Change Management and Operations Management
How it works
Operations management is the lynchpin to a company’s success: maximize efficiencies to achieve a competitive advantage. Operations management is an immense topic and this paper will address the topic from a general perspective and the examples will focus primarily on the general tenants. Through years of information services, I have observed or have been a part of styles that have been successful and less so.
There are three major groups of activities performed by operations management, deriving from its planning or designing, implementation, and control.
“All activities involve considering assets, costs, and human resources, and are preceded by a thorough analysis of processes (Braccioti, 2017)”. Before planning processes or designing products, there needs to be an analyst of the market to test the demands. From there and with a clearly defined mission and goals work design can begin. Work design is the portion of the operations strategy creating a structure fostering productivity by focusing on the job design, employee compensation and job measurement that captures value and enables the company to meet objectives.
The work design looks at the tasks and factors time, capacity, staffing and the relation to other tasks to optimize the design and reduce waste. Recognizing inputs, expected outputs, and the related controls and tracking allows an operations manager to manage the design and adjust even after the process has become functional When designing or implementing a company may what to consider a lean operation. This approach uses less resources (human, inventory, floor space) while increase productivity, lower costs and short cycle times. The focus is on process that creates value, eliminating waste to create production flow, and produce only according to customer demand.
Another name for this process is Just in Time (JIT), where services are performed just as then are needed. There as a few down sides to this approach; there are few resources (human or inventory) if a problem arises. If the supply chain gets interpreted production could halt, due to low inventory.
There are certain cost factors in the operation function that will continually need to be reviewed, input costs, labor costs, processing costs, inventory cost and quality management. If the company plans to achieve competitive advantage through cost leadership; provide the lowest price in the market, there are a few strategies that can be used. “Economies of scale, a business can cut costs by increasing the scale/size of the business. Simply put, the larger the company the larger(greater) the output, the lower the costs per unit.
Another advantage of size is that companies can buy their supplies in bulk and negotiate a lower per unit price. Keeping in mind that there may be a cost increase as the company may be forced to store these supplies (PrimeOnlineTutor,2015)”. Technology can provide better methods of processing and production goods or service. Focus can also contribute to lower costs. A small company may not be able to produce a variety of goods, but they can put all their focus on one product and produce it in a very efficient way.
Operations is not only about the goods and services but what differentiates a good from a service at a basic level. Goods are tangible items which tend to be standardized. Goods can be owned, and considerable amount of time expounded between production and consumption. The profit for goods is relatively easily calculated. Service on the other hand are intangible, generally customized and cannot be owned. “Production and consumption occur at the same time; The value of the service depends on what the customer is willing to pay (PrimeOnlineTutor,2015)”. What are customers prepared to pay, maybe they will pay more if more time is spent on the service.
For example, a salon may charge two hundred dollars for a haircut and color but provide a posh experience offering coffee or tea in a calming environment and use very good product Having a great reputation can also increase demand. Varying the quality of materials/technology used in service delivery will contribute to cost.
Implementation needs to be accompanied by quality. To understand quality and quality control operations managers and employees need to understand the definition of the product or service including key product service attributes, quality characteristics and the standards for each attribute. There are two aspects of quality, control and assurance, each having the same desired output be are approached from a different perspective. Quality control (QC) is used to verify the quality (predetermined standards) of the output. This process is considered reactive as the inspection is with the output (after development).
The goal of QC is to detect the imperfection before the output is sent out of the factory. QC identifies the why a defect occurs then uses human or mechanic resources to correct the issue. QC is normally enforced by a specific team of individuals. Quality assurance (QA) is used to ensure quality of process which is used to produce the output. QA is a proactive process, as it seeks to prevent the defect from occurring. The goal of QA is to develop/improve a process so that the product is produced as all with unacceptable flaws. QA approaches change by initiating audits/inspections of the operations system. QC is enforced in a more holistic approach; this can lead to a bureaucracy.
Companies need to constantly be studying the market to identify new trends, such as a shift in customer needs/wants, political climate change or the introduction of a new competitor. Looking at the tactics and procedures portion in detail, forecasting of long-term and short-term changes in the industry allow the operations planning to work to meet demands. There are three basic types of forecasting: economic, technological, and demand. Economic focuses on the predictions of certain indicators such as housing starts, inflation rates, money supplies, and other indicators.
Technological monitors trends in emerging technologies that could impact (positively or negatively) their products or that of their competitors. Demand/Sales forecasting deal with the company’s products and estimate consumer demand. To meet the demands requires consideration of the workforce and facilities currently in place and what will be needed in the future; the product, its current state and the what projections of change is needed to meet the moving demands of the industry. Companies can use qualitative techniques, this approach uses soft information (such as human factors, personnel opinions, and customer satisfaction) for forecasting. The alternative is using quantitative techniques, uses hard data like metrics, sales figures, and cycle times. Using both quantitative and qualitative methods tend to provide better results.
