Using Operations Management Decisions as a Competitive Advantage

If you are a parent, you are an operations manager. If you oversee the bills in a home, you are an operations manager. Or if you do something as routine as driving a car, you are an operations manager. Operations are a continuous process…that involves efforts like that of a parent. Setting aside the time, nurturing with love, and using available funds to care for a child(ren). To mature and develop, a child must have the appropriate structure along with managers (parents/guardians) who encourage them to be successful in their lives. When they are not productive or trending in the right direction, their managers will guide and help them to reduce, if not, eliminate situations that do not add value to their lives.

As a business leader, performing operations management can be thought of in the same way. Leadership and management that wants to increase profits and reduce expenses via efficient, targeted operations will benefit by adopting the ‘parent-child’ concept. In other words, an organization cannot operate to its full potential without three core management functions. I think of the three core functions of marketing, operations, and finance as the “time, love, and money” parent-child concept. Businesses need that tender loving care, just as children do. As recently mentioned in 3 Core Management Functions of a Sustainable Organization, they are the main management functions all organizations perform to create their goods or services and they are necessary for the organization’s survival.

In this discussion, we will go a bit more in-depth and focus on one of the three central core management functions: operations management. There are ten strategic operations management decisions that an operations manager is responsible for are:

1.       Design of goods and services

2.       Managing quality

3.       Process and capacity strategy

4.       Location strategy

5.       Layout strategy

6.       Human resources and job design

7.       Supply chain management

8.       Inventory management

9.       Scheduling

10.   Maintenance (Jay Heizer, 2017, p. 8)

Have you had any experience with either one of these ten decisions? Possibly more than one? Does any of these decisions remind you of something you perform at your job?

If you have experience running an organization, you may have been exposed to these ten management decisions, or realities, that operations managers deal with. These decisions should be considered, evaluated, and applied favorably and effectively. Neglect can lead to missed opportunities, wasted time, frustration, aggravation, …. the whole gambit.

Aspiring or current operations managers have ten major decisions to make and attempt to synchronize them in a manner that reduces costs and increases productivity. This is in addition to collaborating with the marketing and financial managers as each manager jockey for funding for resources and funding for their respective functions. For instance, an operations manager may need to increase sales to a target rate that is too high for the marketing department to maintain demand at a high level and the funding may not be approved by the finance department. Procurement managers may need to know details of the product or service when furnishing contract agreements or making purchase orders. Operations managers will have to work closely with procurement managers once the service or product has been developed and tested, so knowing what the organization can distribute within required delivery or response times becomes critical. This can sometimes be the difference between gained or lost market share.

A good operations manager will develop a game plan or strategy for the function that steers the organization in a direction that leads to competitive advantage. Competitive advantage implies the creation of a system that has a unique advantage over competitors (Jay Heizer, 2017, p. 36). The key to the operations management function achieving competitive advantage is to win on cost, differentiation, and response (delivery) time. These are strategic concepts that if applied can lead to competitive advantage over competitors. The organization that provides uniqueness, are able to spread their costs, and speed up their response times can create a sustainable competitive advantage. Designing operations that beat expectations internally and externally will not go unnoticed by management and the organization’s customer base.

Improving quality through continuous improvements, hiring skilled and experienced staff, compliance with requirements of the client, reducing expenses, and improving productivity can widen the gap of the sustainable competitive advantage and increase profits the organization will enjoy! Remember, all organizations need an operations function, but they may almost never be the same. Be unique. Seek differentiation. Keep your costs relative to quality of the product or service, and in line with the market.

References

Jay Heizer, B. R. (2017). Operations Management: Sustainability and Supply Chain Management, 12th Edition. Pearson.

Smith, N. (2024, April 22). 3 Core Management Functions of a Sustainable Organization. Saint Petersburg, Florida, USA.

Smith, N. (2024, August 3). Strategy: A Pathway to Organizational Success. Saint Petersburg, Florida, USA.

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Meet Nikia Smith, the Project Management Consultant driving success at Business and Wealth Generations. With over a decade of advisory expertise, Nikia orchestrates strategy and operations, spearheading growth and innovation. Beyond his professional endeavors, Nikia actively participates in his community, having served on the Board of Directors at the Project Management Institute Florida Suncoast Chapter in different roles for several years. Recognized for his contributions, he received the PMI Florida Suncoast Chapter Award in 2018 for significantly boosting membership and retention and was also selected to attend the 2019 PMI North America Leadership Institute Meeting in Philadelphia. Nikia holds a bachelor's degree in management and organizational leadership with a focus on Project Management, alongside several business certificates from St. Petersburg College. He is also certified in CAPM and PMP by the prestigious Project Management Institute. For collaboration opportunities, reach out to Nikia at info@thebusinesswg.com.

