Operations Management: Definition, Types, And Tips

If you’re new to the concept of operations management or would like to improve your knowledge on the subject, we’re here to help.

The processes you put into place serve as the foundation for the way your business runs on a daily basis and defines how you and your team work, communicate, and manage the tasks involved.

These processes are an integral part of everything you do, so choosing the right systems and workflows is vital for the success of your business.

In this article, we discuss the finer points of operations management and provide tips on how to make it work for you, your team, and your company as a whole.

Table Of Contents

• What Is Operations Management?
• Modern Theories Of Operations Management
• Types Of Operations Management
• Tips For Effective Operations Management
• The Future Of Operations Management

What Is Operations Management?

At its most basic, operations management (or OM for short) is the administration of business practices with the goal of creating the highest level of efficiency possible within the various standards, procedures, and workflows of an organization in order to maximize profits.

The application of OM typically extends from one “end” of your business to the other — from the raw materials and supplies flowing in, through your team’s activities and labor, and on to your customers and clients.

Stages of your business that can benefit from operations management include:

• Procurement
• Supply Chain
• Manufacturing
• Production
• Labor
• Workflow
• Service Delivery
• Customer Service
• Information Technology
• Quality Assurance
• Distribution

Though every business can find ways to implement OM, no two businesses will have the exact same solutions because the nature of operations differs greatly from company to company and industry to industry.

That said, the next section deals with common theories you can use to figure out what works best for you, your team, and your business.

Modern Theories Of Operations Management

Business Process Redesign

Business Process Redesign (BPR) is a theory of operations management that focuses on analyzing and designing workflows and processes that respond to accelerated change.

As the name implies, BPR is best suited for businesses that need to redesign their entire business process in order to achieve a complete overhaul of their key operating components from start to finish.

One of the many benefits of BPR is that, once implemented, your business is set up to be more efficient, more profitable, and better equipped to handle future shifts in operations management that you may find necessary.

Granted, by its very nature, BPR is more costly and time-consuming than some other OM theories and practices, but the results can be well worth the effort and expense.

Reconfigurable Manufacturing Systems

The Reconfigurable Manufacturing Systems (RMS) theory is similar to the Business Process Redesign theory but is best applied to a single system (typically a manufacturing run) rather than your business as a whole.

Like the Business Process Redesign theory, Reconfigurable Manufacturing Systems prepares your organization for accelerated changes in structure, hardware, and software components.

RMS allows systems to adjust and adapt more rapidly than before to necessary business or market modifications — all while maintaining the consistency and efficiency of production.

Six Sigma

Engineers at Motorola introduced Six Sigma in 1986 as a way to improve quality by reducing the number of errors in a process.

Six Sigma does this by:

• Identifying what is not working
• Removing those unsuccessful bits from the process

While Six Sigma may be best suited for larger businesses that want to improve quality and efficiency, there is much to be gained for small and medium businesses as well.

Lean Manufacturing

The Lean project management methodology revolves around maximizing customer value and minimizing waste. This ideal often manifests as using fewer resources and is embodied by the value that, as waste is eliminated, quality improves and production time and cost are reduced.

Lean focuses on reducing waste in the following categories:

• Transport
• Inventory
• Motion
• Waiting
• Overproduction
• Over-processing
• Defects
• Scheduling and operation
• Workflow

Lean is a beneficial project management methodology for businesses with the goal of streamlining a complicated project and transforming how they do business.

Types Of Operations Management

As we touched on earlier in this article, you can apply operations management to your entire business (from start to finish) or to components and processes within that larger structure.

In this section, we’ll discuss four of the most basic types of OM so you can see how they apply to your business.

1) Financial

The goal of operations management applied to the financial aspect of your business is the ultimate increase in profits.

Sometimes, though, you may find through an operations management analysis that your business can benefit from sacrificing short-term profits and financial goals in order to increase future profits and capacity.

For example, your business might decide to reinvest all annual profits into upgrading machinery in order to increase production capacity and efficiency over the course of the next year.

In other words, you may sacrifice profits now in order to achieve increased profits in the future. An OM analysis of the financial aspects of your business can help you identify these possibilities.

2) Internal

When most managers think of operations management, they visualize it as part of a restructuring of internal practices and procedures. For example, your business might focus on improving efficient communication between individuals, teams, and departments.

Or your business may choose to focus on improving other aspects of the workflow inside your business such as accounts payable, accounts receivable, manufacturing, order handling, scheduling, hiring, training, and others.

