As we have seen, managing operations is a central task of an organization. The skilled and effective management of operations can increase productivity and lower costs, enabling a firm to outperform rivals and reach the efficiency frontier in its industry. The competitive advantage of many enterprises is based on their superior operating capabilities—their ability to achieve operating excellence—which in turn is the result of hard work by managers at the operating level.

By configuring the firm's production system, adopting flexible production technologies, and pioneering process innovations, operating managers can lower costs. Productivity can be further enhanced by taking actions to make sure the physical assets of an organization are fully utilized by, for example, optimizing capacity investments, production scheduling, and turnaround time. Quality improvement methodologies such as six sigma and various techniques for inventory management can lower costs even further, as can the efficient management of supply chains and designing products that are easy to manufacture.

Effective operations management can also help a firm better differentiate its product offering. Mass customization, which is made possible by modern flexible production technologies, can increase customer loyalty and repeat purchases. Customers keep coming back because they can get products that are perfect for their particular needs. Efficient management of inventory, by making sure the firm does not suffer stockouts, also keeps customers coming back to an organization because they can be confident the firm will have the products they are looking for in stock. And finally, by boosting product reliability, quality improvement methodologies such as six sigma increase the quality that consumers ascribe to the firm's product offering—and therefore its ability to differentiate that offering from that of rivals.

In short, effective operations management is clearly key to establishing competitive advantage. Moreover, improving the efficiency of operations over time is how a firm stays ahead of rivals and sustains its competitive advantage.