Operations management theory uses a variety of strategies to maximize the efficiency of an organization, and uses various tools to do it. It includes converting raw materials into manufactured goods in the most efficient way possible and delivering services in the most economical way.
However, it’s still surprising to see how it is being ignored outright or considered a detail in so many businesses. This is one of the costliest mistakes anyone can make, and a surefire way to lose control over your budget, spending, and consequently, your team. Here are 5 reasons why operations management should play a major role in any organization.
You Can’t Afford to Ignore Operations Management
We’ve mentioned how operations management seeks the most economical and cost-effective solution for performing your core business processes. As a business, you can’t afford to ignore proven strategies for making your operations leaner, faster and more effective. As a matter of fact, it should be your goal to constantly seek new tools and ways of doing things if it can eventually make your operation more efficient in any way. All of the savings you’ll make will go directly towards your bottom line or redirected.
You should also note that operations management looks at the whole system. It won’t undermine key business processes, because its goal is delivering products and services with the same level of quality as before. This makes investments in equipment that improves quality levels or production rates worthwhile.
A Changing Marketplace Makes Operations Management Essential to Your Firm’s Survival
Operations management tends to focus on creating streamlined, flexible, and robust business systems. This makes your operation more adaptable, but also limits waste.
One of the benefits of an operations management mindset is that constant investments in productivity and quality can pay off over the long-term. For example, if you dramatically increase throughput in the factory, you may not need to build a new plant to meet growing demand. You’ve also reduced the risk of building new infrastructure you can’t use if customer expectations change.
You can also avoid the pesky habit of automating just for the sake of it. For instance, you could have your IT partner with operations management to determine what processes should be automated and what can and should continue to be done by humans.
If you want to learn how operations management theory can help improve any business through proven tools like lean and Six Sigma, you should check out this piece. It explains exactly how a manufacturing plant may replace the expensive manufacturing line with a reconfigurable manufacturing system. It also talks about how that can be reorganized as required to make new products or rearranged as engineers find more efficient ways of doing things.
Quality Is Systemic
Operations management is responsible for quality management. This is far more than performing quality control checks as things roll off the assembly line. It includes entire systems for calibrating equipment and maintaining it so that defective items aren’t produced at all. It also includes training people so they use the correct and most efficient methods possible.
Operations management mandates having official processes on how to do everything from ordering spare parts to assembling a product. It includes inspecting incoming parts and material, so you don’t waste time and effort making something that is certain to be defective.
Quality management extends to business processes as well. It results in back office processes that ensure customer orders are correct and shipped to customers on time. It forces marketing to talk to manufacturing and other departments to ensure that they can deliver what sales is promising. All of this results in far higher rates of customer satisfaction.
It Measures Everything by Established Metrics
Operations management measures everything against constantly tracked metrics. There are goals beyond producing so many widgets a year. The productivity of individual employees and assembly lines are tracked. Then you can analyze staff performance, offering training to those who aren’t up to par or learning from those whose output or quality is better than average.
Furthermore, operations management tracks quality levels. For example, defect rates are tracked with a goal of zero defects. Six Sigma programs use statistical analysis to map processes, study trends and calculate potential defect rates. Then you can notice when something is out of specification and act before you get a batch of bad products.
It Could Give Your Business a Competitive Edge
Having a solid operation management plan and system in place could be all that you need to gain some market shares and get an edge over your competition. A company that runs a tighter operation can afford to play on margins and offer competitive pricing. It also won’t waste as much money on unnecessary hires.
Companies with good operations management also tend to keep their employees longer. They don’t notice as many sharp fluctuations in workload and don’t see as many temporary workers come in and out. There is then more cohesion amongst team members who are well aware of established processes and recent changes.
However, to get this edge, you have to make sure that operations management is done properly. At the end of the day, operations management relies on all multiple moving parts working together in synergy to improve and maximize processes through every stage of production. The problem is that these parts are made of people, and people are error-prone.
Mistakes typically occur during transitions, like from manufacturing to sale, for instance. This is why it’s essential to make sure that operations management is coordinating sales, marketing, finance, information, accounting, and human resources effectively and transparently. No matter how good your plan is, you have to make sure that individual parts are working well and that you have a way of keeping tabs and evaluating performance if you want to be successful.
Operations management is far more than overseeing the manufacturing floor. It involves every single process within your organization and could literally be the difference between your business thriving or losing to more effective competitors.