Operational Management: Definition, Purpose, Characteristics, Functions and Strategies

Operational Management – ​​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 that goes into 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 goes according to plan.

The operations manager is fully responsible for the course of operational management. The operations manager is responsible for overseeing and managing operational processes. Starting from the process of converting raw material resources, energy, and labor into the form of goods and services, or in other words, you must be able to manage the process of converting inputs into outputs.

Operations manager is 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. Means that operational management has an important position to perfect the company’s strategy. It is also in the interests of ensuring the long-term survival of the company in good condition.

For more details, operational management is the management used to design strategies and organize corporate 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.

Definition of Operational Management

Operational management activities are closely related to various company activities in changing the basic input series. Such as changing the input of raw materials, energy, consumer needs, information, company capabilities, company finances, and others into output for consumers.

The field of work is also broad, related to other parts of the company. As with marketing, sales, finance. This is where the real role of the operations manager is, which must be able to carry out operational management while being 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 basic modern technology will clearly be more able to compete and survive. Conversely, companies that do not use technology will find it difficult to develop. As an example is the use of software in operational management to assist the production process, which currently has very limited references. Sinaumed’s can study it in the Operational Management Practicum book below.

It means that it has been answered, that operational management is indeed focused on the process of converting inputs into outputs. This management must be able to ensure that the company carries out the process properly, and is carried out efficiently as well as effectively.

The field of operational management work includes procuring goods or services from related sources, establishing good relations with parties involved in operational processes, and increasing the company’s ability to optimize resources.

The Importance of Operational Management for Companies

Why is operational management so important? This management helps several areas of operational management. As explained in the following points.

1. Helping companies achieve goals

Operational management assists companies in achieving company goals. This management must be able to ensure that all company activities run properly.

2. Helps 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 the workers.

3. Helps increase goodwill

Good intentions here mean the company’s goal in carrying out its business is to provide customer satisfaction. Operations management helps the existence of the company, also helps to achieve this goodwill. This management ensures sending the best products for the sake of customer happiness.

To achieve this means operational management must be able to increase the utilization of company resources. Management must plan, control all activities, and ensure all resources are used efficiently.

4. Helps Motivate Employees

This management helps workers understand their role in the company. These workers are under the supervision of the operations manager so that they can work according to the portion given in a supportive atmosphere. Employees will also be given prizes and awards according to their performance.

Operational Management Objectives

  1. This management aims to increase the efficiency of the company, also known as efficiency.
  2. Has the goal of increasing the productivity of the company, also known as productivity.
  3. Aiming to minimize the company’s expenses for various activities, also known as the economy.
  4. Has the goal of improving the quality of the company, also known as quality.
  5. Has the goal of controlling the production process time to a minimum, also known as reduced processing time.

Features of Operational Management

Basically there are three characteristics of operational management, namely:

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1. Have the goal of producing goods and services.

The very first feature of this management is having the goal of managing all production activities of goods and services to generate income. This management is in charge of controlling all production activities and ensuring the company earns profits.

2. Has a change process activities

The process of changing or transforming is the entire activity or part of the activity that takes one or several inputs, changes them, then provides use value, so that in the end it becomes output for consumers.

Examples of transformations for inputs will be easier to identify if their form is clear. For example, yarn inputs are turned into cloth, or flour is turned 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 the input of sick people to healthy ones. Then the television stations that turn the interview results 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.

Operations 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. The functions in question include planning, organizing, and supervising business operations for better production results.

Control over the company’s operations also aims to minimize production costs as well as avoid excessive use of resources. In order to achieve this objective, operational management has several functions covering 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. The finance must really be used for the production of quality goods and services.

Effective finance can be sure to facilitate the process of creating optimal products and services. Of course, goods and services are aimed at meeting customer needs as a whole.

2. Strategy

The operational management function is used in developing business strategies to optimize company resources, as well as increase competitiveness with other companies. The intended business strategy includes the procurement of raw materials, marketing, financial capability, and optimizing human resources.

