What are Business Operations?

Business operations refer to activities that businesses engage in on a daily basis to

increase the value of the enterprise and earn a profit. The activities can be optimized
to generate sufficient revenues to cover expenses and earn a profit for the owners of
the business. Employees help accomplish the business’ goals by performing certain
functions such as marketing, accounting, manufacturing, etc.

Business operations evolve as the business grows, and the management should plan
to accommodate the changes to prevent glitches occurring in the system. For
example, as a small business grows, it must be ready to handle arising challenges
such as legal, marketing, and capacity issues. If the business does not evolve with the
changes in business operations, glitches such as errors and omissions will emerge.

Business Operations in Different Industries

The operations of a business vary across industries, and they are structured
according to the requirements of the specific industries. Mastering the operations of
a specific industry can help the business achieve success. Here is an analysis of
business operations in different industries:

1. Retail industry

One of the main goals of a retail business is to stock products that customers are
looking for and at a price that the customers are willing to pay. This means that the
business must maintain an efficient inventory system so that it knows what is in stock
at any given time, while reducing instances of dead stock. Deadstock refers to
products that the company has in stock but that are not in high demand.

In order to maximize revenues, the business should stock fast-moving items that
customers are willing and happy to pay for. The business should also negotiate
friendly credit terms with suppliers so that they can get the required products on
credit to prevent stock-outs.

2. Service industry

The business operations of a service business are divided into the front-end and
back-end side of the business. The management must ensure that the two divisions
are running efficiently to prevent laxity on one side, which can hinder the
achievement of the company’s objectives. On the front end, the business should
focus on streamlining the service delivery to customers to increase their satisfaction.
It should also formulate a means of receiving feedback and complaints from
customers to know their expectations and how to improve service delivery.

On the back end, the management should employ the right people in each
department. For example, the company should appoint trained and experienced staff
to prepare forecasts for client projects to prevent the actual costs from exceeding
client budgets.

3. Manufacturing industry
Manufacturing companies are involved in turning raw materials into physical
products, which are then sold to consumers. One of the things that a manufacturing
company can do to achieve efficiency is to source quality raw materials from credible
suppliers. For perishable and edible products, the business should look into how raw
materials are stored, processed, and shipped to consumers.

The company can also eliminate bottlenecks that increase processing times to save
time during manufacturing and shipping. If the company is struggling with shipping
logistics, it can outsource shipping and concentrate on other areas of the business
that it excels in.

4. Technology industry
The key to streamlining operations of a technology company is hiring the right staff
and training them on how to execute the tasks they are assigned. This means that
the company should put a hiring criterion in place that helps them hire the best
candidates for the job. The company should also come up with an internal training
and mentorship program where senior staff works hand-in-hand with junior staff to
help them perfect their skills.

Another way of increasing efficiency is by collaborating the different tools such as

apps, websites, and systems that the company uses. The company’s management
should continually monitor internal and external processes to spot any glitches and
address these issues quickly.
How to Improve Business Operations
The following are some suggestions that businesses can use to improve business
operations:

1. Measure performance

A business should come up with realistic and actionable means of measuring its
business milestones. The process of measuring performance starts from the goal-
setting stage. The company’s management should set achievable objectives with
clear targets. For example, the goal of achieving a 30% increase in revenues is more
actionable than setting a goal to make more money in the next financial period. The
company should then implement a measurement system that determines how well
the business is doing against the goal targets.

2. Keep up with the latest trends

A business should stay up to date with what happens in the industry to get ideas on
how to get better than the competition. Trends can take the form of new innovation,
changing state and federal laws, or changes in the local economy. Knowing the latest
trends and changes in operations can help the company find new systems that
improve performance and cut costs, or that help the company stay compliant with
new regulations.

3. Streamline processes

Another way of improving business operations is to evolve with changes in the

industry to increase productivity. The management should continually be on the
lookout for new tools, software, and equipment that improve and ease critical
processes.

For example, where the business uses manual methods to manage inventory, the
management can acquire an inventory management software program that
automates most of the processes and saves both time and costs.
Operations Management: Understanding
and Using It
What Is Operations Management?

