Operations Management, Operational Excellence, 3 ways of Bridging Strategy and Execution
Operational Management
Operational management is the overarching process that involves a series of decisions that shape the execution of an organization's business model through the efficient and effective management of its operations systems. It involves overseeing, coordinating, and designing business processes to achieve operational excellence. It contributes significantly to an organization’s success by driving efficiency and effectiveness.
Operational Management Decision Choices
Operational management decisions are focused on the day-to-day activities of an organization. They are typically short-term in nature and aimed at optimizing efficiency and effectiveness. Operational management decisions encompass a wide range of choices that affect how efficiently and effectively an organization transforms inputs (resources) into outputs (products or services).
Categorization of Operational Management Decision Choices
Operational management decisions can be categorized into several types:
1. Tactical Decisions
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Some of the key decision areas include:
Process Design and Improvement:
Inventory Management:
Capacity Planning and Scheduling:
Human Resource Management:
These are just some examples, and the specific decisions will vary depending on the nature of your business. By making well-considered operational management decisions, organizations can create a well-oiled machine that delivers consistent value to customers while minimizing costs and maximizing efficiency.
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Operational Management decisions act as the building blocks that define how efficiently and effectively the organization transforms resources into finished goods or services.
Here's how operational management decision choices contribute to the operations strategy:
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Operational Management Functions:
Operational management takes the business model, created and maintained by strategic management, as its blueprint. This business model outlines the core activities, resources, partnerships, and performance metrics needed to deliver value to customers. Essentially, it's the "how" of your strategic plan, detailing the operational systems and procedures required for successful execution.
Operational Management Functions Aligned with Standard Management Functions:
Operational management utilizes the core management functions of planning, organizing, leading, and controlling to ensure smooth and efficient operations:
By effectively using these functions and making informed decisions at the right level, operational management ensures your business executes its strategy flawlessly and delivers the value proposition outlined in the business model. They are the backbone of any successful organization, turning strategic plans into tangible results.
Operations Management Decisions:
The decisions made in operational management can be categorized based on their scope and impact:
Operations management decisions play a crucial role in ensuring efficient production and delivery of goods and services within an organization. Operational management combines efficient day-to-day execution with strategic planning to create a production strategy that optimizes efficiency while meeting organizational needs. It’s about translating high-level goals into actionable plans that drive efficiency, effectiveness, and competitiveness. Operations strategy is the practical implementation of the strategic aspects of operations management. Operations strategy refers to the overall plan and approach an organization adopts to achieve its operational goals. It involves decisions related to resource allocation, process design, capacity planning, technology adoption, and quality management.
Operational management is the overarching process that involves a series of decisions that shape the execution of an organization's business model through the efficient and effective management of its operations systems. It involves overseeing, coordinating, and designing business processes to achieve operational excellence. It contributes significantly to an organization’s success by driving efficiency and effectiveness.
Operational Management Decision Choices
Operational management decisions are focused on the day-to-day activities of an organization. They are typically short-term in nature and aimed at optimizing efficiency and effectiveness. Operational management decisions encompass a wide range of choices that affect how efficiently and effectively an organization transforms inputs (resources) into outputs (products or services).
