Operations Part 2: Are You Managing Efficiently?

Business owners or stakeholders have a common goal and that is having a sustainable business. In the last blog, we discussed policy, process, and procedure, defined them and touched on why they are an integral part of your business. So this topic will cover managing efficiently: what to look for and how to manage the operation and its processes effectively.


What does managing efficiently look like?

A Business survives from profits whereas it expands from its efficiency. The efficiency of an organization lies not in one factor but many. Therefore the proper and timely functioning of every component of a company makes it efficient. An efficient business is one which implements its policies and procedures necessary to satisfy its customers, employees, and management.

5 Pillars in Operations

A working enterprise goes through five sets of functions, also termed operations, throughout its life. The following five operations, working in proper synchronization, makes the chances of managing efficiently much more successful in your business:

  1. Demand Forecast
  2. Sourcing and Procurement
  3. Creation of Output
  4. Delivery
  5. Managing People

The Role of Management

All five functions listed above are maintained by a formal structure of management. Accordingly, leaders that are managing efficiently are planning, organizing, directing and controlling the workforce assigned to them in order to realize the set goals.

2 challenges you may face in operations management

  1. Stringency: In a typical business scenario, the synchronization of all departments takes time because they are usually segregated in order to maximize efficiency and perform their own work. Therefore the stringency of this hierarchy makes adaptations in the overall process and inter-departmental communication difficult.
  2. Long term planning: Long term plans and policies of an enterprise may fall through in the face of certain scenarios and as a result, impede on swift decision making.

Operations Management to the rescue

Operations Management administers business practices to create the highest level of efficiency possible within an organization. It also converts materials into products as efficiently as possible and maximizes the profit of an organization. Furthermore, Operations Management acts like a bridge, connecting the five functional pillars of the organization. It designs and controls the process of production.

So let’s take a look at some sample job functions operations managers will oversee as they pertain to the five pillars of operation:

  • Demand Forecast
    • Conduct market surveys
    • Gather specific requirements from clients
    • Set product price, targets, and production
  • Sourcing and Procurement
    • Negotiate price of materials and place orders
    • Manage inventory, strategic planning of usage and replenish
  • Creation of Output
    • Plan the production line accordingly
    • Manage budget in accordance with cost implications, ensure quality of product
  • Delivery
    • Dispatch goods and services to customer in proper time
  • Managing People
    • Employ and train people
    • Plan and delegate work across departments
    • For special tasks, outsource to professionals

An extra edge

First keep in mind the policies and vision established by the company. In doing so, Operations Managers adopt tactical changes befitting the present internal and external scenarios. Therefore they plan the use of firm resources by analyzing the effectiveness of performance metrics involving:

  1. Price: purchase price, usage cost, maintenance cost, upgrade cost, disposal cost
  2. Quality: specification and compliance
  3. Time: production lead time, information lead time, punctuality
  4. Flexibility: Production flexibility, program flexibility, operation flexibility
  5. Stock availability and safety stock: indicators are in place to maintain efficient workflow
  6. Ecological implications: biological and environmental impacts of the system

Operations Management is the key to a planned and informed investment in the marketplace which is vital for the survival of a product line. In a service setting, it would focus on ensuring that workers are adequately trained, customer service locations are equipped and safe for employees and the public, and services are revised as dictated by customer input or competitive forces.