By Vidya Hattangadi Organisations that deliver the highest quality of service or products are the ones that attract the most customers. Prominence is, therefore, important. But ability is also important; if prominence brings customers to an organisation, ability helps organisations to retain customers. Ability of the organisation tells who they are. Eminence and ability consist of four operational processes: volume, variety, variation and visibility. Organisations survive and flourish when operations management lies in the hands of able managers to manage core activities that transform key resources into deliverable products or services. The process of creating products and services is based fundamentally on creating value in each operations management process. Volume: It refers to how much production of a specific product is required to satisfy its overall demand in the market. This refers to the physical number of units or items produced. A high volume manufacturing service example would be a fast-food joint like Domino’s Pizza. It sells quite literally millions of pizzas and other related food items every day around the world, and one of the known characteristics of Domino’s Pizza is that the chain has a very high degree of consistency in all of its products and service delivery. Alternatively, a low-volume example might be an artist who produces specially made commissions and pieces of artwork. These are unique, which are likely to take a very long time to produce and which cannot be easily replicated or repeated exactly, if at all. This is highly resource intensive and often a long-term process. Scarcity is often used to boost sales, but it can also be used to create massive brand lift. It plays on the customer’s fear of missing out. Please remember this fact that marketers use limited-time offers like daily deals, limitations on quantities, or one-time only promotions to create a sense of urgency and leverage scarcity. Volume is a significant tool because it shows the confidence of buyers in a product or service. Although volume should never be used alone to determine price or selling patterns, it is a base to gain insights into the markets and determine the next strategies. Variety: It relates to the variety of goods/services to be produced and sold to customers. This V is all about diversity. Selling a variety of products or services helps organisations increase sales and profit potential, and reduces their dependence on only one or two products, which can lead to business closure if demand for that product(s) ends or wanes out. For example, HUL sells 44 brands spanning 14 distinct categories such as soaps, detergents, shampoos, skin care, toothpastes, deodorants, cosmetics, tea, coffee, packaged foods, ice cream, and water purifiers, and the company is a part of the everyday life of millions of consumers across India. Its portfolio includes leading household brands such as Lux, Lifebuoy, Surf Excel, Rin, Wheel, Glow & Lovely, Pond’s, Vaseline, Lakmé, Dove, Clinic Plus, Sunsilk, Pepsodent, Closeup, Axe, Brooke Bond, Bru, Knorr, Kissan, Kwality Wall’s and Pureit. HUL has a product to offer for each segment of the society. In a given product category, it has maintained variety. High variety gives more flexibility to produce goods and services to match a customer’s requirements. Variety and volume correlate—the higher the variety, the lower the volume of products or services. Variation: It refers to how much the level of demand changes over time due to external factors. However, several factors make it difficult to predict variation. For example, a natural disaster such as the Covid-19 pandemic struck the world which made the entire world go topsy-turvy in all walks of life. Most business processes do not exist as singular entities, but rather as a plurality of variants that need to be collectively managed. Most of these approaches are built on the assumption that variation points and variation drivers are given as inputs. The question of how process variation is drawn and conceptualised in the first place has received relatively little attention. It takes a lot of experience and maturity of managers to fill the gaps. When processes fail to follow a precise pattern, it causes quality issues, both in transactional and production processes. Visibility: It refers to value chain of a company’s all processes put together. Customers need to experience the company’s products/services. Service industries have a high level of visibility compared to manufacturing industries. For example, Amazon has track-and-trace software on its website that enables their customers to have visibility of where their packages are at any given time. It is important that potential customers can locate the company they are looking for. Most people have had the experience of being lost. It is truly frustrating driving around unable to find the location a customer is searching—may be it is a company’s workshop, warehouse, retail store, head office, customer care centre, anything. Organisations must make sure that their signage is clear and visible so that visitors can easily locate. Otherwise, the experience can turn into a negative one. High-visibility signage has already helped easy-to-find repeat customers. Unilever’s operations management is responsible for keeping the four Vs integral with high productivity throughout the global organisation. Operations managers develop procedures and processes to support the organisation in achieving higher volume, variety, variance and visibility. The operations team of Unilever directly supports marketing, sales, financial and HR performance. It essentially addresses concerns in all strategic decision areas to maintain high productivity. As a leading consumer goods firm, Unilever has evolved operations management approaches to keep all four Vs highly productive. The author is a management thinker and blogger
The term operations management encompasses planning, implementing, and supervising the production of goods or services. Operations managers have responsibilities in both strategy and day-to-day production, in either manufacturing or services. Sometimes called production management, the field is cross-functional, tying in with other departments such as sales, marketing, and finance. It’s involved in product or service creation, development, production, and distribution. In effect, it connects dots along the value chain. Technology, ever changing, plays a key role in springboarding constant advancements in operations management (OM). That’s truer now than ever before thanks to budding advancements like self-maintaining smart machines (for production) and drones (for distribution). Companies that use technology well can thrive, and those that don’t may not survive. “The future of operations management is going to involve increasing automation to the point that we will hardly recognize the way new organizations function,’’ says Iris Tsidon, Co-Founder and CEO of Okapi Vision, a cloud-based key performance indicator (KPI) platform. This article will provide an overview of operations management: its history, importance, functions, strategies, principles, and types of production. You’ll also hear from seven operations management professionals about tips, challenges, trends, and the future.
