How Can Your Business Thrive by Using Operations Management Theory?

operations management theory
operations management theory
operations management theory

How Can Your Business Thrive by Using Operations Management Theory?

What is Operations Management?

Bar Rescue is a reality television show produced in the United States and hosted by John Taffer, an expert in the bar and restaurant industry. Taffer travels to different bars and restaurants throughout the country. The one thing these businesses have in common is that they are failing. Owners are losing profits due to health and sanitary issues, wasting alcohol due to over-pouring drinks, serving sub-par food, and mismanaging relationships with their supply chain. Owners are frustrated, workers are exasperated, and customers dissatisfied.

After Taffer comprehends all of the problems a particular business is experiencing, he initiates a complete overhaul that crosses all business divisions. This overhaul often includes building re-design, marketing efforts, menu changes, rearranging of staff, and initiating new policies and procedures. This creates a holistic system to initiate efficiencies and process improvements designed to reduce waste and enhance operational activities. After incorporating Taffer’s plans, most of the businesses are able to rebound and prosper. John Taffer’s work is an example of how businesses can thrive by implementing the principles of Operations Management Theory.

Operations Management Theory refers to the strategies used in structuring and administering business practices to create the highest level of efficiency in an organization. The ability to convert materials and labor into goods and services in the most efficient way possible is what maximizes profits. According to the blog, What is Operations Management Theory and How Can it Help a Business, Operations management involves specific responsibilities:

  • ensuring the business operates efficiently: using the least amount of resources necessary to meet customers’ requirements to the highest standard that is economically possible
  • managing the process to convert raw materials, labor, and energy to goods and services.
  • exhibiting effective interpersonal communication and conflict-negotiation skills
  • demonstrating rational analysis and critical thinking skills
  • possessing and utilizing technological knowledge

Operations Management Theory

Operations management takes four theories into consideration. Business process redesign, reconfigurable manufacturing systems, Six Sigma, and lean manufacturing.

Business Process Redesign

When businesses need a jump start return on investment, cost reduction, or quality of service, one way to achieve these opportunities is to redesign processes. A business process can be redesigned in  any of the following areas: manufacturing and production and/or marketing, sales, and customer service, to name only a few.

Reconfigurable Manufacturing Systems

A reconfigurable manufacturing system (RMS) is  a system “designed at the outset for rapid change in its structure, as well as its hardware and software components, in order to quickly adjust its production capacity and functionality within a part family in response to sudden market changes or intrinsic system change” (Koren, Jovane, Heisel, Moriwaki, Ulsoy, & VanBrusell, 1999).

Six Sigma

Six Sigma is a strategy designed to improve the quality of process outputs. The Six Sigma program identifies and removes the causes of defects and errors by minimizing variability. It uses strategic quality management tools such as statistical analysis and trains employees to become experts in these tools. Six Sigma projects follow a specific sequence of steps including process mapping, trending charts, calculations of potential defects, ratios, and statistics to accomplish defined goals.

Lean Manufacturing

Lean is a production theory that considers the expenditure of resources for any goal, other than the creation of value for the customer, wasteful and thus a target for elimination. Lean starts with the customer and values any process or action for which a customer will pay. All aspects of production workflow are evaluated to find waste such as excess motion, excess inventory, and overproduction.

Effective Operations Managers

Perry Pearce, Operations Management expert, explains that operations management is at once, “strategic, tactical and operational”. He describes that effective operations managers:

  1. Know their customers
  2. Are effective in their communication
  3. Know the organization’s financial performance
  4. Know how to motivate their team
  5. Know how to track and analyze staff performance
  6. Know how to maximize the learning experience
  7. Know how to use their staff appropriately
  8. Delegate
  9. Keep consistent standards
  10. Communicate pride in their organization and their standards

Having a theoretical understanding of operations management and the ability to apply concepts from business process redesign, reconfigurable manufacturing systems, Six Sigma, and lean manufacturing across business units can accelerate a business on its journey from surviving to thriving.