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Operations Management Explained

Operations management (OM) plays a vital role in any organization by maximizing existing resources, decreasing waste, and increasing revenue.

July 13, 2023

When a business is looking to tighten its bottom line, it will often refer to its operations management team to review where it could improve. Operations management (OM) plays a vital role in any organization by optimizing existing resources, decreasing waste, and maximizing profit.

Operations management is practiced in virtually every industry, including distribution, manufacturing, retail, healthcare, and more. It plays a critical role in ensuring that businesses run smoothly and efficiently and can meet the needs of their customers and stakeholders in a cost-effective and timely manner.

There are many facets to operations management, and this article will break down some of the processes, career paths, software management tools, and more.

What is Operations Management (OM)?

Operations management (OM) is a crucial business function in any organization that involves designing, planning, and controlling the processes that transform inputs into finished products and services.

Inputs may include things like labor, raw materials, energy, or information.

These inputs are used to create goods or services. Operations management creates the highest level of finished products and services while also ensuring quality.

One critical goal of OM is to optimize the use of resources and reduce waste — in the form of materials, inventory, labor costs, and more. This involves looking at various factors within your day-to-day operations, policies, procedures, and overall business operations.

What is the Purpose of Operations Management (OM)?

The purpose of operations management is to ensure your business functions as effectively as possible in its delivery of products and services to the end customer. This ensures maximum profitability for your organization and maximum customer satisfaction.

Operations management does not happen in a silo. OM processes touch almost all areas of your business, with functions including:

  1. Providing goals, direction, and oversight to multiple departments.
  2. Managing and streamlining processes throughout the organization.  
  3. Balancing revenue and costs. 
  4. Developing, implementing, overseeing, and/or strategic plans. 
  5. Overseeing production, production logistics, and supply chain management.

What Are Types of Operations Management?

There are seven functions to operations management. 

  1. Operational planning
  2. Finance
  3. Product Design & Development 
  4. Quality control
  5. Forecasting
  6. Strategy
  7. Supply chain management 

Operations management is involved in many different departments within your company. Depending on the business needs (and politics), OM can have a significant stake in your department or a minor one.

What is an Example of Operations Management?

There are several examples of operations management, but one common example is product manufacturing.

Here, the operations department coordinates resources—like raw materials, labor, and equipment—to efficiently and effectively produce the end product. OM is deemed successful only if they create a product in an effective and efficient manner.

Another example could be delivering a service, like healthcare. In this case, the Operations Manager would coordinate resources, such as doctors, nurses, and suppliers, to provide customers with high-quality service while effectively leveraging resources to keep down costs. This may include ongoing contract negotiations between providers and insurers. Operations management is a core component of the United States healthcare system.

No matter your industry, there is almost an area where operations management is involved or could be more involved.

Operations and Supply Chain Management (OSCM)

Operations and supply chain management (OSCM) is a high-level view that covers both manufacturing and service industries. OSCM functions include:

OSCM manages risks and disruptors common in the supply chains, such as natural disasters, pandemics, geopolitical events, and supplier bankruptcies.

Managing risk can mean developing contingency plans, diversifying suppliers, and implementing risk management strategies to minimize disruption. This was particularly evident during the pandemic when the supply chains were bottlenecked, and suppliers had issues manufacturing products due to shutdowns.

What Does a Career in Operations and Supply Chain Management Look Like?

Operations and Supply Chain Management focuses on the design, planning, execution, control, and improvement of production and supply chain processes

OSCM works to accomplish this by maximizing efficiency and reducing waste. This can involve identifying and eliminating bottlenecks, reducing inventory levels, and improving the flow of materials and information through the supply chain. Another important goal is to ensure that products and services meet customer expectations regarding quality, cost, and delivery.

In general, OSCM managers need good analytical and problem-solving skills and knowledge of computers. A comprehensive view of the business and the ability to "get in the weeds" when needed is also helpful. 

