Operations Management

Operations management pertains to the effective management of a business enterprise to generate operating profits. Good managers incorporate proven management techniques, good common sense, fiscal responsibility, and excellent people skills.

Good Operations Management Requires the Coordination of:

Inputs

Capital

As we all know it always takes a certain amount of money to produce any good or service. Sometimes capital seems like the most limiting of all inputs. Limited capital can sometimes be overcome with smart marketing, increases in other inputs, or a change in the process.

Raw Materials

Every output had to start from some sort of raw material or available labor. Energy of some sort is applied. The transformation of the raw materials, or the input provided by the labor produces a product or service that can be purchases by someone else – thus, creating a transaction.

Techniques or Skills

The transformational process requires energy and the skill. The more specialized and difficult the techniques, the more value that is added to the raw inputs.

Knowledge or Information

Labor is just potential unless that energy can be harnessed into a process that produces a viable output.

Transformation Processes

Unfocused labor is of no value unless it is concentrated into a production process that creates an end product that is of some value. Often any skills or techniques developed came from the knowledge and information of the leadership.

Outputs

The end result is a product that can be sold to a willing purchaser that can obtain some benefit from the consumption or use. If the output is labor then the purchaser derives some value from having someone provide the needed service.

Control Systems

Control is monitoring the transformational process to keep it in check and to provide a consistent good or service. Control systems vary from random to continuous. Without a control system there is no consistent product or service.

Small firms often build their reputation on good quality and value for the customer. The founders may be directly interacting with the customer and get straight honest feedback. As the company grows, the control of the quality becomes harder. As every step in the process becomes looser and less exact little things add up to major failure. Keeping control of the production process requires a top management approach that puts in place the right type of control to accurately monitor progress. It doesn’t sound hard until you start to do it and then you find that with control comes the requirement that you make corrections. This may require an honest appraisal of some people’s progress and maybe even require reprimanding or firing a long-term employee.

Anyone that has been directly involved in control knows how difficult it can become. If the reader of your plan doesn’t think your control and feedback process is going to work they will be generally worried about the organizational management of the whole firm.

Feedback

Did the end user receive the benefit from the consumption of the good or service that was in line with expectations? Was the price point appropriate for this target market? Would the consumer purchase again if needed and would the recommend it to others? These are important things to know. The consumer may not be willing or able to articulate everything that went into their selection of your product or service and they may not be good about explaining the value proposition they received from its use. These are challenges everyone faces in getting good feedback. Unhappy and very verbal customers are not afraid to tell you what they think either in person or to their friends and family. Today, these vocal customers can even complain on the internet for everyone in the world to read.