Categorization of Operational Management Decision Choices
Operational management decisions can be categorized into several types:
1. Tactical Decisions
- Short-term in nature
- Focus on day-to-day operations
- Examples:
- Scheduling employees
- Allocating resources
- Inventory management
- Quality control checks
- Monitor and regulate ongoing activities
- Ensure adherence to standards
- Examples:
- Production planning and control
- Supply chain management
- Customer service management
- Identify and implement enhancements to operational processes
- Aim to increase efficiency and effectiveness
- Examples:
- Lean manufacturing initiatives
- Six Sigma projects
- Automation of tasks
- Determine how resources (human, financial, physical) are used
- Optimize resource utilization
- Examples:
- Equipment maintenance scheduling
- Budget allocation for operational expenses
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Some of the key decision areas include:
Process Design and Improvement:
- Standardization vs. Customization: How much variation will there be in the production or delivery of your product or service? (e.g., standardized processes for mass production or customized solutions for specific clients)
- Workflow Optimization: How can you streamline the steps involved in your core processes to minimize waste and maximize efficiency? (e.g., implementing new technology to automate tasks or redesigning workflows for better flow)
- Quality Control Procedures: What measures will you take to ensure consistent quality in your outputs? (e.g., establishing quality control checkpoints, implementing statistical process control techniques)
Inventory Management:
- Inventory Levels: How much raw material, finished goods, or work-in-progress inventory will you hold? (e.g., just-in-time inventory management to minimize holding costs or larger buffer stocks to avoid stockouts)
- Inventory Control Systems: What methods will you use to track inventory levels and reorder points? (e.g., implementing inventory management software or using barcodes and scanners for real-time tracking)
- Supplier Selection and Management: Who will provide the resources you need for your operations? (e.g., choosing reliable suppliers based on factors like cost, quality, and delivery times)
Capacity Planning and Scheduling:
- Matching Supply and Demand: How will you ensure you have the resources and personnel available to meet customer demand? (e.g., forecasting demand and adjusting production schedules accordingly or implementing flexible staffing models)
- Facility Layout and Design: How will you physically arrange your workspace to optimize workflow and minimize bottlenecks? (e.g., using a layout that promotes efficient movement of materials and personnel)
- Equipment Maintenance and Upgrading: How will you maintain your equipment to minimize downtime and ensure optimal performance? (e.g., implementing preventive maintenance schedules or investing in equipment upgrades)
Human Resource Management:
- Staffing Levels and Skills: How many employees do you need, and what skills are required to effectively perform core tasks? (e.g., scheduling staff based on workload demands or investing in training programs to develop employee skills)
- Workforce Scheduling: How will you assign tasks and allocate personnel to ensure efficient operations? (e.g., creating work schedules that match employee skillsets with task requirements)
- Performance Management: How will you measure employee performance and provide feedback for improvement? (e.g., setting clear performance goals and implementing performance review processes)
These are just some examples, and the specific decisions will vary depending on the nature of your business. By making well-considered operational management decisions, organizations can create a well-oiled machine that delivers consistent value to customers while minimizing costs and maximizing efficiency.
[TBD]
Operational Management decisions act as the building blocks that define how efficiently and effectively the organization transforms resources into finished goods or services.
Here's how operational management decision choices contribute to the operations strategy:
- Process Design and Improvement: These decisions determine how your core processes are structured and optimized, ensuring a smooth flow of work and minimizing waste.
- Inventory Management: Inventory decisions influence your ability to meet customer demand while managing costs. They contribute to a well-balanced strategy for just-in-time delivery or maintaining buffer stocks to avoid disruptions.
- Capacity Planning and Scheduling: These choices ensure you have the right resources and people in place at the right time to fulfill customer needs. They are crucial for creating a responsive and adaptable operations strategy.
- Human Resource Management: Decisions around staffing, scheduling, and performance define how effectively you utilize your workforce to achieve operational goals.
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Operational Management Functions:
- Process Management: They design, analyze, and improve the business processes that deliver value to customers. This ensures smooth and efficient operations. (e.g., streamlining order fulfillment or product assembly processes).
- Quality Management: They ensure the consistent quality of products and services delivered to customers. This involves setting quality standards and implementing quality control measures. (e.g., implementing quality checks throughout production).
- Supply Chain Management: They manage the flow of materials, information, and goods from suppliers to customers. This ensures timely delivery and cost-effectiveness. (e.g., building strong relationships with suppliers and optimizing inventory management).
- Facility Management: They oversee the physical workplace, ensuring it's safe, efficient, and supports employees in achieving their tasks. (e.g., maintaining equipment, optimizing workspace layout).
