Operations management is a key part of any business, and it probably extends further in to your business than you realise. An operation has three components:
Input > Transformation > Output
These inputs can be tangible (e.g. raw materials) or intangible (e.g. knowledge), and once they go through a transformation of some kind they become outputs. This can go from the simple, e.g. a kitchen porter has the input of a dirty plate, and needs to transform that in to a clean plate, to the complex of a patient in need of surgery. Crucially, both of these operations have to follow what is known as the "process hierarchy". This is the order that certain processes must happen in in order to achieve the desired outcome.
Operations management uses resources to appropriately create outputs that fulfill desired market requirements. The most innovative companies actively work with their customers to co-create new products or services based on feedback, this creates a deeper relationship with customers and a sense of community that can be a powerful marketing tool.
Operation processes can be analysed by looking at the four V's:
- Volume - higher volume allows for the systemisation of repeatability of tasks, this allows for lower costs per unit and a standard procedure, e.g. McDonalds, versus lower volume usually has a higher cost per unit due to more complex tasks, e.g. a Michelin starred restaurant.
- Variety - higher variety requires higher flexibility and better communication, which usually leads to higher costs.
- Variation - high variation of required service (e.g. seasonal resort) requires more accurate forecasting. Level demand allows for advance plans, high utilisation of resources and lower unit costs.
- Visibility - the more visible the operation is to the customer the higher the cost, due to higher quality staff being needed due to skill sets such as customer contact.
When you are analysing your operation do you use these four key features? And if not, then what metrics are you looking at to understand your operation?
What do operations managers do?
- Direct - the overall nature and strategy of the operation. An understanding of the overall strategic vision of the organisation is key to be able to translate this in to reality through the operation.
- Design - the operations services, products and processes.
- Deliver - planning and controlling ongoing operations.
- Developing - process performance and improve capabilities, through ongoing reflection and learning.
These four D's link together in a constant feedback loop with continual iterations to finely tune your operation to take your inputs and transform them in to the desired outputs.
Next time we'll look at operations processes and how performance can be looked at to deliver competitive advantages for an organisation.
Feel free to leave any comments or thoughts on this.
