Operation management is the management of the process of activity in an enterprise. But such a definition is too vague to understand the essence of such a phenomenon and, more importantly, to understand its effectiveness.
Although the outlined set of procedures has been in operation for a very long time, more than 100 years ago, its full application is rather a matter of chance. Although it is a great option for companies seeking an innovative structure to streamline and optimize their business. There is nothing “breakthrough” about it. The mechanism has been used for many years and has proved itself as a reliable and productive system. We will talk about it in more detail in the review.
History Of Appearance
Two names, Frederick Taylor and Henri Fayol, are closely associated with the birth of this phenomenon. The first is a citizen of the United States, the second – France. Scientists-economists developed the most basic concepts in the context of the general branch of business management. This was only a small section that included the fundamental notion of implementing optimization in any enterprise. Only with the interconnectedness of all phases of activity can positive dynamics be achieved.
And already in 1913, these parameters were first tested in applied tasks. Namely in conveyor production at the Ford plants. And by the ’70s, the theory had finally found its current form. An extended toolkit appeared that solved many application problems, as well as general functions for internal and external procedures.
Operational Decisions In Management
Initially, under the basic concept, the meaning of procedures was exclusively to optimize a single phenomenon in the internal business. For example, to increase the efficiency of the production process. But in the future, the functions expanded, as already specified. And as a result, the main aspect became continuous improvement. It would seem that if the system in production works as it is, why re-engineer it, why invent something? But, if we don’t allocate a certain percentage of profit from turnover to direct capital for continuous improvement of technical parameters of production, then over time stagnation occurs.
This affects not only technology but all other aspects as well. The system of resource consumption, delivery, distribution, communication of the various employees, payment via pay stub email sample, acceptance of goods, and so on. All points can be made a little better, faster or cheaper. In the end, this dynamic of constant progression can bring the company forward during competition. After all, an operation in management is absolutely any procedure that affects the final margin in one way or another. To clarify the situation: even if it’s too slippery on a production outdoor site after it rains – it can potentially cause profit margins to decline.
Let’s say one in ten employees slips and one in a hundred gets injured, which takes them out of the workflow for a day. And once a year, it causes a product cart to overturn on the site, which is supposed to transport goods from the facility to the warehouse. Of course, on the face of it, these are ordinary costs, why, in principle, analyze them? But if there is a pattern, it’s easy to see what the loss is. Let’s say it’s $2,000 a year. How much would it cost to sprinkle the site with sand during an unfavorable season? Again, notionally, $1,000. In the end, by optimizing this point, we will win $1000 net profit.
The Main Goals and Objectives of Operational Management:
- More profits, more added value.
- Better products and/or improved properties of the services rendered.
- It is obvious that as the level of quality increases, the demand for products will also increase. The correlation is not direct, however, very clear. Therefore, this aspect will also affect the increase in margins.
- Develop a system that is common to all class internal processes. Common procedures for all actions for the business.
- Reducing expenses, costs while maintaining the current level of income as well as profits. Accordingly, search for weak points, leaks, on which positions additional expenses arise, how they can be avoided.
Any example of operational management is a type of management in which all current business processes are optimized to the maximum extent possible. That is, an organization must install such a system at all levels. Which means implementation must be multi-step.
- basic analysis;
- organizational settings;
- reallocation of resources;
- adjustments or changes in employee authority;
- making adjustments to incentives;
- changes in the technical base.
Management process operations management refers to strategic planning. It is an important part of shaping financial strategy as a whole, as well as the main way to survive a particular war. Therefore, to ignore such a layer is disastrous for the company.