3) External

Your business can also apply operations management to external aspects such as:

• Customer service
• Vendor management
• Transport
• Delivery
• Supply chain

Finding ways to improve efficiency and service within these external components of your business can pay dividends in profitability and long-term success.

We’ll discuss more specific types of operations management in the next section.

Tips For Effective Operations Management

1) Stay Current

Innovation never sleeps, so it’s vital that your managers stay current on trends that can help your business improve.

This may involve everything from reading to research to listening to the suggestions of employees on the front line.

2) Keep It Simple

Effective operations management often relies on implementing new technologies into extant workflows. When that’s the case for your business, it’s best to keep the new technology as simple as possible for team members at every skill level.

This may not always be possible because some technologies, by their very nature, come with a steep learning curve. But, when it’s within your control to do so, choose new systems and tools that everyone in your organization can learn fairly quickly.

3) Invest In Education And Training

Sometimes, OM strategies necessitate the introduction of more advanced technologies and procedures.

In those cases, it’s best to invest in education and training along with the new equipment. That way, your team and your business can get the most benefit out of the changes.

4) Communicate

Good communication is at the heart of every successful business — especially when you’re changing the way your business operates on a day-to-day basis.

Establish strong lines of communication with all your team early on in the process, and then be sure to maintain that communication during and after the operations management analysis gets going.

5) Collect Accurate Data

Data is the cornerstone of effective operations management. As such, you want that data to be as accurate as possible.

Before computers, businesses recorded their data manually — often tasking team members to write the numbers by hand with paper and pen.

But manual data capture is often rife with inaccuracy, and even simple mistakes (such as the transposition of two values or the misreading of a poorly written number) can lead to huge discrepancies in what the data shows and what is really happening in the operation itself.

That highlights the importance of collecting data electronically and reinforces the old adage, “If you’re going to do it, do it right.”

With computers spreading into every corner of the business world, it’s now become easier than ever to gather extremely accurate data to help your business run better. It’s so easy, in fact, that the difficulty now lies in separating the useful data from the noise around it.

To counteract this glut of information, savvy operations managers determine exactly what information they need to run the business better and filter out the rest so their analysis is as accurate as possible.

6) Get Feedback From Your Team

While accurate data is invaluable to effective operations management, it doesn’t fully take the place of the human element on the front lines of your business.

Employees who interact with the various components of your operation — be it running a specific machine, talking to customers, or interfacing with vendors — have experience and insight that you can’t get anywhere else.

In fact, the data you gather can sometimes describe a slightly different picture than what’s actually going on.

The employees on the front line may not know what the numbers say, but they are much more closely connected to the reality of the situation and the human element that can often differ from the pure data that you collect.

Getting feedback from your team members is one of the best things you can do to get an accurate picture of how your business is running.

If you think of examining your operations as washing a dirty window, data collection would be like one swipe of the rag — it might make things mostly clear, but it’s still not as clear as it could be.

Analyzing the feedback you receive from your team members is like a second swipe of the rag — it supplements and augments the previous action so that your view becomes clearer.

Set up a system and a schedule for gathering employee feedback — e.g., a one-on-one meeting every three months — and then incorporate what you learn about the various aspects of your operation with the hard data you also collected.

Both of those variables together can inform your decision-making process like never before.

7) Take It Slow

It’s a universal truth: Decisions have consequences. And, sometimes, those consequences come with unintended side effects that can change your operations for the worse.

If you’re thinking about making adjustments to your operations, take it slow and consider what you’re doing from all angles.

Altering things in the spur of the moment — without really analyzing all the data and feedback — or going too big and complicated all at once can create a situation that puts you behind the eight ball right from the start.

It can also create a culture within your business that promotes knee-jerk reactions and a feeling that there’s always a crisis brewing.

Both can be bad for morale.

Take the time to analyze the data and all available options. Create a strategy for moving forward. And be as objective as possible when it comes to tweaking your operations management procedures.

8) Train Your Team To Adapt

You want your team to work efficiently at their jobs, but you don’t want them so set in their ways that they can’t adapt to a bump in the road or a change in the process.

Train your team to be flexible and even to expect and plan for change.

That will put them in the right frame of mind to accept any alterations in the operation that management deems necessary.

The Future Of Operations Management

1) Automation

As computers and artificial intelligence become more prevalent in every type of business, automation will become the foundation of operations management.