Business must account for factors from a cross functional perspective when looking at the three functions of finance, marketing and operations for the organization. Understanding the future needs of the company to meet upcoming demands is important. Within forecasting there are three underlying guiding principles regardless of the technique or model used. The first is that the processes remain constant for planning. The second is an understanding that there is a difference between planning and reality. Large scale forecasting is more accurate than focusing on individual product or services.
Last, the accuracy decreases as the time covered increases. While not perfect, forecasting becomes more accurate when incorporating qualitative and quantitative techniques to account for differing information types. From forecasting, companies need to plan and manage processes to satisfy their customers’ needs. For example, an IT company building an application will need to be continuously aware of wants, needs, environmental factors and organizational process assets.
An example of where operations management properly executed has completely turned a company around is Apple. By the 1990s, the company had only a minor share of the computer market and was not healthy. When Steve Jobs reinvigorated Apple, he focused on building the brand image and personnel that could take risks to innovate at the strategic and tactical levels. They focused on building products and images that played to people who wanted computers that would do more than just business tools.
Steve Jobs saw that the computer was moving beyond personal business and took the chance to position Apple to dominate emerging markets in the 2000s. Apple’s organizational structure is a big part of the success with the hierarchy set up in a spoke-and-wheel hierarchy that has product-based units working with each other, but final products have a central control. The functional offices are kept weak to limit authorities and optimize innovation. Apple measure’s it’s success by the revenue of its stores, how productive the supply chain is and the effectiveness of the employees. They are very careful to locate not only offices but stores to maximize the impacts on revenue and productivity. Apple’s climb to dominance is a textbook case of the effective use of operations management.
“Supply chain management (SCM) is the centralized management of the flow of goods and services and includes all processes that transform raw materials into final products (Hayes, 2020)”. SCM can be very complex in today’s market, my break down and explanation will be at the most simplicity level. Supply chain management might have three entities, a supplier, producer and customers. There would be four flows that connect the entities: flow of physical materials from the supplier to the producer, the flow of primary products from producer to customer (primary flow), flow of cash from the customer to the producer/material supplier. Information would flow back and forth to all three entities along the chain. And a reverse flow of products returned. A closer look at the what is flowing through these chains.
Primary product flow may contain materials, components, supplies and/or services. Information flow would include invoices, sales material, receipts, orders and specifications. Primary cash flow consists of payments of products and supplies. Reverse product flow contains returns for repair, replacement of goods/service, and disposal. There are three types of SCM strategies: reactive, stable and efficient reactive. The stable strategy’s focus on execution, efficiencies and cost performance. These SCM’s generally will not be working with real time information and have a more simplicity approach. Reactive strategy fulfills demand from trade partner. These SCM have event-based triggers that will determine demand. Efficient Reactive strategy’s focus efficiency and cost management (total delivered cost of the product); efficient reactive is designed to rapidly replenish a supply. This strategy may use have multiple distribution center, logistic centers and manufacturers to delivery and restock as fast as possible.
There are two types of SCM, vertical integration and horizontal integration. Vertical integration is when the company owns the entire supply chain. Every member of this chain produces a product but it’s the totality that is necessary to satisfy the need. Target would be an example of the this, it owns the manufacturing plants and processes, controls the distribution, and is the retailer. This eliminates other outside manufacturers, transportation, or other logistical processes. Target can therefore offer its products at a much lower price. Horizontal integration is where a company increasing production of goods/services at a single point of the supply chain.
This may be accomplished by internal expansion, acquisition or merger. Facebook acquiring Instagram, they are both performing in the social media industry. Facebook wanted a stronger hold in that marketplace and the best way for them to obtain was through Instagram.
The contract I worked under was recompeted and awarded to another firm providing me with a unique opportunity to see operations management performed on the same large legacy system by two different companies. The new company, ABC fully assumed the system in mid-December 2019. I was involved in the transition with the incumbent XYZ and spent 4 years on the contract. Both companies did make similar mistakes after transition regarding execution of daily activities.
ABC company acquired roughly 20 employees from the XYZ whereas the XYZ, was not able to acquire any employees from their predecessor. This should have allowed ABC to excel in data processing and support. The issue that I’m discovering is that the new company (ABC) although versed in DoD IT infrastructure, has not fully grasped the legacy system and the capabilities of their employees to include the employees from XYZ. This has already disrupted daily processing into the warehouse to the point they are weeks behind on data and applications within the system are not functioning.
