What Are Operations Systems?

It can seem overwhelming to read about the numerous activities involved in

operations management. One wonders where they fit into an organization? How are
they connected? This is where a systems view is very helpful.

What is a System?
Simply put, a system is an organized collection of parts that are highly integrated to
accomplish an overall goal. The system has various inputs, which go through certain
processes to produce certain outputs, which together, accomplish the overall desired
goal for the system.

For example, an automobile is a system. Its inputs are gasoline, a driver, a steering
mechanism, tires, as well as various tubes, pipes and electrical cords. The system's
processes are when they work together to burn the gasoline, resulting in the
systems outputs of the tires moving and the car steering as the driver prefers. The
overall system's desired goal is a very useful automobile.

What is an Operations System?

The primary activities in operations management is a system -- they are all
integrated and aligned with each other. The operations manager's job is to ensure
they are all effectively and efficiently working together in order to produce the
desired goal of useful goods and services for customers.

Look at this diagram of a system of an overall organizations. Notice the various

inputs that are processed to produce certain outputs and outcomes (desired goals).

An operations system includes, for example:

1. Inputs -- such as expertise, best practices, funding, equipment, facilities and

technologies, as well as the customer's feedback and the overall
organization's strategic priorities
2. Processes -- such as planning (capacity, product and service design,
production, facilities, jobs, inventory, quality control, etc.) and managing
productivity to produce high-quality products and services
3. Outputs -- high-quality products and services
4. Outcomes -- very satisfied customers

Feedback from customers should be continually collected and considered as an input

to the processes of the planning the development and production of goods and
services. In that way, the operations system is really a recurring loop of outcomes
which, in turn, influence the inputs to the next round of the system.

Align Operations Systems With Strategic Planning

Notice that one of the inputs to the operations system is the strategic priorities of
the organization. It is critical that the operations system be closely integrated and
aligned with the purpose (the mission) and priorities (strategic goals) of the
organization. Otherwise, the system will not be operating as effectively as it should
be. For the system to be operating as efficiently as it should be, there should be
closely integrated and aligned parts within the system.

Phase 1: Planning Operations Systems

Product/Service Planning
The planning of products and services (the outputs from the system) includes
market research to:

 Clarify the needs and wants of potential groups (market niches) of customers,
as well as how those needs and wants might be met with certain products
and services.
 Clarify how the new products and services should best be provided to those
target markets.
 Identify competitors, as well as potential collaborators.
 Suggest the best terms in pricing for the products and services.
 Suggest how best to advertise and promote to those groups of customers.

The results of that research produce a specification of the product or service. Various
feasibility studies and perhaps a prototype might be done, as well, to refine the
description of the product or service. See
Product and Service Development

The specification could be further enhanced by adding information about costs to

develop and produce the product or service, including employees, facilities and
management. This information is often included in a business plan. (This information
is also sometimes referred to as the business strategy.)
All About Business Planning

Capacity Planning
Capacity planning includes specifying how many of the outcomes (products or how
much service) will be produced and how often. That includes predicting, or
forecasting, the demand for those outcomes. The previous market research will be
very useful here. There are a variety of other tools that could be useful, as well.
Four Steps to Forecast Total Market Demand
How to Choose the Right Forecast Technique
What is Demand Forecasting and How Can It Help Your Business?
What Are the Best Demand Planning Software Tools for 2019?

A useful planning technique to ensure consideration of many possible influences is

scenario planning, including to consider various external driving forces that could
have a strong influence.
Driving Force Impacts for Environmental Scanning in Strategic Planning
It also might be useful to hire an expert with knowledge about developing the
particular product or service.
How to Successfully Hire and Work With an Excellent Consultant

The results of the planning should produce estimates of the needed inputs to
produce the product or service, including types of expertise needed, amounts of
certain kinds of materials, what technologies to use, etc.

Facilities and Layout Planning

This is one of the most critical activities in operations management, not just because
they underlie and facilitate the activities to very effectively and efficiently produce
products and services, but also because facilities and their maintenance are one of
the most expensive, as well. Fortunately, there is a variety of helpful articles about
how to do this acclivity in operations management.
Relationship Between Plant Layout and Material Handling
Plant Layout and Material Handling
Introduction to Manufacturing Facilities Design And Material Handling
The Ultimate Facility Manager Checklist

Job and Work Design

The Business Dictionary defines work design as:

 "An arrangement in the workplace that has the objective of overcoming

employee alienation and job dissatisfaction that comes about from mechanical
and repetitive tasks in the workplace. Work design is used by organizations to
boost productivity by offering employees non- monetary rewards such as
satisfaction from a greater sense of personal achievement. Also called job
design."

From Wikipedia:

 "Job design (also referred to as work design or task design) is a core function
of human resource management and it is related to the specification of
contents, methods and relationship of jobs in order to satisfy technological
and organizational requirements as well as the social and personal
requirements of the job holder or the employee."

Work Design
Work Design (Wikipedia)
Work Design in an Organizational Context
Principles of Good Work Design

Work Flow Management

"Workflow management is creating and optimizing the paths for data in order to
complete items in a given process. Workflow management includes mapping out the
workflow in an ideal state, finding redundant tasks, automating the process, and
identifying bottlenecks or areas for improvement." kissflow
The map depicts the flow of activities through the system, including its input,
processes, outputs and outcomes. These are sometimes also referred to as
operations management process maps. (This technique is at the heart of
the Business Process Re-Engineering approach.)

