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The Building Blocks Of Operations Management


When an organization is small, the business owner is directly in charge of staff and in addition to their own duties, generally oversees all the firm’s activities.

As an organization grows though, more people are required and they specialize in tasks they must repeat constantly, efficiently, and as error free as possible. From this perspective, business can be seen as people and methods.

Design of procedures begins by breaking down a business into its key processes. This is a critical phase since this task actually defines the size, scope and broad requirements of the system. Throughout the design phase, all processes and supporting activities must be examined and evaluated to make sure they meet specific business requirements. Process owners are clearly defined and the relevant steps and means to perform each process should be documented in full.

How activities are to be measured and monitored, and how employees will be motivated to behave appropriately are also important steps in the design phase.

What is created is the Operations Management System. In its ideal, this sets out how employees do their work and how management monitors quantitative and qualitative aspects of the firm’s performance.

Some important problems arise though because too often systems grow ad hoc in response to growth pressures, and they change over time as employees leave and take their experience with them. Other issues arise because of the people element. Culture, politics, and day to day decisions all play a part in making things work and in making things break down. Then of course too there is the element of chance that can work for or against the best intentions formalized processes were meant to standardize.

So every now and again management must step back and re evaluate the “whole picture”.

Over the years, companies have used a variety of tools and methods to help them manage their business processes. Continuous improvement, change management, reengineering, six sigma, and total quality management are but a few examples. And it is funny to see how some concepts are recycled under new names. Re engineering for example was a complete concept long before it became a management fad.

But there is really no real cookie cutter approach that is a panacea because organizations are affected by firm goals, who wields the power, size and complexity, technology, the corporate culture, and its environment to name but a few key factors.

All we can really do is focus on the common elements to all Operations Management Systems, “learn“ what works best, and focus on executing well. These common elements include:

Methods and procedures
Shape of work units and groups
Shape of the organization
Management processes
Measurement systems
Training and reward systems
Information and control systems

Use these basic building blocks and tailor them. I guarantee that even with expert help you will not get it right the first time. But learn and focus on executing well and you will move ahead. Ideally you will build an organization whose diverse working elements will all work well together to achieve the firm’s raison d’etre. Because in the end, that’s what its all about.



© 2007 John B Voorpostel CA
www.iaccountant.ca


   
   
 
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