Operational management is needed in a business to control production activities. A business requires supervision of several elements supporting its activities. Such as finance, marketing, and also production which are included in operational activities.
This management is a plan that focuses on production activities. His job is to ensure the production process is maintained and running as it should. This management must also ensure that the production process is maintained and its development proceeds as planned.
Operations manager is fully responsible for the running of operational management. Operations manager is responsible for supervising and managing operational processes. Starting from the process of converting raw material resources, energy, and labor into goods and services. Or in other words, must be able to manage the process of converting input into output.
Operations manager is a very important position in a business. Because operations are one of the company's strategic functions. As is known, there are three strategic functions of the company, namely marketing, finance, and operations. This means that operational management has an important position to perfect the company's strategy. Also has an interest in ensuring the company can survive long term in good shape.
To be clear, operational management is the management used to design strategies and organize the company's practice activities. Of course the ultimate goal is to increase the company's income . The following are important points about operational management that you should understand.
Understanding Operational Management
Operational management is a part of management that is closely related to supervising, designing, and controlling production activities. In addition, this management is in charge of controlling production activities and the process of improving the strategy of business activities in terms of the production of goods and services.
Operational management activities are closely related to various company activities in changing the basic input series. Such as changing inputs of raw materials, energy, consumer needs, information, company capabilities, company finances, and others into outputs for consumers.
His field of work is also broad, relating to other parts of the company. As with the marketing, sales, finance. This is where the real operations manager plays a role, which must be able to carry out operational management as well as be involved in its operational activities. Operations manager who is a liaison in every area of production coverage to product distribution.
Operational management is closely related to the technology owned by the company. Businesses that have a basic modern technology will obviously be better able to compete and survive. Conversely, companies that do not use technology will find it difficult to develop. An example is the use of software in operational management in assisting the production process which currently has very limited references. Grameds can learn about it in the Operational Management Practicum book below.
It means that it has been answered, that operational management does focus on the process of converting inputs into outputs. This management must be able to ensure that the company carries out the process well, and is carried out efficiently and effectively.
Operational management work includes procuring goods or services from related sources, establishing good relations with parties involved in operational processes, and improving the company's ability to optimize resources.
The Importance of Operational Management for Companies
Why is operational management so important? This management assists in several areas of operational management. As explained in the following points.
1. Helping companies achieve their goals
Operations management helps companies in achieving company goals. This management must be able to ensure that all company activities run properly.
2. Help increase worker productivity
Operations management helps workers be more productive. The operations manager as the person in charge of this management is obliged to train and educate workers.
3. Help increase goodwill
Good intentions here mean the company's goal in running its business to provide satisfaction to customers. Operations management helps the existence of the company, it also helps to achieve this good will. This management ensures to deliver the best products for the sake of customer happiness.
To achieve this means that operational management must be able to increase the utilization of company resources. Management must plan, control all activities, and ensure that all resources are used efficiently.
4. Help Motivate Employees
This management helps employees understand their role in the company. These workers are under the supervision of the operations manager so that they can work according to the assigned portion in a supportive atmosphere. Workers will also be rewarded and rewarded according to their performance.
Operational Management Objectives
This management is in charge of managing all the resources owned by the company. These resources are in the form of raw materials, workers, machines, and other equipment, and ensure that the entire production process runs efficiently and effectively. The following are the objectives of operational management.
- This management aims to improve the efficiency of the company, or also known as efficiency.
- Has the aim of increasing company productivity, or also known as productivity.
- Aims to minimize the company's expenses for various activities, also known as the economy.
- Has the aim of improving the quality of the company, or also known as quality.
- Has the goal of controlling the production process time to a minimum, also known as reduced processing time.
Operational Management Features
Basically there are three characteristics of operational management, namely:
1. Having the goal of producing goods and services.
The very first characteristic of this management is that it has the aim of managing all activities of producing goods and services to generate income. This management is in charge of controlling all production activities and ensuring the company makes a profit.
2. Have a change process activity
The process of changing or transforming is all activities or part of activities that take one or more inputs, change them, then provide use value, until finally they become outputs for consumers.
An example of a transformation for an input will be easier to identify if it is clearly defined. For example, the input of yarn which is converted into cloth, or flour which is converted into pastries and cakes. However, identification will be difficult if what is changed is the input of people or information. For example, a clinic that changes input from sick people into healthy ones. Then the television station that turned the results of the interview into news.
3. There is a control mechanism for an operation
The last characteristic of operational management is the existence of a mechanism to control the operations of a business. This mechanism must be applied to all business departments, such as for improving product quality, reducing waste, as well as increasing sales.
Operational Management Function
The purpose of operational management applied in a company is to achieve a more efficient level of activity. This management has several functions to facilitate this goal. These functions include planning, organizing, and supervising business operations for better production results.