Operational management takes the business model, created and maintained by strategic management, as its blueprint. This business model outlines the core activities, resources, partnerships, and performance metrics needed to deliver value to customers. Essentially, it's the "how" of your strategic plan, detailing the operational systems and procedures required for successful execution.
Operational Management Functions Aligned with Standard Management Functions:
Operational management utilizes the core management functions of planning, organizing, leading, and controlling to ensure smooth and efficient operations:
- Planning: They translate the broad strokes of the business model into specific operational plans. This involves:
- Strategic Decisions: Aligning operational plans with the overall strategic goals. (e.g., Deciding on production capacity to meet projected demand).
- Tactical Decisions: Developing detailed plans for specific departments or processes. (e.g., Scheduling production runs for optimal efficiency).
- Organizing: They ensure the right people, equipment, and technology are in place to execute the operational plans. This involves:
- Tactical Decisions: Assigning roles and responsibilities within departments. (e.g., Assigning specific tasks to barbers based on their skill sets).
- Operational Decisions: Allocating resources efficiently to support production processes. (e.g., Deciding on inventory levels for different hair care products).
- Leading: They motivate and empower employees to achieve operational goals. This involves:
- Tactical Decisions: Providing clear instructions and coaching to employees. (e.g., Training barbers on new haircutting techniques).
- Operational Decisions: Fostering a collaborative work environment for smooth operation. (e.g., Encouraging communication between barbers and stylists).
- Controlling: They monitor progress, identify inefficiencies, and make adjustments as needed. This involves:
- Tactical Decisions: Tracking key performance indicators (KPIs) to measure operational efficiency. (e.g., Monitoring customer wait times).
- Operational Decisions: Implementing corrective actions to address bottlenecks or quality issues. (e.g., Adjusting appointment scheduling to reduce wait times).
- Administrative Decisions: Maintaining records and ensuring compliance with regulations. (e.g., Ensuring barbers are properly licensed and following hygiene protocols).
By effectively using these functions and making informed decisions at the right level, operational management ensures your business executes its strategy flawlessly and delivers the value proposition outlined in the business model. They are the backbone of any successful organization, turning strategic plans into tangible results.
Operations Management Decisions:
The decisions made in operational management can be categorized based on their scope and impact:
- Strategic Decisions: These are high-level decisions that align operational plans with the overall strategic goals set by senior management. (e.g., Deciding to expand services to include beard trimming based on market demand).
- Tactical Decisions: These translate strategic direction into specific actions for departments or processes. (e.g., Developing a training program for barbers on beard trimming techniques).
- Operational Decisions: These are day-to-day decisions made to ensure smooth and efficient execution of tasks within departments. (e.g., Deciding on the order in which customers are served).
- Administrative Decisions: These are routine decisions related to maintaining records, ensuring compliance, and supporting overall operations. (e.g., Maintaining appointment books or ordering cleaning supplies).
Operations management decisions play a crucial role in ensuring efficient production and delivery of goods and services within an organization. Operational management combines efficient day-to-day execution with strategic planning to create a production strategy that optimizes efficiency while meeting organizational needs. It’s about translating high-level goals into actionable plans that drive efficiency, effectiveness, and competitiveness. Operations strategy is the practical implementation of the strategic aspects of operations management. Operations strategy refers to the overall plan and approach an organization adopts to achieve its operational goals. It involves decisions related to resource allocation, process design, capacity planning, technology adoption, and quality management.
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Strategic Decisions
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Tactical Decisions
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Operational Decisions
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Administrative Decisions
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Operational Management Strategic Decisions
The strategic aspects of operations management is concerned with shaping the long-term capabilities of any type of operations and its contribution to the organization's overall strategy. Strategic decisions involve defining systems, tasks, and technology aligned with strategic goals. Some examples of operational management strategic decisions include:
Strategic Aspects focus on shaping long-term capabilities and overall organizational impact. Operations Strategy translates high-level goals into actionable plans for efficient execution. These decisions work together to create a cohesive operational framework that drives success.