Some universities, like Texas A&M, offer degrees in Operations and Supply Chain Management. Courses included in this degree might include:

  • Systems Modeling and Simulation
  • Linear Programming and Applications
  • Current Topics in Operations Management
  • Managing Quality Improvement
  • Management of Service Operations
  • Supply Management and Logistics
  • Project Management
  • Computer Models for Operations Management

Although having a degree in OSCM is helpful, many jobs do not require it.   Epicor job requirements, for example, are more pragmatic than rigid. 

As such, our OSCM leaders have a wide range of backgrounds in business and bring diverse expertise and backgrounds in understanding every company's unique needs — across dozens of global industries.

What Operations Managers Do

An Operations Manager is a business professional who ensures everything runs smoothly within the organization on a day-to-day basis

This can mean handling big-picture projects, like reworking the entire organization chart or changing shipping distributors. An eye for detail is also extremely beneficial for Operations Managers as they review hundreds of processes and workflows to ensure they are optimized. 

Responsibilities of Operations Managers

Specific duties of an Operations Manager (OM) include formulating strategy, optimizing performance, procuring materials and resources, and ensuring compliance.

An Operations Manager is focused on always improving customer service through best business practices at all levels of an organization.

  • Ensuring operations are performing optimally and cost-effectively
  • Improving operations management systems, processes, and best practices
  • Purchasing materials
  • Inventory management
  • Overseeing warehouse efficiency
  • Ensuring legal compliance
  • Formulating strategic and operational objectives
  • Examining financial data to improve profitability
  • Managing budgets and forecasts
  • Performing quality controls and monitoring production KPIs
  • People management: training, and managing staff

Being an Operations Manager can be a rewarding and exciting career, requiring continually collaborating with stakeholders and fine-tuning processes to improve a company's bottom line.

Operations Management Software

Effective operations management software systems can simplify business operations, facilitate communication, save time, streamline documents and reporting, help with quality management, and many other business functions.

Epicor's software can scale to meet the operational needs of businesses of all sizes, or adapt to business or industry-specific needs.

  • Standalone software options.
  • Integration with existing business solutions.
  • Cloud-based software solutions.
  • A full-scale software solution (cloud-based or on-premise) that integrates with your existing Enterprise Resource Planning (ERP) system.
  • Expert implementation and project management.

How Operations Management Impacts Customer Experience

Operations management plays a crucial role in meeting your customer's experience.

Suppose an organization cannot meet your customer's inventory needs because of a slowdown in the production process or lack of quality consistency.

Effective operations management software can help you mitigate these issues before they become issues.

  • Quality control ensures that the product or services meet or exceed customer expectations.
  • Speed at which products or services are delivered to customers. By optimizing supply chain processes (production and distribution), you can forecast and proactively respond to changes in demand, raw material shortages, shipping delays, or other bottlenecks.
  • Flexibility involves adapting to changes in customer needs and preferences. By implementing an agile process and systems, businesses can respond quickly to changing market trends and help customers successfully adapt.
  • Effective communication with the customer regarding order status, delivery times, and other relevant information. This also includes a streamlined return or exchange process.

Overall, operations management is a central part of the customer experience. When products are of a quality that is expected, quickly, and efficiently delivered, there is a generally higher customer satisfaction score. Business flexibility and effective communication are also crucial to customer satisfaction.

Bottom Line

Operations management is crucial to the function of your well-run business.

Without a high-caliber OM team, a company may often leave money on the table, waste money, and lose customers. Well-managed OM processes, including the right OM software, can significantly benefit your organization.

Talk to us at Epicor for a free consultation about ways you can make your OM processes run swifter and nimbler. We can connect you with OM experts with a commanding knowledge of your industry. 

Our OM software solutions could drive major savings—in both time and money—for your business. 

Or, we might not be the right fit. But we value learning about other businesses, including yours, and sharing our 50 years of insights and expertise.

Find out what we can do.