Control over the company's operations is also aimed at minimizing production costs as well as avoiding excessive use of resources. In order to achieve these objectives, operational management has several functions which cover the following areas.
1. Finance
The most important complementary element in operational management is finance. This management must be able to ensure that the company's finances are used according to plan and do not go off track. These finances must be used for the production of quality goods and services.
Appropriate finances can certainly facilitate the process of creating optimal products and services. Of course, goods and services are intended to meet customer needs as a whole.
2. Strategy
Operational management functions are used in formulating business strategies to optimize company resources, as well as increase competitiveness with other companies. The business strategy in question includes the procurement of raw materials, marketing, financial capability, and optimization of human resources.
3. Operation
This management function is closely related to the company's operations which include planning, organizing, directing, and controlling all business activities. The main function of operational management is related to all company activities. Where the task is to help convert raw materials and worker services into quality products and services for customer satisfaction.
4. Product Design
Modern technology makes selling easier and the process simpler. The function of operational management here is to ensure that products are made according to the wishes and needs of the market. The market or consumers are certainly very concerned about the quality. Therefore, the resulting product must be ensured that it is durable and of high quality.
5. Maintaining Quality
The quality of the products produced by the company must be ensured by the existing system in operational management. The management team must control and ensure that goods and services are free from defects. They must also supervise workers in carrying out their duties. If there is a defect in the product, the team must act immediately to fix it.
6. Prediction
Prediction is an estimate of future events using software. In operations management, predictions are used to estimate consumer demand for a product. This prediction relates to the number of products that consumers need for a certain time.
The existence of operational management in a company will help increase productivity in it, but there must be a design and management of activities carried out by the company to run it well which you can learn in the book Operational Management Strategy & Analysis.
Operational Management Functions in Business
There are four operational management functions in a business, as described below:
1. Planning
This stage starts from determining the type of production of goods and services, as well as the right time to market them. This includes planning the resources and facilities used to make a product. The operations manager's responsibility is in terms of developing programs, policies, as well as the need for procedures in achieving business operational goals.
2. Organizing
The number and type of human resources must be determined for the smooth running of all activities. In other words, operations managers form the composition of workers, either individuals, groups, or departments in an operational system to achieve company goals.
3. Reviewer
The review stage includes all activities in obtaining information about the activities carried out in the company's operational activities.
4. Supervision
Supervision functions to control all activities with the aim of directing and ensuring that all company activities run as planned.
Operational Management Strategy
In studying operational management strategies, we must know that there is a running system in it, as described in the book Distribution Management Operational System which Grameds can read below.
The most effective way to develop a strategy is to understand the various resources the company has. Because the strategy is strongly influenced by the company's internal elements such as, the company's resources in the form of technology and external problems, namely market share.
In fact, many companies develop strategies by combining internal and external factors.
1. Strategy Content
Strategy here is closely related to meeting market needs, as well as taking advantage of various opportunities for more potential market share. Strategy is very dependent on the company's plans. Still, in the preparation of an operational management strategy there are some important content.
2. Design process
This content contains research, forecasting, and development activities. Where all these activities require expertise as well as energy whose results can last a long time.
3. Innovation
Is the process of updating the company's output in order to compete with the times.
4. Data usage
It is an analytical activity that is important for planning, adjustment, and also making the right decisions.
5. Supply chain management
It is management that regulates the company's relationship with producers who supply raw materials.
6. Inventory analysis
It is an activity that manages the company's inventory, and shares it in ABC analysis. The inventory held is divided into 3 categories A, B, and C. Category A has the most value and control, while C has the least.
7. Production control
Is an effective and efficient operational management of the process.
8. Collaboration between departments
Based on a good collaboration and communication system, operational management can collaborate effectively with finance, marketing, sales, human resources, and other departments.
9. Managing human resources
Management that regulates the company's workers, the level of customer satisfaction, as well as quality control.
In fact, this management strategy should include the following:
- The company's capacity needed to achieve its goals.
- Time and place of facilities.
- Technological resources to develop processes and products.
- Establishing relationships between ideal consumers and suppliers.
- The process of introducing new products as well as services.
- The organizational structure as a description of the company has implemented the plan well.
The following are some areas of activity that require operational management expertise in their implementation.
- Factory manager, has expertise in production planning, purchasing and inventory management. This includes control over workers in operations and other resources.
- Purchasing director, related to the purchasing function, expertise in analyzing sales, establishing good relationships from suppliers to distributors, and coordinating company operations.
- Quality manager, supervising all quality concepts. Because quality is a shared responsibility.
- Process improvement consultant, activities related to process design as well as consulting on various process improvements.
- Supply chain managers and planners, fully responsible for the cooperation talks between companies with suppliers and distributors.
Studying operational management is not an easy thing, as we can see in the book Airport Operational Management which makes Soekarno Hatta airport a case study, where with the rapid development of the aviation business, negligence often occurs due to a lack of understanding of operational management operations.
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