3 Key Core Management Functions of a Sustainable Organization

If you have past or current experience as a manager or leader in an organization, chances are you are aware of the challenges of leading and/or directing individuals, teams, management functions, or entire organizations. On the other hand, if you do not have experience or are interested in what managers and leaders perform collectively, you should be exposed to the three management functions that are needed to run an organization efficiently and effectively. Marketing, operations, and finance are the core management functions of any sustainable organization. These three management functions are necessary for survival.

Marketing is responsible for creating demand. Other responsibilities of a marketing role could be customer retention, branding, or sales. Operations, also called production or manufacturing, is responsible for designing, developing, and delivery of the solution, service, or product. And, finance, is responsible for monitoring the organization’s financial health, paying the organization’s bills, and collecting money for the organization. Figure A, below, displays the central idea of a sustainable organization and its management components for long-term survival.

Figure A. Core Management Functions of a Sustainable Organization

Performing marketing, operations, or finance well separately can be satisfying for the short-term. But combining all three management functions together that creates a synergy can propel and allow an organization to pursue and achieve the goals they established in their strategic or business plans. While synergy between the three core functions can be cultivated to become a competitive advantage all by itself, few organizations can perform the three management functions with key performance indicators and target rates that are just above or below their industry averages that remain favorable to the organization. While profit is the idea, the key is to create or improve value and business performance by performing all three management functions together effectively and efficiently. This is the ultimate business challenge for any organization. When this ‘togetherness’ happens, management creates the ability for the organization to position themselves to improve their earnings or profits and be capable to reinvest into their employees, equipment, quality, services, or products in an intentional manner.

Management produces favorable results, monthly or annually, gaining competitive advantage by consistently providing value or returns to its stakeholders (customers, clients, local community, etc.). Management that shows good governance, has the right organizational culture, conducts effective planning, forecasts accurately, works well together at all levels, provides training, recruits or hires the right personalities for their culture, invests in facilities and equipment that produces value first, and schedules work and effort responsibly are attributes of a well-run organization. Although they are hard to lead or direct, these concepts are most definitely achievable. A solid, repeatable value-chain process that includes marketing, operations, and finance will support an organization and its long-term survival efforts.

Organizations are increasingly using project management concepts, tools, and techniques to help them achieve results. Experienced operations managers are ripe candidates to become project managers as they perform similar tasks of a project manager. Project managers have become indispensable post-pandemic as organizations seek to adapt and change with today’s times. Reduction of costs, speed to market, implementing change are just a few reasons that organizations are looking to specialized project professionals to assist them as they seek to develop plans or adapt to changes within their organization. Outsourcing to a project management office (PMO) or hiring a certified project professional to develop a project plan that an organization can use as a business roadmap or guide to help them to a achieve organizational goals has become a popular approach. This approach allows the client organization to focus on their day-to-day responsibilities while the supplier organization assists by developing plans that comply with the client organization's business requirements.

In all, these three management functions have an immediate and direct impact on an organization’s business performance and financial health. Other management functions (human resources, distribution, etc.) are important but they are indirect and pose a delayed effect on the organization. This does not give the decision makers the ‘green light’, so to speak, to make sub-par decisions because they may feel the impact is not immediate. Due diligence and vigilance to the organization’s staff, finances, goals, and objectives will help cement a foundation. Good management = Strategy + Finance!

References

Jay Heizer, B. R. (2017). Operations Management: Sustainability and Supply Chain Management, 12th Edition. Pearson.

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Meet Nikia Smith, the Project Management Consultant driving success at Business and Wealth Generations. With over a decade of advisory expertise, Nikia orchestrates strategy and operations, spearheading growth and innovation. Beyond his professional endeavors, Nikia actively participates in his community, having served on the Board of Directors at the Project Management Institute Florida Suncoast Chapter in different roles for several years. Recognized for his contributions, he received the PMI Florida Suncoast Chapter Award in 2018 for significantly boosting membership and retention and was also selected to attend the 2019 PMI North America Leadership Institute Meeting in Philadelphia. Nikia holds a bachelor’s degree in management and organizational leadership with a focus on Project Management, alongside several business certificates from St. Petersburg College. He is also certified in CAPM and PMP by the prestigious Project Management Institute. For collaboration opportunities, reach out to Nikia at info@thebusinesswg.com.