The need for organizations to improve productivity and quality is at an all-time high. With competition increasing exponentially, effective operations management and decision-making can have a major impact on your organization’s success. Operations is at the core of most businesses because it tends to consume the most resources in labor, materials, equipment, energy, and capital to manufacture products and deliver services. We are living in a global economy with competition coming from countries with lower cost of operations. Operations management is essential to gaining a competitive edge.
I worked with a company to improve their ordering and delivery process. When I started with them, I discovered that they did not have any kind of documented process for ordering material produced by a third-party provider. There were no documented procedures on how to process the material received and then deliver the final product to their customer. The current undocumented process was random and changed each day. In order to correct this problem we value-stream mapped how they thought they did it (their current state) and then process mapped each step to discover how they really performed. Once we completed that, they could see why there was chaos within the organization. We redesigned the process to make it significantly more linear and then documented it so they could follow it each and every time. This created a standard process, which generated consistency of operations.
- Processes and Procedures: Every organization needs documented processes and procedures to create consistency as to how work gets done. Without documented processes and procedures, there is randomness, which is the enemy of efficiency. A process is made up of a variety of functions and we cannot improve the whole without improving the various parts. Process improvement is necessary to be competitive in the marketplace, and that starts by having well-documented processes and procedures in place.
- Standard Work: Creating standard work procedures is the foundation for organizational improvement. Standard work represents the current understanding of the best way or the right way to perform work to create consistent results, eliminating confusion and chaos. If you watch a professional golfer, you will notice that they have a methodical, structured approach that creates consistency within their actions. This is usually the result of considerable time with coaches and trainers to create a standard operating procedure that will generate predictive results. It is the same in business. If we want to generate consistent, predictable results, we need processes and procedures that create standard work.
- Capacity: Capacity is the productive capability of the organization to achieve a specific output of products or services within a given period of time. Capacity is typically measured as a quantity of output per unit of time. Capacity planning is critical to an organization’s success. If the company has too much capacity, its inventory levels can rise, or it may underuse its workforce and equipment. If the company has too little capacity, it can lose customers to the competition because of the lack of ability to meet demand. Capacity decisions are important, because increasing capacity usually involves a large capital outlay. Maximizing capacity increases throughput and reduces cost per unit.
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