Improving Operation Management
November 10, 2023
Operation Management (or Process Management) has the goal of achieving Operational Innovation and Excellence to positively impact a manufactory. OI and OE work to improve processes. By taking a whole picture look at a process, you can improve performance with more efficient and effective tasks, thereby improving customer value.
The goal of operation management is to:
- Manage the transformation of inputs (staff, technology, equipment, material) into customer-valued outputs, such as goods or services
- Improving process efficiency and productivity
- Implementing new strategic issues that improve firm performance, such as increasing capacity or adding productivity via technology
- Liaising with suppliers, acquiring resources, and adjusting production to meet forecasted demand
Operation management does this by implementing and managing the various processes at a firm. A Process is a series of tasks that produce a product. These tasks can be any number of installing, following, or measuring actions. The final objective in operation management is delivering value to your customers. Better processes also lead to a better focus on what really matters, which leads to less waste and smarter decisions.
To summarize: Operation management requires the understanding company processes, coordinating their usage and innovation, and developing new processes with the two goals being improved productivity and organization.
The Problem with Operations
Even though operations are the daily tasks most take for granted, most companies avoid sinking money into improving operations and processes. The reasons are varied, but often include:
- Ownership – Which person or department takes ownership of a process can often be muddled, since many times a process will encompass multiple departments. This means that ownership of the error can be easy to find but the person responsible for ensuring improvements cannot.
- Visibility – Because processes entail everything we do, they can often be so common as to become unseen. And inefficient processes can be impossible to correct because after a long time of doing the same thing every day, it becomes easy to think that it has always been done like this, so it’s likely the best way.
- Focus – Since processes take up all of your day, they are not often thought of when you look at big-picture stuff, like strategic planning, capital allocation, mergers, staffing issues, etc. This means that senior leadership sit atop a heap of bigger problems and can’t see the small parts of the machine that need servicing or as a place where growth can be found.
- Boring – It’s quite obvious. What you do every day is not exciting. Acquiring a new firm and selling a division are headline grabbers. A new product line might grab some headlines, but not without a marketing push. And changing the way you purchase materials, or process customer invoices? Those are not the type of firm action that is seen because few have any interest.
The Two Parts of Improving Operation Management
Operations are a key part of your firm that have potential that you can unlock with a little work and know-how. The good news is that the knowledge and skills needed to improve your operations are already in your shop, with your staff knowing enough about their workplace to help you move forward.
There are two main components to making your processes better:
- Innovation – Changing your processes in new ways that lead to improved productivity, like adopting Lean or Agile Manufacturing
- Excellence – Changing your processes via minor improvements that lead to less errors, less delays, and less non-value-add activities, like adding products, value-based selling, or introducing regular PDCA process reviews
| ||Operational Innovation ||Operational Excellence |
|What is it ||New ways of doing things that eliminate assumed delays, costs, errors, and other waste ||Changes to how things are done that reduce delays, costs, errors, and other waste. |
|Delivers ||Improved results ||Improved performance |
Improving processes is often a more reliable and less costly way (when compared to acquisitions or marketing campaigns) for a business to improve productivity, efficiency, and growth. In this age of global competition, decreased purchasing power, lower revenue, and lower growth, process management can do more for the important goal of improving company performance for less. Innovative operations can bring numerous benefits, such as:
- Higher customer satisfaction, interrelationship, and retention
- Better decisions
- Added value
- More product offerings leading to better market penetration or creating new markets
- More customizable product line
- Lower costs/ lower prices
- Faster response time/ better agility
- Efficient asset usage
- Improved production/ cycle time
- Improved accuracy
- Simpler processes
Beginning Operational Innovation
In the end, innovating on your operations is a key that can unlock potential in your workplace. But because operations are part of everything you do, it is important to ensure that any changes you decide to apply are successful. To improve your implementation rates for these new processes, you can:
- Pilot projects – Innovations in operations and processes are great on paper but implementing will always run into issues. To ensure your new ideas are off to a better start, have a simple department or process implement a smaller version of the plan before branching out.
- Apply benchmarks – It is always good to have key performance indicators, or KPIs, to look at. However, when you are adding a new way of doing things, sometimes it can help to look at not just your current KPIs, but also at benchmarks that are used by other companies in other industries. For example, focusing on improving customer satisfaction instead of PPM may help reduce costs in the long run.
- Defy assumptions – Oftentimes, everything done in an industry comes with an assumption, like how inventory should always be stored in the warehouse or how chips must come in a bag. However, identifying your assumed constraints can be the first step to innovating the process by defying the selfsame constraints, such as with cross-docking, or chips in a tube.
- Normalize unique cases – Your firm will have a default way of running that can be changed for special cases. However, why is there a differentiation? Can you normalize the special case processes to make them the new normal?
- Change the scope – Create a Business Process Map of your processes to better understand the scope and dimensions of the work. This will help you visualize how you can improve each task and how it is performed.
- Rethink culture – Innovating operations should be the constant goal of your firm. The culture at your firm should be geared toward experimentation and improvement, which will lend itself to better processes, better innovations, and a better reputation with your staff, your suppliers, and your customers.
Adding Technology to Operations
There are some parts of operations that are seeing more interest in recent years. With Industry 4.0 taking over the way manufacturers make their products; more and more firms have found that they can no longer avoid to look at adding technological improvements to their operations in the form of:
- CRM – Customer Relations Management software and Customer Portals have become a crucial way to improve how you can communicate with your customers
- SCM – Supply Chain Management software is also an important item on the vendor/ supplier side of relations management
- WMS/IMS – Warehouse and Inventory Management Systems can help digitize parts of the warehouse to ensure the inventory you carry is more streamlined and usable with less breaks, less loss, and less time spent retrieving material and supplies from storage
- QMS – Quality Management has always been an important part of manufacturing, but with global competition and a more selective client-base, it has become more necessary to add a more scientific method to ensuring your quality meets or exceeds customer expectations
- MES – Manufacturing Execution Systems are another system that helps improve your operations by adding a layer of digitization to your shop floor with all the data you need from your machines sent to one central database
- ERP – Enterprise Resource Planning is one of the most talked about systems for firms of all stripes, though you need to ensure the one you are installing is right for your industry. With a good ERP, you can see all the benefits from the above systems, along with added improvements to planning, procurement, auditing, finance, and all the other facets of your organization
These are just a few of the technological systems that firms have been adding to improve their processes. These improvements are often championed by an individual executive of manager that has experience with a similar system. These improvements can often generate actual benefits in operation speed and decisions time.
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