In contrast, XYZ, didn’t have the luxury of the employees of their predecessor. This meant data processing and development was solely on the shoulders of employees that had never seen the system. This caused operation to take a huge hit and took over eight months to recover from. So XYZ had a vision, and the employee capability but took too long to fully understand the system and lacked precision in their execution. ABC had the vision, the employee capability to include understanding but have not been able thus far to merge the three into successful execution. It doesn’t appear at this point that ABC is taking their established process for change management and adjusting to fit the needs of this project, they have instead appointed a developer to create this process which seems redundant.
Management under ABC has taken the more hands-off approach with its employees but has been extremely involved in client relations; this is a sharp contrast to XYZ, whose management was hands on with both employees and clients. Thus far, ABC’s approach has left some employees overwhelmed with work and others under tasked with both having little understanding of priorities.
I have experience writing personnel work documents describing roles. The project I worked on was assumed from another contractor and had been functional for the government agency for many years that managed pay, retirement and bonuses for individuals. The challenge was the operations were not well documented and the previous IT company did not provide all the information in the transition. I had to lead a team deconstructing work product to back into processes on the product resulting in an understanding of customer value and job design methods, inputs outputs and controls.
The tools of operations management allowed me to move successfully through this process looking at each product and input. The system had 78 databases and 30,000 separate tables. Without a mapped work design, I tracked inputs and outputs of different work products as well as their relationships to the myriad of tables. Many of the inputs come in from the state agencies so the formatting has variances that led to errors because the many tables that products pulled from. As I identified each part, I mapped and documented the process so that the tables could be standardized, and the data then be mined for better forecasting of customer needs. While I did this, I took new developers and database administrators as we hired them and trained them on the process so they could repeat the mapping and identification as they worked through the system. By the time the contract had ended, 80% of the databases were mapped and the relationships with the tables were fully understood.
On the opposite end of the spectrum, developing a new process using operations management tools working with the customer to understand their needs and desires for the short term and the long-term goals, gathering the data and properly mapping the processes. Facilities for an IT project tend to not be buildings as much as they are the servers, databases and networks. Failing to take those into considerations can lead to crashes and loss for the company and customers. I worked with the outside data providers to ensure the connections to the government payment offices were mapped and properly established to their standard as well as ours.
In the design process to make sure the outputs were high quality and of value, I had a test environment and training site that mirrored the final product so that we could validate the outputs and then train users and customers on the product. I found that the failed operations management from the prior company and the learning I gained from backing into their system rules helped me immensely with the project that followed because I had a stronger understanding of why and how to better set up operations.
One of the best books that I have read on the subject, I thought really captured and broke down not only what operations management is but how to achieve precision was Execution by Larry Bossidy and Ram Charm. The authors philosophy for operations is companies cannot be successful with without the three building blocks of execution: “essentially behavior of the leader, the operational definition of the framework for the cultural change and getting the right people in the right jobs (Bossidy)”. As I was working through my project, I sought out an Operations Management textbook to learn foundational knowledge of how I could better solve the problem of a massive yet undocumented system. I found the premises laid out in the design theory section and the quality and planning to be immensely helpful in creating a successful system.
Operations management is critical to any companies’ success as it is the management of company processes from ideas through inputs to the delivery of the product whatever it may be. It has many parts that play across the strategic and tactical levels from the processes to the people and products. Although my knowledge of operations management has a narrower focus as most of my experience has been in the service industries; my observations and mistakes have led me to research and grow my knowledge of this discipline.
- Bossidy, Larry, et al. Execution: The Discipline of Getting Things Done. Random House Business, 2011.
- Braccioti, Matteo, operational Management Study, Robert Gordon Aberdeen University 2017
- Bossidy, Larry, et al. “Execution: The Discipline of Getting Things Done.” Amazon, Random House Business Books, 2011, www.amazon.com/Execution-Discipline-Getting-Things-Done/dp/0609610570.
- Hayes, Adam. “Supply Chain Management (SCM): What You Need to Know.” Investopedia,
- Investopedia, 5 Feb. 2020, www.investopedia.com/terms/s/scm.asp.
- Institute, 19 Feb. 2019, panmore.com/apple-inc-operations-management-10-decisions-areas-productivity
- PrimeOnlineTutor. “Iitutor.com.” YouTube, YouTube, 20 Dec. 2015, www.youtube.com/user/PrimeOnlineTutor.
- Rowland, Christine. “Apple Inc. Operations Management: 10 Decisions, Productivity.” Panmore
- Stevenson, William J. Operations Management. McGraw-Hill Education, 2012.