Why Operations Management?

What is operations management and why is it important?

Operations managers are responsible for managing activities within the production of goods and services, utilizing resources from staff, materials, equipment and technology.

They will acquire, develop and deliver goods to clients based on client needs and wants and the abilities of the company.

Many who go into this line of work are fascinated by the innovations made possible by operations management – whether it’s a new device from Apple, fast package delivery from Amazon Prime or simply the power to heat your home. Studying operations in an MBA program gives you the opportunity to learn the skills and tools needed to bring these innovations to life.

Operations is of course an essential part of running any business, and it’s worth noting that obtaining skills in this area can make you a better manager. We spoke to professors and graduates from some of the world’s top business schools to find out more about why operations management is so important.

All businesses need operations management in order to function

Operations management is the function that turns an organization’s resources (materials, labor) into products and services. That’s why it is “the main reason for existence for any organization”, according to Ángel Díaz, professor and chair of the operations management department at IE Business School.

If you work in manufacturing, understanding operations is important as this is the areas of the business where a vast majority of a company’s money is made or lost. For those working in service industries, it’s important to understand operations as it’s a key differentiating or determining factor between companies in the same area. When thinking about banks or logistics companies, the value proposition they offer consumers is often based on functions provided by the operations department.

Knowledge of operations can help you become a top executive

According to Carlos Cordon, LEGO professor of supply chain management at IMD, one of the main reasons his students take operations classes is the fact that operations is required for top executive roles. “Businesses look for executives that have a holistic understanding of the business, which includes operations,” states Cordon.

Operations roles are highly sought after, in-demand jobs, which only adds to their appeal. According to Ángel Díaz, “global operation and supply chain managers are in greater demand due to globalization”. Díaz also feels that operations work helps students build the skills they need for a top executive position, since it offers “the possibility of managing a lot of people and developing an understanding of how the business makes money”.

Understanding operations helps you become a good manager

Understanding the other parts of a business helps you become a good manager. As operations is necessary in order to run a business, a working understanding of operations will help you do your job better. Díaz points out that MBAs who end up working in the role of general manager, they must “understand the interaction of operations management with other functional areas”.

Operations knowledge can also help executives without a grounding in the discipline to get further along in their careers. Thomas Roemer, senior lecturer in operations management at MIT Sloan School of Management and executive director of MIT Leaders for Global Operations, teaches executives in addition to MBAs specializing in operations. For example, although a healthcare executive didn’t have a specialized background in operations, he was able to use what he learned to better manage a hospital.

Operations management skills can be applied across all industries

In banking and finance, operations management skills are necessary in order to move large sums of money and construct financial deals. In healthcare, “Operations can drastically improve performance” states Roemer, who explains that simple operations procedures can reduce death rates. Even in industries where operations may not seem as relevant, such as air travel, have seen big developments because of operations, states Cordon. He cites Southwest Airlines and Easyjet as two examples of carriers who have benefited from operations-based innovations.

You get the chance to work with new technology

Operations management puts MBAs into close contact with new technology. Whether you work in a hospital or on the factory floor, an operations manager often ends up using technology to solve problems. Companies are now delivering items using drones; driverless vehicles, such as Google’s, are creating new opportunities for companies and consumers.

Using new technology to bring power into people’s homes and monitor the water supply are other examples of how technology is being used for operations management. In a less domestic context, one might also see nanotechnology and aeronautics being used.  

Operations can also be a gateway into the tech sector, being instrumental in bringing the products of the world’s top tech companies to market. “There’s a huge operations machine involved in getting Apple products in your hand” states Roemer. Roemer also gives Amazon as another example of an “enormously complex operational machine that offers value to all of us”.

Operations helps contribute to sustainability initiatives

Roemer meets many students interested in undertaking work related to the environment; operations is a great function in which to do this. The goal of operations is to provide the most to society without creating waste. Therefore, for the environmentally-minded, working in operations presents an opportunity to contribute to sustainability initiatives by reducing waste in order to run an environmentally responsible business. According to Roemer, “Reduction of waste is inherently part of operations management”.

You are directly involved in creating the end product

Many MBA jobs give you the opportunity to do something meaningful with your career, but operations management enables you to be directly involved in creating an end product – whether it’s an iPhone or the energy someone needs to keep the lights on in their home. Roemer cites this as one of the top reasons his students choose to study operations.

Operations managers get to solve problems daily, while interacting with people from all around the world. Unlike finance or marketing which (while important) put you more on the periphery, operations management allows you to be directly involved in delivering the final product to the consumer.  

Roemer feels that students are drawn to operations because it involves “the idea of creating wealth by doing things better”.

You get to work with a diverse group of people

Instead of sitting at a desk all the time, an operations manager goes out in the field and interacts with many different people, potentially all over the world. An operations manager at a sports shoe manufacturer, for example, may interact with everyone from a seamstress putting the shoe together, to a materials scientist developing a new sneaker fabric.

Operations knowledge can help you create a start-up

Solving an operations problem can lead to the formation of new companies. Jennifer Meller, an MBA alumna of The Wharton School and doctor founded Navimize, LLC in March 2016 – a healthcare tech company based on solving a very common operations problem: long wait times at doctors’ offices. She took management classes where she learned about just-in-time principles as part of an operations case study about a Japanese executive at a hospital. She realized that with Uber she could know if the car was there because of notifications and actually seeing the car in front of her. She wanted to create a similar experience for patients in doctor’s offices so they have a more realistic idea of when the doctor will be available.

Operations knowledge can also help you get your start-up off the ground. Wharton graduate Jerry Lin created mattress company Helix Sleep with two MBA classmates. Lin and his classmates all had bad experiences buying mattresses after moving to Philadelphia. They created a company to improve the mattress buying process by creating custom mattresses that are delivered to a customer’s door within seven to 10 days. Neither Lin nor his classmates had deep mattress industry experience, and they needed to have a well-oiled delivery machine in order to fulfil customer orders. Lin, who is in charge of operations for Helix Sleep, had to rely on his knowledge of operations and what he learned in Wharton classes in order to help build the business.