Top 6 Functions of Operations Management in Business

Here, we are talking about the functions of operations management and how it helps the business organizations to achieve its objectives.
We know that there is an Operations Management department in almost all the companies. Along with this, there may be other department s also like Finance, HR, Sales and Marketing departments etc.

We know well what these departments do and how they help the business to reach success. But what about the functions of Operation Management.

We need to understand the functions of operations management clearly. In recent times, operations management is more likely present in all type of industries. Before it was known as Production Management and usually present in manufacturing companies only.

What is Operations Management

Functions of Operations Management is a sum of several other exercises like planning a business, production or service process, quality assurance, product delivery, smooth running of the machinery and labour.

Operations Management is a process of management by which the entire resources are mobilized and configured to accomplish the strategic goal of the business.

Read : How to Start a Business – A 9 Step Guide

Functions of Operations Management ensures maximum efficiency through the optimum utilization of resources. It may be the reason why operations management is getting much importance in the era of competitiveness.

Why Operations Management

An established operations management department can secure the ultimate satisfaction of customers or clients. They always try to explore new requirements of customers or clients and design new products to help the customers in terms of reduced cost, increased benefit, efficiency or services for the customers

Functions of operations management are mainly to maximise the efficiency of the resources used in the business. It means the maximum utilization of money, material and labour.

Operations management process needs to balance between the two things.

It needed to ensure maximum satisfaction to customers in terms of quality, design, benefits etc. and

it required the maximum utilization of the resources to reap optimum benefit to the organization

What are the Functions of Operations Management in Business

Operations Management will convert all your available resources to the final product or service. They consider the customer requirement like quality and values. Along with that, they will try to match your organizational objectives.

The main functions of Operations Management do for your business are given below.

(1) Plan the Demand and Volume
(2) Decide the Location and Layout
(3) Production Design and Process Selection
(4) Plan the Production Productivity and Quality
(5) Managing the Projects
(6) Prevention of Bottlenecking

Forecast and Plan the Demand and Volume

Forecasting and Planning Demand

Forecasting is essential for all types of management to work smoothly.

Functions of operations management start with the projection of the future requirement with the help of the Sales and Marketing department. They may have the authority to speak about future demand.

It may provide information of favourable and unfavourable conditions which may affect the demand.

Read: How to forecast by Trend Projection Method

Many sophisticated business applications and techniques are available in the market to forecast future demand for the product or services. All of these software analyses the past and present performance and predicts the future market conditions to forecast.

There are many business forecasting methods used in the market like; qualitative and quantitative. Qualitative methods usually based on the survey or opinion of human beings.

Quantitative methods developed by using past data and  Statistical methods to predict the future.

Here, the main role performed by the business data and its availability. Nature and selection of data may affect the output drastically.

The forecast maybe for the long, medium or short term. The short term forecasting is highly recommended over the others as it can find the deviations immediately and can go for corrective action as soon as possible.

 Volume Planing
Once we forecasted the demand, we need to plan :

The required volume
The time required to produce

Firstly, we need to plan the required volume. Based on the volume, we need to plan the capacity of the business.

These capacity planning may be for short term or long term.

For a short capacity plan, the business can manage easily. But for long term capacity plan may take time and resources. These may be required an investment in new ventures or capital equipment etc.

If we do plan an optimum volume. it will ensure that we are not producing excessive goods or shortage.

Functions of the operation management can ensure all these activities.

Decide the Location and Layout

Selecting a location of the business may be the challenge when we plan an investment.

When we consider the selection of the location, it is important to assess the availability of infrastructure, local government policy, availability of raw material, cost of labour etc.

These factors considered important to run a business unit in a particular land.

A location may be selected domestically or internationally.

Selection of country of operations may dominate many factors like how the particular country welcomes foreign investment and entrepreneurship.

Factors like availability of raw material and target market become considerations when we select a particular location or region for our business.

When we start the business near to the target market, it can reduce the hindrance of transportation and reduces the operating expenses.

Labour availability or the possibility of movement of labour to the place must be checked and ensured.

When we consider a particular land for our business, the future expansion plan must fit with the availability of the land or other resources. We need to forecast future requirements.

The next step is the decision to select the layout. The layout is important as it directly affects the efficiency and reduced cost etc.

The layout needs to plan based on the equipment, material and products used in the business and its current and future movements

A good layout may have the benefit like the reduced movement of materials, its order of arrival to the production line or machine and become finished product moving out for storage. An efficient operations manager can lead all these activities.

The layout of the business will be arranged based on the sequence of the operations or the function performed by each department.

Some layouts use the combination of both.

In this stage, we can think of the implementation of an ERP system. It will increase productivity and reduce cost and help for better pricing.

Production Design and Process Selection

Product design has much importance in the functions of operations management or production management.

Product design starts when we convert the needs or requirements of customers by ensuring the quality and cost-effective.

Product design will happen if we revise the quality, usage or cost. It will enable us to provide something new to the market. The same will make us competitive and help us to generate profit.

To produce the product with some specification, we need a specific process. So we need to design the process.

The process gives importance to the required machines to perform the process. Many factors are determining the sequence of operations. Quantity, quality and the production unit layout etc. will dominate the process of production.

We need to select a process suitable for our product. There are five types of process found in the business. They are

1. Job Shop
2. Batch process
3. Assembly line process
4. Continuous process
5. Project process

Functions of operations management can help the business to evaluate all the process and select the best suitable for the business.

Plan the Production

There must be proper planning in the production department to produce and supply the required quantity to customers without interruption.

The main motto of this process is to satisfy the customers with products and contribute to the profit of the business.

When we plan the production, we need to implement a  control mechanism to follow up with the planned activities. 

Operations management function also ensures the standardization of jobs. By standardization, it analyses the entire process and the best one can select and implement.

The main techniques used for this purpose are Time Study, Work-Study, Methods Study, and Job Evaluation etc.

Operations management can reduce the cost of operations by careful and systematic job allocation through assignment techniques.

Productivity and Quality

Operations Management can increase the productivity of the busines by the optimum use of available resources.

These resources include men, material, money etc. Increased productivity can help the business to get a competitive advantage over the competitors in the market.

Improved productivity means not the overburden on the labour force. In the real scenario, the increased productivity will attain by ensuring less fatigue to employees.

The entire production or operations process need to design with a view to reducing the burden of the labour force.

Increased productivity should not compromise for quality.

Introduction Total Quality Management (TQM) proposes all the employees of the organization need to be involved in the process of ensuring quality and customer satisfaction.

TQM is synchronization among organization, employees and external stakeholders. Now the business houses across the World seek international recognition like ISO.

Prevention of Bottlenecking

Operations Management can help to prevent unwanted bottlenecks in the business. In the manufacturing sector, if a machine is a breakdown, it automatically decreases the production.

It affects the productivity of the business, and it can not supply products on time.

When the machine is idle, ultimately the cost will go high. Operations Management can help to implement a preventive maintenance policy in the plant.

A planned and scheduled maintenance program can help the business to attain the optimum level.

It increases productivity, quality and ultimately customer satisfaction. Proper analysis of maintenance data helps the operations managers to plan the routine maintenance for the safeguard of the asset.


An entrepreneur who wishes to start a small or medium-scale business, need to know the fundamentals of the functions of Operations management. Large business houses set up their operations Management department. It has the same importance of selling more products, reduced cost and increased quality are also essential to sustain in the market. Operations management can help you to do this function. Recent trends also indicate that the increased responsibility of the operations management function in the coming days. The data-driven automation process will be the next functions the operations management has to focus on achieving the business objectives.

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