What is Operations Management?
Operations management (OM) refers to the management of business practices that create goods and provide services. In manufacturing, this refers to all processes that transform materials into finished goods.
The overall goal of operations management is to utilize resources, labor, material, and equipment effectively in order to match supply and demand. Having too much supply or excess capacity is wasteful and costly to the manufacturing organization. On the other hand, having too little capacity means lost opportunities and potential customer dissatisfaction if your organization is subject to frequent stock-outs.
This is why it is crucial for organizations to effectively balance supply and demand to reduce costs, maximize profits, and provide value to their customers.
What is the Scope of Operations Management?
The term ‘Operations Management’ encompasses a host of processes that are concerned with transforming materials into finished goods.
Some of the functions and activities involved in operations management are:
- Forecasting - Forecasting is the process of predicting future customer demand based on past sales data and trends. This is essential for the production facility to anticipate the demand level they will need to meet.
- Location & Facility Planning - Location decisions can have a significant impact on the manufacturing organization. There are many aspects to consider when deciding on the location of the facility such as the availability and proximity to materials, the cost of labor, and even the amount of space available.
- Purchasing - This component ensures that the production facility has enough raw materials, equipment, and supplies to begin production and meet demands. This department must find reliable suppliers and ensure that the right quantities of materials are available at the right time.
- Inventory Management - Manufacturing organizations hold materials, parts, work-in-process items, finished goods, and more in inventory. Inventory management is required to balance under-stocking and over-stocking items.
- Capacity Planning - Capacity planning involves balancing the available capacity of the resources with the required capacity to meet demand. Capacity planning can also involve determining whether additional resources should be added to increase the overall capacity of the production facility.
- Scheduling - Scheduling in production is the process of establishing the timing of which jobs run on which resources. Production schedulers must also schedule workers, equipment, purchases, and other maintenance work to ensure that the production facility is running as efficiently as possible.
- Quality Assurance - This is the process that ensures that the output of production meets the appropriate standards of quality and performs corrective action if the standards are not met. Quality checks can be performed throughout the supply chain to ensure that the materials received are of good quality and to catch defects early in the production process.
- Employee Management - Operations managers deal with a lot of different people throughout the organization. Good management of employees is essential to keep them satisfied. Employee satisfaction is essential to ensure that production remains productive and revenues remain high.
The Importance of Operations Management
Operations Management is an essential aspect of any business as it affects and is affected by every business aspect. The three major functions of business organizations include operations, finance, and sales and marketing.
All of these functions overlap with one another to some extent. For example, the marketing department will provide the operations department with information on customer needs and the operations department will return information on lead times so that the sales department can provide realistic estimates to customers.
On their end, the finance and operations components cooperate on budgeting, analyzing investment opportunities, and providing funds for research, development, and the production of goods.
Challenges of Operations Management
While operations management has aided production facilities immensely, there are still some challenges that operations managers face on a daily basis. The field of operations management is challenging and requires a deep understanding of the business processes to allow operations managers to deliver value to their customers.
Some of these challenges include:
- Customer Expectations
PlanetTogether's Advanced Planning and Scheduling (APS) Software can help operations managers navigate through these challenges. This software allows manufacturing facilities to have a visual representation of their production schedule and can help with reducing waste, increase profits, and boost production efficiency. This software can be implemented in production facilities around the globe to help them take their operation to the next level.
With PlanetTogether, we now have a consistent tool for our planning and scheduling. PlanetTogether APS is used by most of our departments, from supervisors, production planners, purchasing, IT staff, and management.
BRUCE HAYS, DIRECTOR OF MANUFACTURING, J&J SYNTHES
Advanced Planning and Scheduling (APS) Software
Advanced Planning and Scheduling Softwares have become a must for modern-day manufacturing operations as customer demand for increased product assortment, fast delivery, and downward cost pressures become prevalent. These systems help planners save time while providing greater agility in updating ever-changing priorities, production schedules, and inventory plans. APS Systems can be quickly integrated with an ERP/MRP software to fill the gaps where these systems lack planning and scheduling flexibility, accuracy, and efficiency.
With PlanetTogether APS you can:
- Create optimized schedules that balance production efficiency and delivery performance
- Maximize throughput on bottleneck resources to increase revenue
- Synchronize supply with demand to reduce inventories
- Provide company-wide visibility to resource capacity
- Enable scenario data-driven decision making
The implementation of an Advanced Planning and Scheduling (APS) Software will take your manufacturing operations to the next level of production efficiency by taking advantage of the operational data you already possess in your ERP system. APS is a step in the right direction of efficiency and lean manufacturing production enhancement. Try out a free trial or demo!