Operations management is the management of processes that transform inputs into goods and services that add value for the customer. The goal of operations management is to maximize efficiency while producing goods and services that effectively fulfill customer needs. For example, if an organization makes furniture, some of the operations management decisions involve the purchasing of wood and fabric, the hiring and training of workers, the location and layout of the furniture factory, and the purchase of cutting tools and other fabrication equipment. If the organization makes good operations decisions, it will be able to produce affordable, functional, and attractive furniture that customers will purchase at a price that will earn profits for the company.
In another example, the owners of a restaurant must make important decisions regarding the location, layout, and seating capacity of the restaurant, the hiring, training, and scheduling of chefs and servers, the suppliers of fresh food at the right prices, and the purchase of stoves, refrigerators, and other food preparation equipment. If the restaurant owners make good operations decisions, they will be able to meet their customers’ needs for delicious and affordable food that is served in a pleasing atmosphere. The owners in turn will be able to charge a price that earns a profit and allows the restaurant to stay in business.