Why Operations Management is Critical for Business Success

An operations manager is a key person within companies that are large enough to require one. The responsibility is significant because success in this area allows the business to satisfy customers and scale up too. This type of manager works in conjunction with multiple departments to assure the smooth running of the business without any logjams or hold-ups because a department is falling behind. 

Here is why it’s often imperative for busy companies, including ones involved with a manufacturing component, to employ an operations manager in their business. 

To See the Whole Board

While the CEO will look at the strategic overview for the business and the direction they wish the business to go in, the operations manager has different concerns. 

CEO vs Operations Manager

The operations manager is looking at the whole board and figuring out what’s necessary for the company’s operations to run smoothly. So, while the CEO is deciding the direction that the company will be going in, the operations manager has to make it all work. And the larger the company, the bigger the operation and number of problems that need solving. 

CEO Can Focus on Strategy, Not Operations

An ops manager is one that should be a strong early hire for a CEO looking to unburden themselves from running around like a headless chicken trying to manage everything. Thinking strategically is difficult to do when they’re stuck making sure everything keeps working right. While the CEO needs to work on the business – not in it, per se – the operation manager must be in the nitty-gritty. 

Stop Departments Acting as Mini Fiefdoms

There can be a tendency for departments and department heads to act like mini fiefdoms. They defend against criticisms from outside their team. Indeed, sometimes it’s almost like other departments are the enemy and as disliked as industry competitors. 

Any company that’s currently suffering from this issue will find it must be addressed. CEOs that feel like they’re banging their head against a wall trying to get interdepartmental infighting to stop could surely do with an operations manager. 

Their introduction to a business will likely ruffle a few feathers. Indeed, it’s fair to warn the incoming ops manager that their introduction is likely to upset the apple cart initially. However, once forewarned, they will know how to approach the situation and tread carefully with existing department managers to step on as few toes as possible. 

Encourage Productive Liaison Between Departments to Support Coordination

The operations manager relies on what’s called ‘soft and hard’ skills. They need to be adept at communicating with people at different levels of the organization and to handle various personality types (including some that might be a little prickly).

Their skillset necessarily includes fact-based, action-oriented ones that allow them to take action and move the needle, while also resolving operation problems as they arise. However, soft skills including good communication, being empathetic and listening more than speaking all play an important part too. 

Therefore, an ops manager may discuss financial matters with in-house accountants and be detail-oriented there, but when also dealing with manufacturing, then they need to address practical problems like machinery breakdowns, staffing issues, and more. 

The life of an operations manager is never boring, and each day is rarely going to be the same. However, the types of people who apply and work in this type of role relish the opportunity to be efficient, flexible, and dynamic. It gives them a chance to perform admirably in a position where they appreciate just how important it is to the organization. 

Better Financial Oversight for Company & Departmental Budgets

With smaller companies, the finance team is often responsible for the creation of budgets and administration aspects. However, once the company grows beyond a certain size, that task is best suited to an operations manager. Even with technology-related companies, they will eventually outgrow a structure where the finance department is responsible for all the financial aspects. 

Departmental Budget Management and Agreements

The operations manager will deal with the budgets for the business, broken down by department and looked at as a whole too. They’re responsible for ensuring that the company can meet its projected earnings from the perspective of budget management. As such, they discuss the needs of each department’s budget to better appreciate each manager’s concerns to ensure they have the financial resources necessary to deliver on what’s expected of them. 

Ongoing Review of Budget vs Actual Expenditure

Throughout the year, the ops manager is also responsible for comparing the actual spending versus the budgeted numbers agreed. When there is a significant variance – either positive or negative – they will go back to the manager concerned to discuss it. This ensures that there aren’t any major surprises at the end of the financial year. 

Cost-Benefit Analysis on Production or Product Purchasing

For ops managers who are responsible for the operations of a manufacturing company or one that buys white label products for resale under the company’s brand, there are other factors to consider.

Cost-Benefit Analysis

While a purchasing department may come up with ideas for new products to obtain, rebrand, and subsequently sell, they don’t make the final decision on whether to go ahead. Similarly, a production manager is involved with ensuring production hits the required quality and safety standards. But they don’t decide what goes into production in the manufacturing facility either. 

It’s necessary to take initial proposals for new products and perform a cost-benefit analysis on the idea. Indeed, sometimes numerous ones are needed to compare a variety of possible ideas and determine which ones, if any, should be given the go-ahead. 

Gathering the Numbers and Data Together

Gathering up the cost of materials, production expenses for things like new equipment necessary for manufacturing a new product design, packaging, different shipping costs for larger (or smaller) shipments, and other factors are all considered. 

Some of this information may come from other departments like the purchasing department if the business is large enough to have one. However, in smaller companies, the ops manager is doing more of the leg work to figure out how much everything will cost. They’re also looking at the practicality of a suggestion for a new product to confirm whether it makes sense to complete it in-house or to outsource the production to another facility to avoid the business being weighed down by too many tangible assets. 

Managing the Supply Chain and In-house Inventory Levels

Supply chain management sometimes falls under the operations manager’s remit and other times there’s a separate person who reports to the ops. manager. Increasingly, the supply chain and general purchasing are handled by a separate individual because of the sheer number of moving parts involved with the role. 

As companies grow, they will increasingly require someone to be responsible for supplier management, overseeing logistics, and ensuring that there are no bottlenecks in the overall supply chain. When the ball repeatedly gets dropped and a manufacturing facility becomes unable to produce a product because of a lack of the right raw materials, there’s trouble ahead. It then becomes more obvious that this aspect of the smooth running of the company needs to be taken more seriously.

Whether these are duties performed by an operations manager or they have a supply chain manager reporting to them, their duties might be:

  • Arranging sufficient diversified supply chains for the raw materials required.
  • Creating adaptable forecast models to ensure demand changes are met.
  • Consider suppliers to include and those to avoid.
  • Troubleshooting supply chain issues and how to prevent them in the future.
  • Control and manage inventory levels, deal with stagnant inventory, and limit the waste involved.
  • Oversight for purchasing, management of inventory, and secure warehouse facilities.

To learn more about the nuances of operations management and supply chain, look at this site

Staff Management and Schedule Coordination

While the human resources department will handle recruitment and any necessary disciplinary actions, other aspects of staffing often fall on the operations manager. 

They are responsible for managing staff, determining staffing levels based on current and future operational requirements, and confirming the duties of each employee. Certainly, department heads will confirm what they believe is required for their team to function well, but the ops manager will make the final decision. 

The budgets including payroll come under their remit, so they are necessarily involved with ensuring that either a changing or growing headcount doesn’t create budgetary overruns. Necessarily, budgets should allow for an expected expansion to a team through the financial year with a reasonable estimate of which staff will be required and what they will cost. 

For companies that do not have an operations manager yet, there are considerable benefits to bringing one on board. Whether it’s to improve the communication and liaison between departments, create improved coordination, manage the financial budgets or the supply chain for a manufacturing company, there are big gains to be made. And for CEOs that feel overburdened and are struggling to handle the rate of growth, once onboard and up to speed, they’ll wonder how they ever managed without one.

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