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BUSINESS BUSINESS ESSENTIALS
Operations Management: Understanding and Using It
By ADAM HAYES Updated March 28, 2023
Reviewed by AMY DRURY
Fact checked by AMANDA JACKSON
Operations Management (OM)
Katie Kerpel / Investopedia
What Is Operations Management (OM)?
Operations management (OM) 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.
Understanding Operations Management (OM)
Operations management involves utilizing resources from staff, materials, equipment, and technology. Operations managers acquire, develop, and deliver goods to clients based on client needs and the abilities of the company
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 that minimal waste occurs. Operations managers use numerous formulas, such as the economic order quantity formula, to determine when and how large an inventory order to process and how much inventory to hold on hand.
Operations and Supply Chain Management (OSCM)
A critical function of operations management relates to the management of inventory through the supply chain.
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This process is known as operations and supply chain management (OSCM). To be an effective operations management professional, one must be able to understand the processes that are essential to what a company does and get them to flow and work together seamlessly. The coordination involved in setting up business processes in an efficient way requires a solid understanding of logistics.
An operations management professional understands local and global trends, customer demand, and available resources for production. Operations management approaches the acquisition of materials and the use of labor in a timely, cost-effective manner to deliver customer expectations. Inventory levels are monitored to ensure that 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.