The strategic aspects of operations management is concerned with shaping the long-term capabilities of any type of operations and its contribution to the organization's overall strategy. Strategic decisions involve defining systems, tasks, and technology aligned with strategic goals. Some examples of operational management strategic decisions include:
- Capacity Planning:
- Strategic Aspect: Determining the long-term capacity requirements for production or service delivery.
- Operations Strategy: Deciding how to allocate resources (e.g., facilities, equipment, labor) to meet capacity needs efficiently.
- Technology Adoption:
- Strategic Aspect: Evaluating and selecting technologies that align with the organization’s overall goals.
- Operations Strategy: Implementing specific technologies within operations (e.g., automation, data analytics) to improve efficiency.
- Quality Management:
- Strategic Aspect: Defining quality standards and ensuring consistency across operations.
- Operations Strategy: Implementing quality control processes, continuous improvement initiatives, and Six Sigma practices.
- Location Selection:
- Strategic Aspect: Choosing optimal locations for facilities (e.g., factories, warehouses, service centers).
- Operations Strategy: Deciding how to configure the network of facilities to minimize costs and maximize service coverage.
- Supplier Relationships:
- Strategic Aspect: Developing long-term partnerships with suppliers.
- Operations Strategy: Managing supplier contracts, lead times, and quality assurance.
- Process Design:
- Strategic Aspect: Designing efficient processes that align with organizational goals.
- Operations Strategy: Implementing process improvements (e.g., lean principles, reengineering) to enhance productivity.
Strategic Aspects focus on shaping long-term capabilities and overall organizational impact. Operations Strategy translates high-level goals into actionable plans for efficient execution. These decisions work together to create a cohesive operational framework that drives success.
Operations Management Tactical Decisions
Tactical operations management decisions bridge the gap between strategic vision and day-to-day execution. Tactical decisions influence the organization over a relatively short to medium timeframe. They address immediate operational needs and respond to changing conditions. The decision areas include:
Tactical operations management decisions ensure smooth execution, adaptability, and alignment with strategic objectives.
Significance of Tactical Decisions
Tactical operations management decisions bridge the gap between strategic vision and day-to-day execution. Their significance in strategy implementation include:
Tactical decisions directly impact day-to-day efficiency and contribute to overall business success.
Tactical operations management decisions bridge the gap between strategic vision and day-to-day execution. Tactical decisions influence the organization over a relatively short to medium timeframe. They address immediate operational needs and respond to changing conditions. The decision areas include:
- Resource Allocation and Coordination:
- Workforce Scheduling: Determining staffing levels, shifts, and task assignments.
- Quality Assurance Procedures: Implementing processes to maintain product/service quality.
- Vendor Contracts: Managing relationships with suppliers and service providers.
- Inventory Management: Balancing stock levels efficiently.
- Flexibility and Adaptability:
- Tactical decisions allow adjustments as circumstances evolve.
- They involve less commitment of resources compared to strategic decisions.
- Operational Efficiency:
- Focusing on achieving short-term goals efficiently.
- Coordinating day-to-day activities to meet targets promptly.
Tactical operations management decisions ensure smooth execution, adaptability, and alignment with strategic objectives.
Significance of Tactical Decisions
Tactical operations management decisions bridge the gap between strategic vision and day-to-day execution. Their significance in strategy implementation include:
- Workforce Scheduling:
- Objective: Efficiently allocate staff to shifts and tasks.
- Impact: Ensures smooth operations and meets short-term staffing needs.
- Quality Assurance Procedures:
- Implementation: Establishing processes for quality checks during production.
- Purpose: Maintaining consistent product/service quality.
- Vendor Contracts:
- Responsibility: Managing relationships with suppliers and service providers.
- Effect: Ensures timely deliveries and cost-effective sourcing.
- Inventory Management:
- Focus: Balancing stock levels efficiently.
