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Why Operations Management Is Important For Your Company

October 23, 2023
Bill Kimball

The goal of operations is to provide the most to society without creating waste. Therefore, for the environmentally-minded, working in operations presents an opportunity to contribute to sustainability initiatives by reducing waste in order to run an environmentally responsible business.

  • One of the hardest parts of being a great operations leader is identifying when a team member is struggling to meet performance goals and addressing sensitive issues.
  • The economic production quantity differs from the EOQ model only in that it assumes a constant fill rate for the part being produced, instead of the instantaneous refilling of the EOQ model.
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  • Less relevant again would be operations roles at large traditional companies.
  • This was accomplished by adhering to their system of delivering the goods and the service to the customers at the lowest possible cost.
  • Other important management problems involve maintenance policies , safety management systems , facility management and supply chain integration.
  • Enterprise resource planning is the modern software architecture, which addresses, besides production operations, distribution, accounting, human resources and procurement.

APS softwares like PlanetTogether will take your facility to the next level by helping you optimize and increase the efficiency of your operations. When operations leaders pay greater attention to quality, it helps to inspire their employees to strive to meet leaders’ expectations. Anyone who has studied the way Steve Jobs operated at Apple understands how his demand for perfection drove his people to do everything possible to meet those demands.

Operations Leaders Are Effective At Supply Chain Management

If true, this would make the roles less attractive for people who are motivated by effective altruism, since those people could do something else that’s less replaceable. In the survey, we also asked the organisation leaders to quantify their willingness to pay to gain additional recent hires. This showed that leaders believe that many recent hires produce value equivalent to hundreds of thousands or even millions of dollars of donations over three years. This suggests that people who are a good fit for direct work roles at the organisations could have much more impact than earning to give.

For instance, we’ve seen several organisations struggle to hire a good bookkeeper, even though it seems to satisfy these criteria. Rather, it’s one important factor, that could be offset by strengths on other dimensions, and it depends on the role.

To double check, we asked a couple of managers to answer the question for operations staff in particular. These roles seem to be especially in-demand in the community right now, based on the results of our talent survey. Junior roles might contribute value equivalent to as much as $300,000 of donations over three years. This makes them competitive with other top roles in the community, such as research and management. We also argue they can be more creative and intellectually stimulating than many people think, often involving the design of complex systems and requiring creativity and social intelligence. And, we respond to some other common misconceptions people have about these roles. This means that the need for more people to pursue this path is somewhat less than when we wrote the post.

We’ve found that people who are less interested in effective altruism are much more likely to leave their job. Turnover is very costly, because then you need to hire and train new staff, which can take years. What’s more, they’re more likely to leave the community altogether, meaning that all the knowledge, training and connections they’ve built up don’t get applied to other effective altruist projects. Operations management is concerned with controlling the production process and business operations in the most efficient manner possible.

why operations

The amount of funding available has suddenly increased in the last few years, while hiring is a risky and time consuming process, and it takes years to build a well-functioning team. The result is that in the meantime, “ready to go” additional staff can have a huge impact. All organisations need to run recruitment processes that are fair and accurate, create contracts, get visas, and so on, and many of these steps are overseen by operations staff. New staff then need to be onboarded and trained, which requires internal documents, workshops, team retreats and more.

Big Data Management Is Important

Operations leaders within an organization are working to design and execute supply chain strategies that maximize productivity, minimize risk and effectively respond to fluctuations in demand. Supply chain management encompasses the shaping of supply and demand along with the optimal design of products themselves, creating a wide range of responsibilities. Operations leaders have begun to treat their supply chain networks—consisting of logistics providers and contract manufacturers—as partners, in order to align goals and effectively orchestrate collaboration across these groups. In larger, more established organisations, the work tends to be more systematised, there is more management capacity, and the culture is more established. Likewise, the more central the organisation to the community, the more important fit is. For instance, GiveWell regularly hires people who aren’t as motivated by effective altruism, which works because they’re more established and focus heavily on international development, which has a pre-existing community. For instance, if you’re an academic project manager, it’s necessary to understand what the research is about, so you can complete core responsibilities, like arranging conferences and writing grants.

why operations

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Understanding Operations Helps You Become A Good Manager

We’ve also focused on the skills most needed in operations itself — if the role also involves management or other responsibilities, then additional skills will be needed. We’ve also not emphasised traits required in every role, such as fit with the culture and social skills. Operations roles also often blur into other areas, especially management, but also communications and fundraising. For instance, operations staff might help out answering questions from people applying to an event, or an executive assistant might communicate with the press on behalf of the staff member. Since they’re involved in finance, they might talk with donors or help prepare materials, assisting with fundraising. According to Carlos Cordon, LEGO professor of supply chain management at IMD, one of the main reasons his students take operations classes is the fact that operations is required for top executive roles.

why operations

Operations management applies to any industry, function, organization, or company – it really is that important to a business. We’ve asked the question, and now we’re going to tell you why operations management could be the career for you. In this RM is converted into FG but by using certain tools, techniques and methodology. As we know, any business organization runs on three basic functional areas which are finance, operations and marketing. These three basic functions are available in every type of organization and all are important.

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In a less domestic context, one might also see nanotechnology and aeronautics being used. Whether you work in a hospital or on the factory floor, an operations manager often ends up using technology to solve problems. Companies are now delivering items using drones; driverless vehicles, such as Google’s, are creating new opportunities for companies and consumers. Cost accounting is a form of managerial accounting that aims to capture a company’s total cost of production by assessing its variable and fixed costs.

All Businesses Need Operations Management In Order To Function

Or even if you’re good at research compared to other people in the community, you might be even better at operations compared to others in the community. Working in finance and events management requires more conscientiousness and attention to detail. Events management also requires greater social skills and ability to work under pressure.


Finally, operations management takes the feedback received and distributes the relevant information to each department to use in process improvement. An operations management professional understands local and global trends, customer demand, and the 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. 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. Some of the functions performed by an operations manager include supply chain management, product design, forecasting, quality control, and delivery management. When an error occurs in service delivery, the recovery must be delivered on the spot by the service provider. If a waiter in a restaurant spills soup on the customer’s lap, then the recovery could include a free meal and a promise of free dry cleaning.

Existing staff need to know where they stand with pay, benefits, how their performance is assessed and so on. People in operations roles act as multipliers, aiming to enable those in the organisation to maximise their productivity.

Walmart provided the first example of very low cost retailing through design of their stores and efficient management of their entire supply chain. Starting with a single store in Roger’s Arkansas in 1962, Walmart has now become the world’s largest company. This was accomplished by adhering to their system of delivering the goods and the service to the customers at the lowest possible cost. The operations system included careful selection of merchandise, low cost sourcing, ownership of transportation, cross-docking, efficient location of stores and friendly home-town service to the customer. Strong operations leaders work to make sure that staff is encouraged to perform to the best of their abilities by providing the tools necessary to make tasks seamless. Maintaining healthy and motivated teams is more than just applying strategies and project management tools to create an optimum output result; it involves thoughtful leadership and management of each level of involved human capital. Not only does focusing on quality help operations leaders maintain productive teams by fostering pride in a product or service, but it can also drive down costs thereby helping an organization gain an advantage over the competition.

As a jack-of-all-trades within the industry, the soft skills you can develop and curate are unprecedented. Operations employees need to have a firm understanding of how different parts of an organization come together and be able to work across different functions. You’re a manager, IT guy, repairman, and pretty much everything else in between. Whether you’re working with major databases such as SQL and Access or dealing with spreadsheets – employers are on the lookout for that knowledge.