What Is Operations Management and Why Is It Important?

Running a successful business requires careful attention to many significant factors. One of the first warning signs of a poorly managed company is reflected in its operations, which can lead to customer dissatisfaction and poor quality outputs.

Operations management is a smart way of doing business that affects everything — from how resources are used to how customers are taken care of.

By doing operations management right, companies can improve how they work, save money, make customers happy, and achieve long-term success.

Read on to learn about operations management, operations roles, operational processes, and tips for implementing best practices.

TL;DR: Operations management

• Operations management involves overseeing business processes to increase efficiency and profit.
• Operations management is crucial for customer satisfaction, production quality, and employee satisfaction.
• Key responsibilities include managing processes, collaborating with teams, and tracking production.
• Essential skills for success include communication, leadership, problem-solving, and analytical thinking.
• Implementing basic operations management functions and technology tools like Scribe can improve business operations.

What is operations management?

Operations management is the supervision and regulation of business systems or processes that use physical labor and materials to create goods and provide services.

In short, operations management (also known as ops management) is the complete management of all workflow within any business operation.

Operations management is used to organize and produce smooth movement and transition of business functions. By doing so operations management enables a business to:

• Increase efficiency.
• Increase and maximize profit.
• Ensure consistency and upward movement.

An operations department keeps control of day-to-day workflow like:

• Managing inventory and supply chain.
• Maintaining production rates and quality control.
• Project costs.
• Supervising various departments.
• Developing operation strategy.

Operations management involves everything from product development to staffing employees and executing business plans. 

📌 ‎Related resource: Maximize Operational Efficiency with IT Operations Management

Why is operations management important?

Operations are the foundation of a business. A profitable business starts with effective business operations. Poor business operations can be unreliable and result in profit loss. Operations management:

• Gets a business going.
• Keeps a business running.
• Ensures the success of a business.

Customer satisfaction

A business's reputation is directly affected by operations management. The success — or lack of success — of all departments within a business results from the business operation. If a business operation runs productively, that business is more likely to ensure consistent customer satisfaction.

For example, when working to address customer concerns, a customer service team will turn to the operations department for:

• Guidance.
• Solutions.
• Resources.

As consumer behavior has evolved, there is now a greater emphasis on brands that can deliver value in their services and products.

Production and quality

Two key things consumers are looking for in a business are:

1. Consistent production rates.
2. Product quality.

When evaluating a purchase, a person expects the products they are looking for to be up to their standards. If those products are not present or seem to be of lesser quality, the consumer will:

• Be disappointed.
• Likely choose an item from another brand.
• Possibly not purchase from that business again.

Losses in loyal consumers can lead to profit loss and poor business reputation. Consistent production rates and acceptable product quality are two major preventative processes.

Production rates and product quality are determined by a successful operations process. An operations process is developed and monitored by the operations department.

Production and quality assurance within a business relies on the operations team for:

• Strategic planning and process development.
• Process monitoring.
• Quick analysis and correction of any flawed process.

Employee satisfaction

Employee satisfaction is a priority within many businesses. Those in positions of leadership understand that their employees are a huge part of what keeps their operations running.

A few ways effective operations management within a business can enhance employee satisfaction are:

• Giving clear instructions.
• Setting clear expectations.
• Providing necessary training and resources.
• Addressing employee concerns.

Employees who feel respected and supported perform more consistently, which results in consistently effective business operations and a positive company reputation.

Most departments within a business are linked to the company's operations department in some way. Some departments utilize the operations team to ensure operational efficiency while others need assistance with operational improvement. In either case, the operations team is or has the potential to be involved with other departments within a business.

Operations management key responsibilities

There is a very long list of responsibilities that can fall on an operations department. Operations managers are expected to keep an entire operations process moving at a consistent and profitable pace while ensuring both employees and employers are satisfied.

A few of the main and most common responsibilities are:

• Creating, implementing and managing business processes.
• Collaborating with managers, other team leaders, and those working within the operations department.
• Keeping track of production, distribution, quality assurance, and customer satisfaction.
• Managing company finances.
• Maintaining stockholder and supplier relationships.

The everyday duties of an operation manager can be quite draining. However, if there is clear communication and a well-organized operational plan in place the life of an operations manager can be much less stressful. 

Organizational tools like Scribe are designed with operation managers and other team leaders in mind. Scribe is an easy-to-use process documentation tool that auto-generates any process into step-by-step guides, tutorials, training manuals, and SOPs.

Scribe's AI-powered documentation takes the hassle out of task completion by offering tools that allow:

• Instant, automated process documentation.
• Auto-filled and editable descriptions, headers, etc.
• Document sharing.
• And more!

‎How? Scribe auto-captures any process you’re performing on your device or browser and turns it into an easy-to-follow document with annotated screenshots and text — in seconds.

• Use Scribe Pages to combine multiple guides in one process doc and write step-by-step documentation based on your unique processes, saving time.

• Quickly and easily edit and update your documentation — with universal updates, any changes are made wherever your Scribes are saved.
• Easily organize your documentation in the Scribe platform by creating folders for different tasks, tools, or departments.
• Sharing and integrating guides outside Scribe is easy, with options to share in one click or embed into a knowledge management platform.
• Scribe facilitates smooth collaboration for teams, allowing members to improve guides, add notes, or ask questions.
• Reduce the risk of sharing sensitive information with Smart Blur — simply specifying data categories to be redacted automatically or manually blurring out elements (Scribe Pro).

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No matter your industry, Scribe can save time and boost productivity. For example:

• A manufacturing company can use Scribe to document assembly processes, reducing errors and improving production efficiency.
• A service provider can use Scribe to document customer onboarding procedures, leading to improved customer satisfaction.
• A hospital can use Scribe to document medical protocols, ensuring compliance and patient safety.

