Track performance metrics and use data to reduce costs and improve throughput.
* Manage vendor relationships and ensure timely supply and delivery.

Essential skills

• Technical proficiency — familiarity with production automation, budgeting tools, and process-design systems.
• Organizational ability — managing schedules, files, budgets, and project details.
• Leadership and motivation — building teams, resolving conflict, and driving continuous improvement.
• Analytical aptitude — identifying bottlenecks, assessing risks, and implementing solutions.
• Decisiveness — making timely decisions under pressure while weighing trade-offs.

Common tools and methodologies

• Business Process Reengineering (BPR): Rethinks and redesigns workflows from the ground up to eliminate redundancies and improve performance.
• Six Sigma: Uses statistical methods to reduce defects and variability in processes; includes tools such as control charts and defect-rate analysis.
• Lean Manufacturing: Focuses on eliminating waste and improving flow from production to customer delivery.

Operations and supply chain management

Operations management overlaps closely with supply chain management, especially in managing inventory flow and logistics. Key activities include:
* Forecasting demand and setting inventory levels.
* Selecting and coordinating suppliers to ensure cost-effective, timely delivery.
* Applying formulas and models (for example, economic order quantity) to determine optimal order sizes and inventory holdings.
* Using customer feedback to refine product quality and operational processes.

Purpose and goals

The primary purpose of OM is to create efficient, cost-effective processes that deliver products or services meeting customer expectations while maximizing net operating profit. OM seeks the right balance between resource utilization, quality, speed, and cost.

Education and career path

• Typical entry: bachelor’s degree in business, operations management, engineering, or a related field.
• Advanced study: an MBA with an operations focus can broaden strategic, financial, and global-management skills.
• Professional development: certifications and experience in process-improvement methodologies (Lean, Six Sigma) are commonly valued.

Operations manager vs. project manager

• Operations manager: Responsible for ongoing processes and day-to-day coordination across departments to keep the organization running efficiently.
• Project manager: Leads temporary, time-bound initiatives with defined start and end points, coordinating resources to deliver a specific outcome.

Bottom line

Operations management is the discipline of designing, running, and improving the systems that transform inputs into valuable outputs. Effective OM reduces waste, raises quality, improves customer satisfaction, and balances costs and revenues to enhance organizational performance.