What is 'Operations Management'

Operations management refers to the administration of business practices to crea

te the highest level of efficiency possible within an organization. It is concer
ned with converting materials and labor into goods and services as efficiently a
s possible to maximize the profit of an organization. Operations management team
s attempt to balance costs with revenue to achieve the highest net operating pro
fit possible.
BREAKING DOWN 'Operations Management'
Operations management involves utilizing resources from staff, materials, equipm
ent and technology. Operations managers acquire, develop and deliver goods to cl
ients based on client wants and the abilities of the company.
Specific Responsibilities of Operations Management
Operations management handles various strategic issues including determining the
size of manufacturing plants and project management methods, and implementing t
he structure of information technology networks. Other operational issues includ
e the management of inventory levels, including work-in-process levels and raw m
aterials acquisition; quality control; materials handling; and maintenance polic
ies. Operations management entails studying the use of raw materials and ensurin
g minimal waste occurs. Managers utilize numerous formulas such as the economic
order quantity formula to determine when and how large of an inventory order to
process and how much inventory to hold on hand.
Supply Chains and Logistics
A critical function of operations management relates to the management of invent
ory through the supply chain. Operations management understands local and global
trends, customer demand and the available resources for production. Operations
management approaches the acquisition of materials and use of labor in a timely,
cost-effective manner to deliver customer expectations. Inventory levels are mo
nitored to ensure excessive quantities are on hand. Operations management is res
ponsible for finding vendors that supply the appropriate goods at reasonable pri
ces and have the ability to deliver the product when needed
Read more: Operations Management http://www.investopedia.com/terms/o/operationsmanagement.asp#ixzz4SX1NO4kk
Follow us: Investopedia on Facebook