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.

Operations management teams attempt to balance costs with revenue to achieve the highest
possible net operating profit.

Key Takeaways

 Operations management (OM) is the administration of business practices to create the

highest level of efficiency possible within an organization.

 Operations management is concerned with converting materials and labor into goods and
services as efficiently as possible.

 Corporate operations management professionals try to balance costs with revenue to

maximize net operating profit.

Understanding 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
needs and the company’s abilities.

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.

This aspect of a company 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 how large an inventory order to process and when to do so as well as how much
inventory to hold on hand.

Important
The combination of understanding and coordinating the work of a company is central to becoming a
successful operations manager.

Operations and Supply Chain Management (OSCM)

A critical function of operations management relates to the management of inventory through

the supply chain.1 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 ample 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.

Another large facet of operations management involves the delivery of goods to customers. This
includes ensuring that products are delivered within the agreed time commitment. Operations
management also typically follows up with customers to ensure that 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.

What Operations Managers Do

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 and innovation. As part of their daily
responsibilities, operations managers must possess a variety of skill sets, including:2

 Technical expertise in areas such as production automation, data entry, budget tracking, and
design.

 Organizational ability and attention to detail, including keeping track of project files,
employee reports, budgets, schedules, and other details related to company processes.

 Motivational prowess in the form of strong leadership skills that provide the expertise to
motivate others, inspire ideas, and foster a supportive and diverse team.

 Analytical aptitude, including skill in risk analysis and mitigation when initiating new
projects. Operations managers must also analyze processes to identify challenges and offer
solutions if negative situations develop.
  Decision-making proficiency, especially under stress, when there is very little time to assess
all factors.

 Ability to maintain quality standards, including as they relate to raw materials, machinery,
manufacturing procedures, packaging, delivery processes, and the finished product.

A master of business administration (MBA) degree in operations management can provide a global
perspective on industry trends and an awareness of financial regulations and political uncertainties
that can affect an organization. It also provides a solid grasp of the inherent complexities and the
tools needed to respond effectively to change.

What Is the Purpose of Operations Management?

Operations management (OM) is concerned with controlling the production process and business
operations in the most efficient manner possible. OM professionals attempt to balance operating
costs with revenue to maximize net operating profit.

What Are Some Systems of Operations Management?

Modern operations management revolves around four theories:

 Business process redesign (BPR), which is focused on analyzing and designing workflow and
business processes within a company. The goal of BPR is to help companies dramatically
restructure the organization by designing the business process from the ground up.

 Reconfigurable manufacturing systems, which are designed to incorporate accelerated

change in structure, hardware, and software components. This allows systems to adjust
rapidly to the capacity at which they can continue production and function efficiently in
response to market or intrinsic system changes.

 Six Sigma, an approach that focuses on quality. The word “six” references the control limits,
which are placed at six standard deviations from the normal distribution mean. Tools used
within the Six Sigma process include trending charts, potential defect calculations, and other
ratios.

 Lean manufacturing, which is the systematic elimination of waste within the manufacturing
process. This theory sees resource use for any reason other than value creation for
customers as wasteful and seeks to eliminate wasteful resource expenditures as much as
possible.

What Is an Example of Operations Management?

Operations management is prevalent and most easily understood in the healthcare sector. The
current healthcare system overuses expensive, technological, and emergency-based treatment. High
costs from care often remain uncompensated due to uninsured patients. The high frequency of
services in expensive settings creates a burden on taxpayers, health insurance holders, and
healthcare institutions.

To combat this, operations management seeks to streamline costs through optimally allocating
resources and optimizing efficiencies to provide quality patient care.

The Bottom Line

In simple terms, operations management (OM) is the process of prioritizing and employing business
practices designed to achieve maximum efficiency as a means to achieve maximum profitability.
Within the process, operations managers utilize organization and productivity to achieve their
primary goals.

Balancing the efficient use of resources, including staff, materials, equipment, and technology, is key
to a successful OM process and, by extension, the success of the company.