Operations management consists of planning, directing, organizing and controlling the company’s production processes in order to create value.
In this way, through this management activity, the production department decides what makes, how much, how or where. All with the aim of being efficient. This work can be observed in companies that sell tangible products, such as a car. However, it is more difficult to frame if you are dedicated to providing a service, for example, a consultancy.
Origin of operations management
Without wishing to be exhaustive, we are going to establish a brief chronology about this concept and its origin, with its main protagonists:
- We can go back to the 18th century with Adam Smith. This Scottish economist was the first to speak of the division of labor. His ideas were applied in the factories of the time, achieving a considerable productive improvement.
- In the next century, Babbage and Taylor developed their ideas on the scientific organization of work. They are considered by many to be the fathers of operations management, as both focused primarily on the production process.
- Already in the 20th century, the couple formed by Frank Gilbreth and Lillian Moller Gilbreth made a series of discoveries related to the study of movement and comfort in the workplace. On the other hand, they also analyzed human relationships between employees.
- Other big names of the 20th century were Henry Ford and his studies of chain work in his car factory. Henry Gantt who developed the graphs of the same name or Elton Mayo, who in the field of sociology and the Hawthorne experiment discovered the informal relationships between work groups and non-hierarchical leadership.
Main functions of the production manager
The production department, headed by its director, has a number of functions. All of them are related to the production process, we highlight the following:
- Industrial design and product development. This is the planning phase of the production process and of the good or service that you later want to sell.
- Design of production processes. This phase, after the one before, defines how we want to produce. What technology or machinery we will use, the necessary personnel and what will be their attributions or control of the entire process. We can include in this section the location decisions of the factory.
- Inventory management. This activity is essential. In coordination with the purchasing department, it must be decided what raw materials and supplies are necessary.
- Quality and maintenance. These two auxiliary departments are very important in production. In this way, they tend to depend directly on this direction more than on others. The former helps define, among others, quality standards and procedures. The second is in charge of the revisions and repairs so that everything works correctly.
- Finally, in coordination with the sales department, it also manages orders to produce what is demanded in the most efficient way.
Importance of operations management
We can propose, to finish, some reasons why it is recommended that this subject be present in related study plans, such as business administration or finance and the like:
- First, because this activity is the key to any company. Even if we provide a service, it is advisable to have clear and efficient processes. Therefore, the director of operations is one of the most in-demand positions.
- Production is the main activity and one where large losses can be generated. Efficient management can mean the difference between making money or losing it. Therefore, it is important for the survival of the company.
- It is closely related to the other directions. With the financial because it requires investments. With that of human resources, because it needs personnel for production processes. With purchases for supplies and with sales to know what to produce. For this reason, operations management is imperative.