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What is 'Operations Management'

Operations management is the administration of business practices to create the highest level of efficiency possible within an organization. It is concerned with converting materials and labor into goods and services as efficiently as possible to maximize the profit of an organization. Operations management teams attempt to balance costs with revenue to achieve the highest net operating profit possible.

BREAKING DOWN 'Operations Management'

Operations management involves utilizing resources from staff, materials, equipment and technology. Operations managers acquire, develop and deliver goods to clients based on client wants and the abilities of the company.

Specific Responsibilities of Operations Management

Operations management handles various strategic issues including determining the size of manufacturing plants and project management methods and implementing the structure of information technology networks. Other operational issues include the management of inventory levels, including work-in-process levels and raw materials acquisition; quality control; materials handling; and maintenance policies.

Operations management entails studying the use of raw materials and ensuring minimal waste occurs. Managers utilize numerous formulas such as the economic order quantity formula to determine when and how large of an inventory order to process and how much inventory to hold on hand.

Supply Chains and Logistics

A critical function of operations management relates to the management of inventory through the supply chain. Operations management understands local and global trends, customer demand and the available resources for production. Operations management approaches the acquisition of materials and use of labor in a timely, cost-effective manner to deliver customer expectations. Inventory levels are monitored to ensure excessive quantities are on hand. Operations management is responsible for finding vendors that supply the appropriate goods at reasonable prices and have the ability to deliver the product when needed.

Delivery Management

Another large facet of operations management involves the delivery of goods to customers. This includes ensuring products are delivered within the agreed time commitment. Operations management also typically follows up with customers to ensure the products meet quality and functionality needs. Finally, operations management takes the feedback received and distributes the relevant information to each department to use in process improvement.

Ideal Traits of Operations Managers

An individual working in operations management must have an understanding of the various processes within a company. Operations managers are involved in coordinating and developing new processes while reevaluating current structures. Organization and productivity are two key drivers of being an operations manager, and the work often requires versatility from the operations manager.

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