💡 See ‎how operations teams use Scribe to complete everyday tasks in half the time they would normally take.

Skills for operations management success

While there are many skills that can be very useful in operations management, a few are essential for success.

Communication

Communication is key, right? In operations management it really is. Productive communication leads to a productive operations process. A productive operations process leads to business success.

The business processes, within most departments:

• Start with the operations department.
• Are monitored by the operations department.
• Will be corrected, if needed, by the operations department.

It is very important for an operations department to ensure effective communication between themselves and other departments within a business.

Leadership and the ability to motivate

It is important that an operation manager is able to motivate and lead their team. An unmotivated and disorganized team may struggle to reach and maintain company or consumer expectations. A motivated and well-led team is usually a productive and consistent team. Take for example:

• Sports teams.
• News and weather broadcast teams.
• Road construction teams.

Within all of these examples, there are levels of authority and a process system in place. Those in a leadership position need to be able to confidently instruct and effectively motivate the rest of the team.

Problem-solving and analytical thinking

In every business, at some point, something within an operational process will go wrong. It's important for anyone working in an operations role to be able to respond quickly and effectively to any issue within a business process.

Production or shipping and receiving are departments that can immediately effect the consumer. Unhappy consumers can result in:

• Poor consumer reviews.
• Poor reputation for that business.
• Negatively affected consumption rates.

Issues within these departments, and others that greatly affect business success, need to be resolved right away.

Linked to problem-solving, analytical thinking is an important skill for operations management professionals. It is helpful to be able to:

• Identify a problem through data analysis.
• Review and understand a problem based on information collected through data analysis.
• Effectively develop and implement solutions to a problem using data analysis.

Skills like the ones listed above can play a very helpful part in preventing and solving problems within a business process.

Operations management across industries

Most business industries are involved in some form of operations management. Any business that uses a process of any kind to complete tasks manages that process in one way or another.

With larger and more complex operations, however, all things pertaining to operations management are assigned to qualified individuals. Think of industries like:

• Manufacturing.
• Healthcare.
• Finance.
• Shipping & receiving.

Larger industries like the ones listed above usually have very large and sometimes complicated business operations. In this case, responsibilities that fall on operations management teams will be separated and organized by job function and assigned to different operations managers. A few of the most common operations roles are:

• Supply chain specialist.
• Production manager.
• Logistics coordinator.
• Purchasing manager.
• Material manager.
• Operations research analyst.

There are, however, many titles and roles that can fall into the operations management category.

📌 ‎Related resource: Implementing a Digital Operations Framework

Key principles of operations management

A few foundational components or principles of operations management are:

• Quality assurance.
• Inventory control.
• Process improvement.
• Supply chain management.
• Data analysis.

Inventory control and supply chain management

Inventory control monitors a business's stock levels and ensures the right amount of supply is available. Without proper inventory control, a product-based company may sink.

Supply chain management is like the life source of inventory control. Through supply chain management, all things pertaining to inventory control are monitored. Supply chain management ensures consistency and productivity of:

• Data collection.
• Planning.
• Sourcing.
• Production.
• Shipping and receiving.

Productive supply chain management has the potential to keep up and even greatly improve inventory control. Well-managed inventory control enhances a business's consistency and reputation with its consumers.

Data analysis

Data analysis is the collection and inspection of data in order to find useful information within that data. The information found through data analysis can be used to:

• Find and resolve problems within a business process.
• Guide decision-making.
• Keep teams informed.

One way data analysis is extremely beneficial is in preventing future problems. Data analysis can be used to track business processes and predict where something may go wrong before it happens. Then, a business has a chance to implement a preventative solution.

Process improvement and quality assurance

Process improvement is another responsibility that usually falls on the operations management department. There is always room for improvement in any process and consistent improvement can lead to:

• Faster and more reliable production.
• Improved quality of products and services.
• Better customer service and satisfaction.
• Greater profit percentages.

A poorly functioning process can slow business performance and success rates. In this case, process improvement needs to be implemented right away.

Quality assurance is a great preventative process. It is crucial in the development and success of any business. Consumers want a business to provide products or services that meet their expectations.

When a consumer is not happy with what they have received from a business, they are much less likely to become repeat customers. Without being solved, this issue can lead to:

• A poor reputation.
• Inconsistent consumers.
• A drop in profit.

The purpose of quality assurance is to make sure a business's products or services do, in fact, meet consumer expectations. This is done by applying systems of organization like:

• Time management.
• Communication.
• Attention to detail.
• Problem-solving.
• Team collaboration.

Operations management: tips for getting started

Operations management is vital to even the newest and smallest of businesses. Whether working within a huge corporation or running a small independent business, operations management is a main factor in business success.

A few ways to prepare for a position in operations management are to:

• Earn a Master's of Business Administration.
• Gain relevant experience.
• Take relevant courses for further education.

For businesses as a whole, it is important to implement basic operations management functions, such as:

• Clear instructions and communication.
• Data collection.
• Organization.
• Time management.
• Standard operating procedures (SOPs).
• Operations manuals.

Staying on top of these important factors will help improve business operations and build overall business success. A few ways to ensure these basic functions are implemented are to use processes like:

• Process documentation.
• Knowledge sharing.
• Schedule production and implementation.

Although tasks like these can be time-consuming and become overwhelming, technology has proven to be extremely helpful.

Using AI-powered tools like Scribe can be a game-changer for you and your team. With Scribe, you can:

• Document your everyday tasks for you, while you do them — no extra work!
• Easily create documentation using AI tools and SOP templates.
• Share documents with the click of a button.

If you're looking for consistency and reliability in a tool that allows you to streamline your operations management, Scribe is the tool for you. Sign up for Scribe today and start creating operations documentation for free!