Operational management extends to property that is the responsibility of the owner or agent / organization. The indicated persons or institutions may dispose of it in accordance with production necessity on the basis of operating rules.
The essence of operational management
Operational management is the activity of the managing entity, which is aimed at influencing the property to achieve the goals set by the company. In fact, this is the implementation of the production plan, as well as continuous monitoring of the completeness and timeliness of its implementation. This economic mechanism allows you to profit from unused equipment by transferring it to third parties on certain conditions.
Features of operational management
Operational management is characterized by a number of specific features:
- carried out continuously at all stages of the production process in order to achieve the planned results;
- the consequences occur not only at a particular moment in the implementation of management, but also in subsequent periods (and this may also apply to the time when contract time on operational management expired);
- has a specific purpose, without which any management measures and actions do not make any sense (can be expressed both in monetary units and in indicators related to labor productivity);
- It is the basis of tactical and strategic plans, representing the main mechanism for translating them into reality.
Operational management process
The operational management process includes a number of mandatory activities, among which it is worth highlighting:
- establishment of exact coordinates, as well as the time frame, in accordance with which the operation of objects will be carried out;
- conducting continuous accounting of all processes and operations that are carried out throughout the entire period of operational management;
- constant monitoring of the current state of affairs in order to compare it with the planned indicators;
- prompt response to deviations in the production process in order to introduce corrective measures.
Operational Management Law
The disposal of this or that property is carried out not only in accordance with the statutory documents, but also is regulated by legislative acts. The right of operational management is granted either to the direct owner of the facilities, or to the organization to which he delegated certain responsibilities. We can say that the company has very limited powers, because the actual owner can at any time act with the property at its discretion.
Speaking about the material objects that are under the jurisdiction of the municipal structures, or were transferred to them in ownership, it should be noted that the process of operational management in this case is regulated by the Federal Agency for the Management of Federal Property. In this case, the values transferred to the jurisdiction of a state or any other object must be immediately registered in the tax registry.
A prerequisite for the transfer of property to operational management is that it should be used strictly for its intended purpose and in accordance with the goals specified in the organization’s charter documents. In case of violation of this condition, the owner has the full right to withdraw material assets.The misuse of property must be confirmed by an act that will be compiled as a result of a special audit.
Operational Management Functions
Quite common is the transfer by the owner of certain property to the authority of a trustee or a specific organization. The operational management functions can be described as follows:
- management of the movement of material assets, as well as the reflection of these processes in accounting and tax reporting;
- continuous monitoring of the condition and serviceability of the funds transferred to the jurisdiction (this is important from the point of view in order to determine the scope of responsibility of the owner and proxy);
- determination of prices and tariffs for goods and services produced using material assets transferred to management (the interests of all parties to the agreement must be observed);
- making tax deductions;
- formation of the production budget, as well as close monitoring of its implementation;
- execution of legal documents that govern the rules and conditions of management of property received;
- establishing relationships with suppliers and customers, as well as organizing the work of staff.
Management and maintenance
Operational management and operational management are varieties of rights that determine the degree of ownership and authority with respect to the disposal of certain objects. These categories determine the relationship between owners, trustees, as well as personnel who directly deal with property transferred to the organization for management.
Operational management and operational management are unequal concepts. So, only legal entities registered as enterprises of specific types can be subjects of the first. Speaking about operational management, it is worth saying that both industrial and non-profit organizations and societies, as well as entrepreneurs, can take part in these relations.
Economic and operational management also differ in the amount of authority granted to the parties. The first is broader, since such a right can be granted directly to a commercial enterprise. As for the second category, here we can talk about state-owned organizations or institutions that do not aim at making a profit.
Business management
The operational management of the enterprise includes several components. So, the first of them is a set of actions regarding production and non-production costs, namely:
- determination of the structure, as well as the systematization of various types of costs in order to optimize and minimize them;
- regular accounting and reporting both for internal use and for providing to the owner;
- determination of the cost of production, as well as factors affecting it;
- establishing the principles of the relationship between cost and net profit;
- the formation of a pricing policy that would allow to obtain the maximum result in monetary terms;
- drawing up cost and cost plans, as well as constant monitoring of their implementation;
- analysis of reporting indicators in order to improve working mechanisms.
It is also worth separately highlighting inventory management, which implies:
- keeping records of inventory in warehouses with the aim of their constant replenishment and rational use;
- determination of the optimal system for the allocation of inventories within the enterprise (in terms of logistics);
- continuous monitoring of the quality and shelf life of raw materials and finished products in order to avoid non-production losses;
- organization of control over the work of personnel involved in the warehouse.
Operational cash management
Money in various forms is an integral element and even a necessary condition for the existence of an organization. The operational management of this element includes a number of activities:
- control the movement of money both in cash and in non-cash form (on bank accounts);
- analysis of operations using foreign currency;
- maintaining tax reports for timely submission of documents to specialized bodies and making appropriate payments;
- audit of financial documentation both in-house and by attracting professional experts from outside;
- assessment of the financial condition of the enterprise based on the calculation and analysis of special ratios;
- maintaining and analyzing accounting documents.
Control system
The operational management system includes the following components:
- cost management for production and non-production activities;
- money management, which is contained both in cash and in bank accounts;
- management of stocks and resources that are involved in the production process;
- procurement and supply management;
- asset management;
- determination of the effect of the measures taken and its comparison with the planned one.
An integral part of this system is a clear and planned workflow. Each of the operations related to operational management should be recorded and properly executed, in addition, a reporting system should be drawn up.
Registration procedure
In some cases, it may be necessary to transfer your property to third parties and organizations. Operational management is one of the best options. The registration procedure for this kind of relationship involves the following actions:
- examination of the authenticity and correctness of the preparation of documents submitted by both the owner and the authorized person;
- a request to state authorities in order to obtain permission to register operational management;
- expert examination and technical inventory of property objects, regarding which contractual relations will be concluded;
- registration of operational management in specialized state bodies and receipt of relevant documents.
Documents for registration
In order to officially formalize the operational management of the organization, it is necessary to provide the following list of documents to the registration authorities:
- originals, as well as notarized copies of the constituent documents of the enterprise;
- cadastral passport or a plan of production and non-production premises;
- an agreement containing information on the transfer of rights and powers relating to operational management;
- a document containing information on property transferred to a third party or organization;
- an act fixing the acceptance of property by an authorized person.
Management Objects
The operational management object may be movable and immovable property production equipment or the organization as a whole. In this case, it is necessary to solve a number of problems and answer some questions, namely:
- determination of the goals of operational management, as well as the development of a plan of tactical measures aimed at achieving the desired effect;
- determination of ways, as well as fundraising for the organization of efficient operation of property transferred to the operational management;
- organization of supplies of material and raw materials for the smooth functioning of the production process;
- continuous monitoring of the achievement of targets;
- periodic analysis of reporting to identify deviations in order to make management decisions regarding the improvement of the production process.
Operational management is an effective tool that allows you to achieve high economic effect by transferring property to third parties or organizations.