- Tasks: Determining reorder points, safety stock, and economic order quantities.
- Resource Planning and Allocation:
- Coordination: Assigning resources (human, financial, material) effectively.
- Short-Term Goals: Aids in meeting immediate operational targets.
Tactical decisions directly impact day-to-day efficiency and contribute to overall business success.
Operations Management Operational Decisions
Operational management decisions are determinations made in regard to the routine, ongoing activities in the functional areas of an organization. These involve the daily business decisions that are done in high-volume by every business. It’s in the nature of operational decisions to be easily repeatable, because one of its primary characteristic is being consistent at following defined rules or guidelines. Another characteristic is that these decisions should often be made as quickly as possible and sometimes they are made while clients are waiting. While these decisions are often made about customers, they can also involve suppliers, employees and products. Operational decisions, unlike strategic decisions, are repetitive, routine and involve definite procedures for handling, so they do not have to be treated each time as if they are new.
Operational decisions are made within the context of longer-term strategic decisions, so that an organization’s strategy is always supported by its operating decisions. Operational decisions are taken in accordance with strategic and administrative decisions; and are related to the efficient production of goods and services. For example, to reduce cost is a strategic goal which is achieved through operational decision of reducing the number of employees; and how we carry out these reductions will be administrative decision. While these decisions are often made about customers, they can also involve suppliers, employees and products.
Operational decisions in operations management are the backbone of daily business activities. They include:
These operational decisions directly impact day-to-day efficiency, customer satisfaction, and overall business success.
Some examples of these decisions include:
In operational decision making, the decision makers have to consider factors such as volume, latency, variability, managing risk, self service and personalized. It’s in the nature of operational decisions to be easily repeatable, because one of its primary characteristic, is being consistent at following defined rules or guidelines. Another characteristic with these decisions is, they are often made as quickly as possible and sometimes they are made while clients are waiting. Good operational decisions help eliminate wasteful activities and costly reports. They reduce fraud and prevent fines. They help people in your organization be more productive, and spend their time where it really matters.
Operational management decisions are determinations made in regard to the routine, ongoing activities in the functional areas of an organization. These involve the daily business decisions that are done in high-volume by every business. It’s in the nature of operational decisions to be easily repeatable, because one of its primary characteristic is being consistent at following defined rules or guidelines. Another characteristic is that these decisions should often be made as quickly as possible and sometimes they are made while clients are waiting. While these decisions are often made about customers, they can also involve suppliers, employees and products. Operational decisions, unlike strategic decisions, are repetitive, routine and involve definite procedures for handling, so they do not have to be treated each time as if they are new.
Operational decisions are made within the context of longer-term strategic decisions, so that an organization’s strategy is always supported by its operating decisions. Operational decisions are taken in accordance with strategic and administrative decisions; and are related to the efficient production of goods and services. For example, to reduce cost is a strategic goal which is achieved through operational decision of reducing the number of employees; and how we carry out these reductions will be administrative decision. While these decisions are often made about customers, they can also involve suppliers, employees and products.
Operational decisions in operations management are the backbone of daily business activities. They include:
- Inventory Management Decisions:
- Balancing stock levels to meet demand while minimizing excess inventory.
- Deciding reorder points, safety stock, and economic order quantities.
- Scheduling and Production Decisions: Quality management is the systematic control process of keeping an intended level of quality in the goods and services, in which the organization deals. It attempts to prevent defects and make corrective actions (if they find any defects during the quality control process), to ensure that the desired quality is maintained, at reasonable prices.
- Determining production schedules based on customer orders and resource availability.
- Allocating work shifts, machine usage, and task sequencing.
- Quality Control and Assurance Decisions: Quality management is the systematic control process of keeping an intended level of quality in the goods and services, in which the organization deals. It attempts to prevent defects and make corrective actions (if they find any defects during the quality control process), to ensure that the desired quality is maintained, at reasonable prices.