Workflow
What Should You Include in Your Operations Management Process Map?
9 Powerful Workflow Examples For Smart Teams in 2019

Phase 2: Planning Operations, Inventory

and Quality Control
Production and Scheduling
Production Planning
This is the processes part in the operations system where the inputs are transformed
into the desired product or service. Considerations include, for example:

 Are there technologies currently or soon available that could expedite the
production?
 Are there best practices suggested by various experts about the product or
service?
 Can components of the product be purchased as-is or off-the-shelf?
 What components are needed, in total, to produce the product or service?
 What are the costs associated with developing and producing the product or
service?
 What are the estimated demands of customers for the next six months? 12
months? 18 months? These estimates drive the scheduling of the production
activities.

This activity also includes developing a detailed map of the activities required to
obtain, assemble, integrate and test the product or service before it is provided to
customers.
What Makes a Good Production Plan?
What Must Be Considered for Production Planning?
Production Planning
Production Planning

Scheduling
A critical activity in ensuring that the operations system is highly effective and
efficient is coordinating (scheduling) the timing of activities to organize, monitor and
optimize the equipment, people and production activities. Scheduling has a major
impact on the productivity of the system.
Supply Chain Management and Inventory
Management
Supply Chain Management
"In business and finance, supply chain is a system of organizations, people,
activities, information, and resources involved in moving a product or service from
supplier to customer." Wikipedia

" Supply chain management (SCM) is the active management of supply chain
activities to maximize customer value and achieve a sustainable competitive
advantage. It represents a conscious effort by the supply chain firms to develop and
run supply chains in the most effective & efficient ways possible. Supply chain
activities cover everything from product development, sourcing, production, and
logistics, as well as the information systems needed to coordinate these
activities." Supply Chain Resource Cooperative

Guide to Supply Chain Management for any Organization: Overview and Resources
What is Supply Chain Management (SCM)
CSCMP Supply Chain Management Definitions and Glossary

The Death of Supply Chain Management

What Are the Main Supply Chain Challenges?
The Seven Deadly Supply Chain Sins

Inventory Management
Inventory includes unprocessed materials, finished products, supplies and works-in-
progress. Inventory management is a part of supply chain management that
oversees the inventory items from manufacturers to storage to where they are sold.
There must be a very careful balance between the size of the inventory of items
compared to the actual rate of their sales. Too many items in inventory means their
costs are not recovered in a timely manner from their sales. It also might mean high
costs of storage. Insufficient numbers of items means the organization cannot meet
the customer demand, resulting in lost revenue.
What is Inventory Management?
What is Inventory Management?

Your Essential Guide to Effective Inventory Management + 18 Techniques You Need

to Know
3 Inventory Management Problems and How To Avoid Them
5 Common Inventory Mistakes and How to Avoid Them

Service Design
In the past, an organization was expected to provide a product or service to the
customer, and then that transaction was done -- the activity was done to the
customer. The customer was more or less at the mercy of the organization.

Today, that is changing dramatically. Customers have a much wider range of

organizations, products and services to choose from, and they can access them
instantly. Customers can also access numerous sources of useful opinions or reviews
about the product or service even before they buy them. Thus, it is more important
than ever that organizations remain very good at attracting, satisfying and retaining
customers. That requires a carefully designed and implemented customer services
plan.

Service design "is the activity of planning and organizing people, infrastructure,
communication and material components of a service in order to improve its quality
and the interaction between the service provider and its customers. Service design
may function as a way to inform changes to an existing service or create a new
service entirely." Wikipedia
Customer Service Business Plan Template
Why Your Business Needs a Customer Service Plan
8 Steps to Creating a Superior Customer Service Plan
How to Create a Customer Service Plan
How to Create a Customer Service Plan

Quality Control
Quality management, including quality control, is crucial to effective operations
management, particularly continuous improvement. More recent advancements in
quality, such as benchmarking and Total Quality Management, have resulted in
advancements to operations management as well.
Quality Management

Quality control can be defined "part of quality management focused on fulfilling

quality requirements." While quality assurance relates to how a process is performed
or how a product is made, quality control is more the inspection aspect of quality
management. An alternate definition is "the operational techniques and activities
used to fulfill requirements for quality." American Society for Quality
Quality Control
Quality Control (QC): Definition, Importance and Tools of Quality Control
Quality Control Techniques

Phase 3: Managing Productivity

What is Productivity?
In the context of operations systems, productivity is defined as the ratio of the
output to the input of the system. The higher the ratio, the more productive the
system. One of the most common measures of productivity is output per hour. This
is important especially in manufacturing industries.
The Concept of Productivity
5 Steps to Achieving Better Results through Productivity Management
How to Create a Successful Productivity Management System
Productivity and Operations Management

Methods to Measure and Improve Productivity

Where many guidelines are in regard to increasing employee
productivity, Productivity: A Practical Handbook distinguishes between three factors
that drive productivity, not all of them around employee productivity, including:

1. Job-related
2. Resource-related
3. Environment-related

The above Handbook is a very useful overview of the many different methods to
improve productivity.

Here are various measures, or indicators, to help monitor and assess the levels of
productivity.
Measuring Productivity Levels
Operations Management (scroll down to "Metrics: efficiency and effectiveness")

General Resources
Software / Tools
How to Use Operations Management Tools in Business
Operations Management Software
Operations Management Software (reviews)