Strategic Operations Management - The Business Processes

Published by MBA Skool Team, Published on November 09, 2011

The concept of management has always been easy to define but hard to implement. In fact, apart from its usual definition of just being called as a process, there is so much to be added upon. Companies in the current world scenario are not being able to figure out those missing links in their management activity. Operations management has been one of those links which if been identified and implemented properly, could result in the accomplishment of organizational goals. There are hardly a handful of companies namely Dell and Toyota who have exploited their operational efficiencies which have helped them in getting more market share. The operations management is a very important area to be focused upon. There are a few aspects which will make an organization to have strategic operations at work which includes mass customization, lean production, agile manufacturing, customer­-centric provision and many more.


Most of the organizations use operations management which is held responsible for co-ordinating other parts of functions such as marketing, finance and others. Japanese for example are the ones who insisted on the western way of doing things and their main weapon was that they turned on to pure manufacturing virtuosity. They started buying goods from the western countries and produced goods of their own in the similar way. Later, they were so successful that they cannot compromise on the defects, reliability and durability of the components they supply. These acts of theirs do not necessarily mean that they were operations driven but were actually good in applying things which were successful in the past. An operations manager in a company has a lot to perform and is held the responsibility of capacity management, decisions regarding locating the service, processing the management, technology management, human resource management and integration. Earlier within an organization, operations management was more concerned with the cost factor and how to manage it but now the whole scenario has shifted to the value management. In the past, companies were expected to either bring down the cost of goods or sell the goods with differentiated features but now with the emergence of newer technologies and innovations taking place within no time has lead to the compulsion of using both. Capacity management is another crucial element in strategic operations management and has to be controlled and monitored on a time to time basis. Defining operations management is not an easy task like any other managerial functions. It holds a network of activities within its framework and these activities are interdependent. It is basically concerned with a transformation process which takes up the inputs and converts them into outputs along with various other supporting activities.

One can often find the senior level managers finding it difficult to deal with strategic issues, which is the reason why they have to first try and understand the concept and then try and exploit the strengths of the organization to produce better results. The results could be in terms of getting more market share or may end up creating value for the customer with which he or she feels satisfied. Even these days you can see more and more companies forming alliances and outsourcing their activities to other companies which are specialized in these areas. The benefits of outsourcing activities are huge. One of the main advantages is that the company which is outsourcing its activities will be able to focus on their core competencies which will help  in performing tasks in a better way. It is a very healthy way of carrying out a process and proves to be a win-win situation for both the alliances. Now, these are also part of the operations management. The corporates of the 21st century are very much into strategic business decisions and it plays a vital role in taking the company to the next level of competency. The strategic business decisions are one area which is also an important part of the operations management. There are a few key questions which a company need to ask itself before even thinking of proceeding into an activity. the first question could be as what area of business is the firm in? the second one could be, what is the area of expertise or which area of operations is the company more specialized in? can I as a company go for the outsourcing option and if possible, what, when and how are the questions which you need to ask yourself ?. Another question can also be added to this list which is how best can you exploit the opportunities coming your way and how quickly can you do it?. There are can also be a few external threats which can affect your new and existing players. Therefore, the threat factor should also be assessed and put under the strategic business decisions.

When coming to the responsibilities of an operations manager, he has to ensure that he performs his responsibilities within the organization and maintains a cordial relationship with the suppliers and end customers externally within the supply chain network. Sometimes, for deciding the involvement of an operations manager inside the supply chain framework rests on a number of factors which can be the reputation of the company, human resources, nature of the company and its size. The task what an operations guy has to perform can be very challenging. Normally, it is not easy to find out what the customer demands and how to meet it. Therefore, an operations guy always has to be in touch with its marketing person. A marketing guy would be able to tell what the current market situation is and what is the new demand for which the customer is looking for? He does this task according to a number of forecasting techniques which forms the part of marketing expertise. So, there is always a critical link between the operations department and the marketing department. If the marketing department of a particular company is not efficient in their way of operating things, then it becomes really difficult for the operations guy to produce as he would not be knowing what is to be produced, when it is to be produced and how much of it to be produced?. So, there has to be a good level of communication and coordination built between these two parties. The manufacturing is a very important part of the operations strategy and this fact was neglected in the past. Not many know that manufacturing is closely related to the planning process and it should be given a proper look through. It is also said that, for a manufacturing process to be successful, it has to maintain a certain level of consistency in its operations whereas there is always a confusion regarding the fact that when and where operations strategy might come into the picture involving strategic planning process. The manufacturing strategy has taken a whole new picture these days which includes a mixture of sophisticated process functions like lean production, JIT, TQM etc. some may say that it is just one of the three or a combination of the three. One of the key roles in developing a strategy for a manager is to be aware of the competitiveness and put their capabilities in order to meet such a requirement. Forming an operations strategy which is such a big and essential part of the overall business strategy of an organization, has a lot to do in terms of bringing up the company’s standard and the margin of profit. Profit making is not just the target of an operations management alone but is the ultimate goal for an organization and is the driving force for an organization to survive or to further expand.

The service operations are yet another important aspect of the strategic operations management which can even be called as the service profit chain. The service profit chain works on a simple principle of achieving profit and creating goodwill for the firm by placing an effective operations strategy. According to service operations, a strategy is one which will tell you where to place the effort, how the performance can be measured and how to control the cost and quality element of a product or service. a new thing is been framed out of this, which is called the service delivery system, which  would land you to a list of ingredients namely facilities, layout, equipment, procedures, technology and employees which is needed in order to achieve this strategy. The operations strategy even says that there is a strong link between the capacity of a firm and customer satisfaction. If you are able to produce in bulk and could quickly deliver it to the maximum number of people, then it shows you have a good capacity and efficient operations strategy. The operations management is undergoing a rapid change and even the responsibilities of the operations manager in the future will be more complicated as he will be required to handle more activities than what it is now. It may not be applicable to that extent in the manufacturing sector but will certainly have an impact within the service settings.

This article has been authored by Sanju Mathew from School of Business Logistics, Chennai

Views expressed in the article are personal. The articles are for educational & academic purpose only, and have been uploaded by the MBA Skool Team.

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