- Implementing quality checks at various stages of production.
- Addressing defects, ensuring compliance with standards, and maintaining consistent quality.
- Pricing and Sales Decisions:
- Setting product/service prices to maximize revenue and profitability.
- Crafting sales strategies, discounts, and promotions.
- Supply Chain Management and Logistics Decisions:
- Optimizing supply chain processes, including sourcing, transportation, and distribution.
- Selecting suppliers, negotiating contracts, and managing lead times.
- Maintenance Decisions: These decisions relate to what the organization needs to do to maintain quality and keep resources reliable and stable. Machinery, tools and equipment play a crucial role in the process of production. So, if they are not available at the time of need, due to any reason like downtime or breakage etc. then the entire process will suffer.
- Maintaining equipment, machinery, and facilities to prevent breakdowns.
- Scheduling preventive maintenance and addressing repairs promptly.
- Human Resources (HR):
- Operational Aspect: HR functions are integral to daily operations.
- Responsibilities:
- Recruitment and selection of employees.
- Training, development, and performance management.
- Compensation, benefits, and employee relations.
- Impact: Efficient HR practices enhance workforce productivity and satisfaction.
- Job Design:
- Operational Decision:
- Structuring job roles, tasks, and responsibilities.
- Determining work processes, skill requirements, and job enrichment.
- Objective: Optimize employee performance, motivation, and well-being.
- Influence: Job design affects operational efficiency and overall organizational effectiveness.
- Operational Decision:
These operational decisions directly impact day-to-day efficiency, customer satisfaction, and overall business success.
Some examples of these decisions include:
- Which customer orders/jobs to schedule for production - [Production]
- Which components and raw materials to buy from suppliers, - [Purchasing]
- Which production equipment to schedule for use, [Production Scheduling]
- The nature of a marketing campaign - [Marketing]
- Where to invest excess funds - [Finance]
- Determining how much inventory to keep on hand. [Operations]
In operational decision making, the decision makers have to consider factors such as volume, latency, variability, managing risk, self service and personalized. It’s in the nature of operational decisions to be easily repeatable, because one of its primary characteristic, is being consistent at following defined rules or guidelines. Another characteristic with these decisions is, they are often made as quickly as possible and sometimes they are made while clients are waiting. Good operational decisions help eliminate wasteful activities and costly reports. They reduce fraud and prevent fines. They help people in your organization be more productive, and spend their time where it really matters.
Operations Management Administrative Decisions
Administrative decisions in operations management bridge strategic planning and day-to-day execution. They encompass routine tasks, resource allocation, and coordination. Examples include workforce scheduling, quality control procedures, and vendor contract management. These decisions ensure efficient operations and support organizational goals.
Administrative decisions within operations management are essential for efficient day-to-day functioning. Some examples include:
Administrative decisions are the backbone of operational success, ensuring effective resource management and streamlined processes.
Administrative decisions in operations management bridge strategic planning and day-to-day execution. They encompass routine tasks, resource allocation, and coordination. Examples include workforce scheduling, quality control procedures, and vendor contract management. These decisions ensure efficient operations and support organizational goals.
Administrative decisions within operations management are essential for efficient day-to-day functioning. Some examples include:
- Resource Allocation (Budgeting):
- Purpose: Distributing financial resources among functional areas and product lines.
- Impact: Ensures optimal utilization of funds and supports operational goals.
- Scheduling of Operations:
- Objective: Determining work schedules, shifts, and task assignments.
- Efficiency: Ensures smooth workflow and timely production.
- Supervision of Performance:
- Responsibility: Monitoring employee performance, adherence to processes, and quality standards.
- Outcome: Maintains operational efficiency and effectiveness.
- Control Actions:
- Application: Implementing corrective measures when deviations occur.
- Result: Keeps operations on track and aligned with organizational objectives.
Administrative decisions are the backbone of operational success, ensuring effective resource management and streamlined processes.