Definition: Operations are the business activities that a firm engages in to convert materials into finished products or services, sell them to customers, and earn a profit.
What Does Operations Mean?
What is the definition of operations? These procedures are used to create goods and services, market them to customers, and deliver the final products. Thus, every business’ operations are slightly different.
A manufacturer’s activities largely consist of purchasing raw materials and turning those materials into actual products. These activities include machining, milling, sandblasting, painting, and assembling materials. All of these activities add value to the product and the company overall.
Contrast that with a retailer that doesn’t create any products. It simply purchases goods from manufacturers and wholesalers and markets these goods to customers. A retailer’s operations consist mainly of logistics and marketing activities.
Most companies, like the two mentioned above, have multiple operations that are interconnected. These activities are called a process and typically consist of four parts: processing, inspecting, transporting, and storing.
Operations have the general purpose of increasing value to customers. For instance a company might obtain more business assets or improve efficiency with the use of current assets in order to reduce the production costs of its products. Thus, it can lower the price to the consumer. These procedures never cease and usually become more complex and more focused as time goes on to pinpoint areas a business can improve upon.
Let’s look at an example.
Example
Bill’s Consumer Electronics is a small manufacturer that makes and sells electronics to customers in the immediate area. Bill’s main business process looks like this:
- Processing: Bill purchases materials and parts and produces electronics.
- Inspecting: After production, the finished electronics are inspected for flaws and tested.
- Transporting: If the goods pass inspection, they are transported to retailers and Bill warehouse.
- Storing: The finished goods are stored until sold to customers.
Summary Definition
Define Operations: Operation means The actions and decisions made by participants and members of a business that affect the production, distribution, service, management, etc. needed for a company to function that requires the use of resources and assets.
