Operations Management: Functions,

Importance, Scope, Nature

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What is Operations Management?

Operation management means the administration of business activities
for attaining higher efficiency. It is a process of planning, organizing,
and supervising the operations of the business for better productivity.
Operation management aims at reducing the cost to business by avoiding
any wastage of resources.

Functions of Operations Management

• Finance- Finance plays a main function in operations management. The
operation manager should not waste finance in unproductive tasks. He
should ensure that all finance of the organization is utilized for the
manufacturing of useful goods or services which may satisfy consumer
wants.

• Operation- The function of operation management is basically concerned

with planning, organizing, directing and controlling of daily routine
operations of an organization. The operation manager ensures that all
activities are going effectively and efficiently.

• Strategy- The strategy formulation is also the main function of operation

management. The operation manager should have pre-planned tasks.
Formulation of plans and tactics helps the organization in optimizing their
resources and developing a competitive edge over competitors.

• Product Design- It is the duty of operations manager to design the product

according to the market trends and demands. He should ensure that
innovative techniques are incorporated within the product and its quality is
maintained.

• Maintaining Quality- Operations managers should ensure a better quality

of products. The manager should not compromise with the quality of
Products. They should work on quality management and should supervise
all tasks. If any defects are found they should take steps to rectify such
defects.
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Importance of Operations Management

• Helps in achievement of objectives: Operations management has an
effective role in the achievement of pre-determined objectives of an
organization. It ensures that all activities are going as per plans by
continuously monitoring all operations of organization.

• Improves Employee productivity: Operation management improves the

productivity of employees. It checks and measures the performance of all
people working in the organization. Operation manager trains and educate
their employees for better performance.

• Enhance Goodwill: Operation management helps in improving the goodwill

and presence of the organization. It ensures that quality products are
delivered to all customers that could provide them better satisfaction and
makes them happy.

• Optimum utilization of resources: Operation management focuses on

optimum utilization of all resources of the organization. It frames proper
strategies and accordingly continues all operations of the organization.
Operation managers keep a check on all activities and ensure that all
resources are utilized on only useful means and are not wasted.

• Motivates Employees: Operation management helps in motivating the

employees towards their roles. Operation managers guide all peoples in
performing their roles and provide them with better atmosphere.
Employees are remunerated and rewarded according to their performance
level.
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Scope of Operations Management

• Increase Productivity: Operation management played an important role in
increasing the productivity of business. It manages all aspects of production
activities to achieve highest efficiency possible. Operation manager are
responsible for designing production plan for carrying out the operations.
They ensure that all inputs used by organisations are efficiently
transformed into outputs that is products or services. It is crucial for all
business for properly managing their day to day activities and efficient
utilisation of all its resources which helps in raising productivity.

• Raises Revenue: Operational management directly influences the

profitability of the business. It works on reducing the cost of operations to
business by reducing the wastage of resources. Operations managers
monitor every production activity and take all necessary steps for
maintaining efficiency in the organisation. They try to maintain an
appropriate balance between cost and revenue.
Maintenance of quality of products and delivering them as per customer
needs is another function played by these operation managers. It helps in
attracting more and more customers which increase the overall revenue of
business.

• Achievement Of Organisation Goals: Every organisation strives towards

achievement of its desired goals. Proper management of production
activities helps business to properly implement their strategic plans in their
operation. Operation management ensures that all operations of business
are going in desired direction.
It regularly monitors every activity and takes all corrective measures as
required according to prevailing situations. Proper functioning of business
as per strategic plans helps in achievement of desired goals.

• Improve Customer Satisfaction: Customer satisfaction is necessary for

every business to improving its relations with its customers. It helps them in
retaining them for the long term. Operation management monitors the
quality of products manufactured by organisations. It ensures that high-
quality products are produced in accordance with the requirements of
customers. When products manufactured by business completely fulfil the
needs of customers, their satisfaction level will improve.
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• Reduce Investment Need: Operation management reduces the additional

capital requirements of the business. It ensures that all capital employed in
the business are efficiently used. Management of operations ensures that
all production activities go uninterrupted without any shortage of capital.
By increasing the efficiency and avoiding the wastage of employed
resources, it avoids any deficiency of capital in business. Businesses are not
required to invest more in their production activities.

• Enhance Goodwill: Maintaining proper goodwill in the market is the goal of

every business. Operation management focuses on improving the position
of the organisation in the market. It ensures that business works for
providing better services to its customers. Business should manufacture
durable and high-quality products that may provide better satisfaction to
users. Customers will gain confidence in their products which will improve
their market image.

• Improve Innovation: Operation management helps in implementing

innovative changes in organisational activities. All decision regarding
production planning is taken by operation managers by doing research and
analysis of prevailing market situations. It takes into account all
technological changes and builds a strong base of knowledge and
operations. This helps in bringing various innovations in operations of the
business.

Nature of Operation Management

• Dynamic- Operations management is dynamic in nature. It keeps on
changing as per market trends and demands.

• Transformational Process- Operation management is the management of

activities concerned with the conversion of raw materials into finished
products.

• Continuous Process- Operation management is a continuous process. It is

employed by organizations for managing its activities as long as they
continue their operations.
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• Administration- Operation management administers and controls all

activities of the organization. It ensures that all activities are going
efficiently and there is no underutilization or mis-utilization of any
resource.

Conclusion
Managing each and every aspect of organisation operations efficiently is
key role of operation management. It focuses on raising the profit of
organisations by maintain a proper balance between cost and revenue.
This process ensures that all resources like raw materials and labours are
efficiently utilised by organisation for production of its goods or
services.

Operation management monitors and controls the entire production

system of organisations. Operation managers are responsible for
fulfilling all requirements of customers by delivering them products as
per their needs. They take all crucial decisions relating to production
process like product and process design, production planning, inventory
control, quality control, capacity etc.

All these decisions are taken by them by doing research and analysing
properly the prevailing situations. They work towards strengthening and
enhancing the production system to minimize the wastage and maximize
the output. The whole activities of operational management revolve
around the conversion of inputs into outputs that is various products that
every organisation manufactures.