3. Operational

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 indeed related to all company activities. Where his job is to help convert raw materials and employee services into quality products and services for consumer satisfaction.

4. Product Design

Modern technology makes it easier for sales to be a faster and simpler process. The function of operational management here is to ensure that products are made according to the wants and needs of the market. The market or consumers are of course very concerned about quality. Therefore the resulting product must be ensured durable and quality.

5. Maintain Quality

The quality of the products produced by the company must be ensured by the existing systems 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 produced, the team must immediately act to fix it.

6. Predictions

Prediction is an estimate of future events using software. In operational management, predictions are used to estimate consumer demand for a product. This prediction relates to the number of products needed by consumers 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 from the Strategy & Analysis Operational Management book .

Operational Management Function in Business

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 responsibility of the operations manager is in terms of developing programs, policies, as well as procedural needs 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, the operations manager forms an arrangement of workers, whether individuals, groups or departments in an operational system to achieve company goals.

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3. Reviewers

The reviewer 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 guaranteeing that all company activities run as planned.

Operations Management Strategy

In studying the operational management strategy, we must know that there is a running system in it, as described in the Distribution Management Operational System book that Sinaumed’s can read below.

The most effective way to develop a strategy is to understand the various resources that the company has. Because strategy is heavily influenced by internal elements of the company, such as company resources in the form of technology and external issues, namely market share.

In fact, many companies develop strategies by combining internal and external factors.

1. Content Strategy

The strategy here is closely related to meeting market needs, as well as taking advantage of various opportunities for a more potential market share. Strategy depends heavily on the company’s plans. Still, in preparing the operational management strategy, there are several important contents.

2. Design the process

In this content there are research, estimation, 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 important analytical activity for proper planning, adjustment, and decision making.

5. Supply chain management

Is the management that regulates the company’s relationship with manufacturers who supply raw materials.

6. Inventory analysis

Is an activity that manages the company’s inventory, and divides it in the ABC analysis. Inventory owned 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 capacity of the company needed to achieve its goals.
  • Time and place of facility.
  • Technological resources to develop processes and products.
  • Establish an ideal relationship between 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 several areas of activity that require operational management expertise in their implementation.

  • Factory manager, is an area of ​​expertise in production planning, purchasing and inventory management. This includes control over workers in the operational section and other resources.
  • Purchasing director, related to the purchasing function, expertise in reviewing sales, establishing good relationships from suppliers to distributors, and coordinating company operations.
  • Quality manager, supervises all quality concepts. Because quality is a shared responsibility.
  • Process improvement consultants, activities related to process design as well as consulting on various process improvements.
  • Supply chain managers and planners are fully responsible for discussing cooperation between the company and its suppliers and distributors.

Studying operational management is not an easy thing, as we can see in the Airport Operational Management book 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.

Operational Management Conclusion

After understanding the previous discussion, it can be concluded that operational management is an important system in the company. So the effectiveness and efficiency of operational management have a big impact on the company. This management system has a role to make products produced according to predetermined operating standards. The resulting product must also be able to satisfy consumer needs.

Another thing that must be considered in operational management is a transparent and efficient financial recording process. Good financial records make all business plans work optimally. Financial reports will take place optimally because all reports are presented in accordance with existing facts.

A business with good bookkeeping will make it easier to control its finances. Both finances are included in income, as well as expenses. The company’s capital will also be seen whether it is used according to plan or not. Apart from that, the company’s expenses will be controlled, especially in terms of raw material and production costs. To support management, competent technological resources are needed.

Operational management is needed so that the company can develop optimally. Enrichment of the supervisory system for various departments in the business must be carried out by this management system.

Operational management is the application of management science that aims to regulate all company activities so that they run effectively. This management must contain a management system and must be carried out based on its function. Without operational management, it is feared that all supporting elements of the company’s activities cannot run properly.

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