Operations Management: Functions, Importance, Scope, Nature

What is Operations Management?

Operation management means the administration of business activities for attaining higher efficiency. It is a process of planning, organizing, and supervising the operations of the business for better productivity. Operation management aims at reducing the cost to business by avoiding any wastage of resources.

Functions of Operations Management

Functions of Operations Management
Functions of Operations Management
  • Finance- Finance plays a main function in operations management. The operation manager should not waste finance in unproductive tasks. He should ensure that all finance of the organization is utilized for the manufacturing of useful goods or services which may satisfy consumer wants.
  • Operation– The function of operation management is basically concerned with planning, organizing, directing and controlling of daily routine operations of an organization. The operation manager ensures that all activities are going effectively and efficiently.
  • Strategy– The strategy formulation is also the main function of operation management. The operation manager should have pre-planned tasks. Formulation of plans and tactics helps the organization in optimizing their resources and developing a competitive edge over competitors.
  • Product Design–  It is the duty of operations manager to design the product according to the market trends and demands. He should ensure that innovative techniques are incorporated within the product and its quality is maintained. 
  • Maintaining Quality–  Operations managers should ensure a better quality of products. The manager should not compromise with the quality of Products. They should work on quality management and should supervise all tasks. If any defects are found they should take steps to rectify such defects.

Importance of Operations Management

  • Helps in achievement of objectives: Operations management has an effective role in the achievement of pre-determined objectives of an organization. It ensures that all activities are going as per plans by continuously monitoring all operations of organization.
  • Improves Employee productivity: Operation management improves the productivity of employees. It checks and measures the performance of all people working in the organization. Operation manager trains and educate their employees for better performance. 
  • Enhance Goodwill: Operation management helps in improving the goodwill and presence of the organization. It ensures that quality products are delivered to all customers that could provide them better satisfaction and makes them happy.
  • Optimum utilization of resources: Operation management focuses on optimum utilization of all resources of the organization. It frames proper strategies and accordingly continues all operations of the organization. Operation managers keep a check on all activities and ensure that all resources are utilized on only useful means and are not wasted.
  • Motivates Employees: Operation management helps in motivating the employees towards their roles. Operation managers guide all peoples in performing their roles and provide them with better atmosphere. Employees are remunerated and rewarded according to their performance level.
Importance of Operations Management
Importance of Operations Management

Scope of Operations Management

Scope of Operations Management
Scope of Operations Management
  • Increase Productivity: Operation management played an important role in increasing the productivity of business. It manages all aspects of production activities to achieve highest efficiency possible. Operation manager are responsible for designing production plan for carrying out the operations. They ensure that all inputs used by organisations are efficiently transformed into outputs that is products or services. It is crucial for all business for properly managing their day to day activities and efficient utilisation of all its resources which helps in raising productivity.
  • Raises Revenue: Operational management directly influences the profitability of the business. It works on reducing the cost of operations to business by reducing the wastage of resources. Operations managers monitor every production activity and take all necessary steps for maintaining efficiency in the organisation. They try to maintain an appropriate balance between cost and revenue.
    Maintenance of quality of products and delivering them as per customer needs is another function played by these operation managers. It helps in attracting more and more customers which increase the overall revenue of business.
  • Achievement Of Organisation Goals: Every organisation strives towards achievement of its desired goals. Proper management of production activities helps business to properly implement their strategic plans in their operation. Operation management ensures that all operations of business are going in desired direction.
    It regularly monitors every activity and takes all corrective measures as required according to prevailing situations. Proper functioning of business as per strategic plans helps in achievement of desired goals.
  • Improve Customer Satisfaction: Customer satisfaction is necessary for every business to improving its relations with its customers. It helps them in retaining them for the long term. Operation management monitors the quality of products manufactured by organisations. It ensures that high-quality products are produced in accordance with the requirements of customers. When products manufactured by business completely fulfil the needs of customers, their satisfaction level will improve. 
  • Reduce Investment Need: Operation management reduces the additional capital requirements of the business. It ensures that all capital employed in the business are efficiently used. Management of operations ensures that all production activities go uninterrupted without any shortage of capital. By increasing the efficiency and avoiding the wastage of employed resources, it avoids any deficiency of capital in business. Businesses are not required to invest more in their production activities.
  • Enhance Goodwill: Maintaining proper goodwill in the market is the goal of every business. Operation management focuses on improving the position of the organisation in the market. It ensures that business works for providing better services to its customers. Business should manufacture durable and high-quality products that may provide better satisfaction to users. Customers will gain confidence in their products which will improve their market image. 
  • Improve Innovation: Operation management helps in implementing innovative changes in organisational activities. All decision regarding production planning is taken by operation managers by doing research and analysis of prevailing market situations. It takes into account all technological changes and builds a strong base of knowledge and operations. This helps in bringing various innovations in operations of the business.

Nature of Operation Management

Nature of Operation Management
Nature of Operation Management
  • Dynamic- Operations management is dynamic in nature. It keeps on changing as per market trends and demands.
  • Transformational Process– Operation management is the management of activities concerned with the conversion of raw materials into finished products.
  • Continuous Process– Operation management is a continuous process. It is employed by organizations for managing its activities as long as they continue their operations.  
  • Administration– Operation management administers and controls all activities of the organization. It ensures that all activities are going efficiently and there is no underutilization or mis-utilization of any resource.


Managing each and every aspect of organisation operations efficiently is key role of operation management. It focuses on raising the profit of organisations by maintain a proper balance between cost and revenue. This process ensures that all resources like raw materials and labours are efficiently utilised by organisation for production of its goods or services.

Operation management monitors and controls the entire production system of organisations. Operation managers are responsible for fulfilling all requirements of customers by delivering them products as per their needs. They take all crucial decisions relating to production process like product and process design, production planning, inventory control, quality control, capacity etc.

All these decisions are taken by them by doing research and analysing properly the prevailing situations. They work towards strengthening and enhancing the production system to minimize the wastage and maximize the output. The whole activities of operational management revolve around the conversion of inputs into outputs that is various products that every organisation manufactures.