A Simple Guide to Operations Management

What are the key areas to focus on for operations managers?

Please note that this article is intended for educational purposes only and should not be deemed to be or used as legal, employment, or health & safety advice. For guidance or advice specific to your business, consult with a qualified professional.

Effective operations management is the foundation of any successful business. It’s what keeps costs down, profits up and customers happy. The principles of effective operations management have been the same for many years. It is, however, becoming increasingly common for operations managers to be heavily supported by technology.

What is operations management?

The term ‘operations management’ covers everything needed to allow a business to operate effectively. There is a strategic element to it. For example, it can involve forecasting what resources a business will need.

A lot of operational management is focused on implementation. In fact, think of it as much the same as the backstage of a theatre. It’s everything that goes on behind the scenes to create a great experience for the end-customer.

How to implement great operations management

Ideally, even the smallest of SMEs should have a designated operations manager. The operations manager doesn’t necessarily have to focus solely on operations, but they should be given enough time and resources to be able to give operations the attention it needs and deserves.

Here is a quick guide to the seven main areas an operations manager is expected to manage and their key considerations.

1. Strategy

All business functions should operate mindfully, that is, with an end-goal in mind. Your overall business strategy is laid out in your business plan. This guides individual business functions as they make strategic decisions relevant to their business area.

2. Location

Generally, one of the first decisions a business has to make is where to operate. This has become an increasingly complex decision even for SMEs.

Choosing a country to be your business’s legal headquarters is usually fairly easy. If a business’s founders are based in the UK, it makes sense to base the business in the UK. If you plan to form a limited company, register it at Companies House.

After that, think about where you are going to put your staff, assets and infrastructure. Depending on your business model and preferences, this can mean anything from a single, permanent, on-site location to a fully remote business.

There are a huge number of variations in between. In fact, even SMEs are now likely to be operating a combination of fixed, permanent sites, temporary sites and mobile sites, and employing remote or hybrid workers.

For some businesses, especially larger companies, managing all these different locations is a full-time role in itself. In fact, it can require a whole team. In many businesses, this task is just one part of an operations manager’s overall duties.

3. Processes

In modern operations management, implementing the right processes is arguably the single most important part of the job. Your business plan sets out what needs to be done. The task of the operations manager is to see that it is done in the most efficient way possible. This generally means balancing cost with the business’s overall goals.

Operational management typically deals with the processes required for day-to-day business operations. For example, functions such as quality control, inventory management, supply chain management and logistics are considered operational functions.

Some administrative functions such as human resources and accounting are also often considered part of operations. Functions such as sales and marketing are likely to be considered non-operational areas.

4. Infrastructure

Your processes determine your infrastructure and staffing requirements, with infrastructure generally the higher priority. There are two main reasons for this.

Firstly, your infrastructure often determines your staffing requirements. For example, if you can automate a function, you don’t need to employ a human to do it. This means you don’t need to employ another human to manage them, and so on.

Secondly, you usually need a certain level of infrastructure in place for your staff to work effectively. For example, if you lack communications infrastructure, then your staff are probably seriously hampered when trying to do their work.

This means that infrastructure management tends to form a huge part of any operations management role. In some cases, this requires the operational manager to oversee the creation and maintenance of in-house infrastructure. These days, it is more likely that the operations manager oversees the management of infrastructure ‘as a service’. There are two key reasons for this.

Firstly, infrastructure as a service can typically be scaled up and down with minimal planning. This is perfect for the agile management approaches typical of modern SMEs. Secondly, using infrastructure as a service generally makes it easier for businesses to manage their cash flow.

This means that a large part of modern operations management often relates to supplier management.

5. Supplier management

Even today, when people hear the term ‘supply chain’, they probably still think about the process of procuring traditional resources such as raw materials. This is still true in certain business sectors, especially manufacturing.

In this situation, it’s very helpful to have good relationships with your suppliers. Generally, you do not have to manage them actively. Simply provide your requirements and they deliver them.

Often, supply chain refers to the supply of services. Modern SMEs often have their key infrastructure provided as a service. They also frequently use external suppliers to fill skills gaps or labour shortages.

In this situation, the relationship between the customer and the supplier often becomes one of partnership. Suppliers become genuine stakeholders in their customer’s success, and vice versa. These types of partnerships typically require a relatively high level of interaction between the two partners. Operations management usually either owns or facilitates this.

6. Staffing

In general, each business function has responsibility for forecasting its own staffing needs. If necessary, they also have responsibility for planning the details of where and when these staff are deployed. Human resources manage the overall hiring and onboarding process. They also guide and oversee performance management.

Operations management has ownership of the practicalities of staffing. For example, they organise any equipment an employee needs. This could include anything from a name badge to a desk to PPE. They also organise any special adaptations to this equipment (e.g. to accommodate disabilities).

7. Continuous improvement

The concept of quality control also applies to the management of internal operations. This means that the operations manager needs to have the means to monitor their area’s performance. This allows them to identify areas that could benefit from improvement.

The operations manager should be given enough time and resources to do this effectively. The resulting suggestions should at least be trialled if at all possible.

Useful resources

  • Find out about workplace health and safety here.

  • Learn about the BT switch-off here.

Frequently asked questions

  • What are the three roles of operations management?

    Operations managers have a huge array of responsibilities. Three key areas that they run include planning, organising and controlling/improving.

    Planning involves setting a business’ strategic objectives and deciding how the company is going to use its resources to reach those objectives.

    In the context of operations management, organising describes creating an internal structure for the business, deciding which jobs are needed and making sure that departments are sufficiently staffed to reach their targets.

    Controlling and improving involves making sure that a business both maintains its standards and, where appropriate, exceeds them.

  • What are the four Vs of operations management?

    The four Vs of operations management are volume, variety, variation and visibility.

    Volume refers to the overall amount of products or services the business produces. Some businesses will create a huge amount of products, like fast food restaurants, for example. Others, such as a hand-crafted furniture business, will have a much lower output.

    Variety describes the number of different types of products and services a business produces, and how different they are from each other.

    Variation covers how predictable a business’ operations are. Is there always a spike in sales over certain months and a drop in others, for example.

    Visibility is how much the business sees the customer and vice versa. A restaurant or shop, for example, would have high visibility. Something like a factory, on the other hand, would have low visibility.

  • What are the five basic principles of operations management?

    The five basic principles of operations management are planning, process, people, possessions and profits.

    Planning involves setting goals and strategies and creating budgets. Process describes how the business is run. Technology such as Square’s online checkout and point-of-sale system can help ensure the payment-processing side of the business runs smoothly.

    The people are the staff working for the business. Possessions are the business’ assets and capital, while profit is the money the business generates after all of its outgoing costs have been accounted for.

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