In many cases, automation will be able to provide better results without the risk of human error. This may lead to sweeping changes at all points along the management hierarchy — from entry-level positions all the way up to the CEO.

It may also create a situation where the most valuable management skill will be a combination of emotional intelligence and data analysis. Why?

Because, while a computer can present the numbers and even perform data analysis, it can’t collate that information with the more emotional aspects of the job.

Managers and team members who can synthesize the two into an effective process will be more crucial than ever as automation takes over.

2) Remote Management

As the recent global pandemic proved, there are very few things that a remote worker can’t do just as well as — if not better than — a non-remote worker. That trend will likely continue and, with the help of automation, spread to industries that were thought to be “remote resistant.”

Manufacturing, for example, could evolve from a team of individuals physically managing a machine on-site to a single individual at a desk in another city monitoring and tweaking the process via computer and the internet.

As the internet of things (IoT) continues to spread, it will become easier to manage large-scale operations remotely thanks to the interconnectivity of the many smaller components that make up the whole.

3) More Focus On Quality Labor

As operations management continues to evolve, it may become more important than ever to focus on how your business utilizes its workforce and the quality of labor they produce.

This will mean drawing in new, well-trained team members who can work at a high level to reach the standards you set.

Building a better workforce like this will all but demand that you perfect your recruiting techniques to be as efficient and productive as possible. Focusing on quality labor will also necessitate the need for efficient training in all aspects of the job.

All of that highlights the importance of the next item on our list: Human Resources.

4) Human Resources

As we’ve discussed periodically throughout this article, the future of operations management is moving toward the data analysis side of the scale.

But that doesn’t mean the human element will completely disappear. Company culture will still play an important role in the success of your business.

Finding the right employees and keeping them engaged and productive will fall squarely on the shoulders of your human resources department.

Without their participation, your business may suffer from low employee satisfaction and even high turnover — both of which can have serious repercussions for the productivity and success of your business.

If your operations management doesn’t already include an HR component, it may be beneficial to start incorporating that department into your decision-making process now so that your business is better poised to handle the changes coming your way.

5) Aware Devices

The internet of things (IoT) has brought with it a unique feature for the future of operations management: aware devices.

In many ways, this new technology will make it possible for things that once required human supervision and interaction to all but maintain themselves.

For example, an escalator fitted with aware components could monitor its own functions, register the need for service, and initiate the repair process.

Similarly, a “smart” building could notify maintenance teams when a small problem occurs (or is about to occur) so that it doesn’t escalate into a big problem.

These are just two simple examples of a process that can scale up to hundreds, if not thousands, of processes across multiple locations.

6) High-Tech Training

All of this change will necessitate that operations management be staffed by those with a technical background and the high-tech training to support the move toward digital solutions.

In the past, operations managers could rely on their hands-on, practical experience to get them through. But, as business evolves, those same managers may need to learn a more analytical skill set and exhibit a more product-focused mindset.

Again, much of this will fall on the HR department to either train existing operations managers or hire new managers with the skills already in place to deal with the changing nature of the position.

Organize Operations Management With Software

At first glance, keeping your operations management organized may seem like an impossible task. But, with the right software, you can achieve the insight you need to streamline every aspect of your operation and create a workflow that works for everyone.

When it comes to scheduling your team, managing their tasks, and tracking their activity, Inch is the perfect software for the job.

The Inch app is a powerful suite of tools that can help your team get aligned on their to-dos, ensure all tasks within the cycle get completed on time, and simplify communication.

The heart of our software is its team task management module that includes intuitive features, like:

• Powerful scheduling tools
• Cloud-based schedule distribution and communication
• A wide range of reports to help you make adjustments for the future
• Paid-time-off control to help you keep expenses low
• A built-in time clock
• Messaging and communication features
• And much more!

With these features, you can guide your entire team — be they on-site, in the field, or working remotely — through the entire job cycle in a timely and cost-effective manner.

You can also help them stay productive and support them in their daily work while simultaneously leading your business toward better growth. It’s a win-win for everyone involved.

Inch even helps you improve your own efficiency by allowing you to create, save, and reuse task templates for recurring work assignments. This way, you don’t have to start everything from scratch.

Then, you can break down tasks into specific actions and distribute checklists so your team can easily meet expectations.

When it comes to organizing, managing, and optimizing your workforce, there’s no better suite of tools than Inch. Take your job management to the next level by downloading the Inch app for free today.

For more free resources to help you manage your business better, save time and energy, and keep your team on task, visit TryInch.com today.