Operations management refers to the activities involved in overseeing the process of creating goods and providing services, including resources, technology, people, and products. These elements must be well managed in order for the business to remain competitive. As we define operations management more fully, we consider these foundations of OM:
Operations management dates back to 5000 B.C. with the Sumerians, who tracked inventories, transactions, and taxes, and has evolved into modern day services like overnight and same-day deliveries. We’ve listed some notable historical highlights below:
Operations management serves as an organization’s engine room, and plans and drives manufacturing and services. Operations managers maximize efficiency, productivity, and profit, which are vital to a company’s growth, survival, and competitive edge. Most companies have an operations department with many employees and a large budget. Forbes magazine reported in 2011 that three-quarters of CEOs come from an operations background, which shows the importance of understanding how a company functions. We can also see the importance of operations management in these aspects of a company’s success:
It’s no exaggeration to say everything depends on operations.
Operations management includes a diverse set of functions and roles, which can differ based on industry and company size. To carry out these tasks well, operations managers need to be organized, analytical, creative, resourceful, versatile, and have strong leadership skills. Now more than ever, operations managers need to be tech-savvy to compete in a rapidly changing market. Technical specialization can arm you with the analytical and problem-solving skills vital to succeeding in this field. We’ve listed the major functions and roles required of a modern operations manager below:
Operations managers facilitate cooperation between departments and ensure that department and company goals are aligned, and to standardize logistical approaches to budget and project constraints. Operations teams must collaborate with all other departments to be effective.
Operations managers are deeply involved in strategy, in addition to their daily production roles. From designing and testing processes to facilitating interdepartmental collaboration, we have outlined some key strategy and tactics points below:
Operations management includes three levels: strategic, tactical, and operational. The strategic level defines company goals, and the tactical level outlines a plan to implement that strategy. The operations level contains the daily operations required to produce the desired outcome.
There are many widely accepted principles of operations management. Most experts advise a focus on organization, risk management, and adaptation. We’ve outlined two prominent lists of principles by experts below: Randall Schaefer, CPIM, described The 10 Principles of Operations Management at his presentation at the 2007 conference of the American Production and Inventory Control Society (APICS).
Another set of operations management principles comes from author Dr. Richard Schonberger. His 16 principles are:
You can categorize production and production systems in several ways, including by technical elements, processes, or lead time. Most modern production systems are software-based, meaning that planning, scheduling, and inventory control systems and processes are managed by software.
Some of the biggest operations management challenges include acquiring and maintaining the right workforce and the right technology. We’ve asked our experts to weigh in on some other common challenges below: David Shelton: COO of healthcare service company PatientMatters lists these challenges: “Staffing: I'm convinced your staffing determines your success. A mixture of new employees combined with seasoned experts allows your operation to maintain stability while training staff, expanding sales opportunities, and identifying new solutions to existing problems. Technology: Whether a service provider or manufacturer, new technology and your ability to understand and react to internal data will dictate your operational success. Growth: Do you have the materials, vendor relationships, and labor to keep pace with your sales team and market demands?"
Operations management is concerned with the quality of a company’s technology and people. Our experts provide their best tips for how to maintain quality resources to ensure efficient and effective operations management:
The field of operations management has evolved over time to keep pace with technology and human behavior. From Lean manufacturing to sustainability, we’ve outlined some current and existing trends for operations managers:
Most experts agree that computers and tech are at the center of operations management. We’ve gathered expert observations of current operations management trends, from data visualization and forecasting to further trends, below:
The future of operations management can be inferred from its past. While no one can know for sure, our experts anticipate a future of ever-increasing data and technology, including self-drive vehicles and the automation of low-skilled jobs.
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