The Five C’s of Operations Management are critical to building a successful business. These factors must all be accounted for, including customers’ changing needs and how these factors might affect growth or decline in the company’s ability to provide products or services to meet these demands. Scott Tillery, a Continuous Improvement Manager from Liberty Township, Ohio, believes that a balance is necessary between satisfying customer needs and keeping costs within budget.
Going over budget would likely result in in hardships for companies and its employees if sales did not at least offset those expenses. A mistake companies make as a reaction to shrinking margins is to stop investing in safety, quality, and their teams. Customers are then negatively affected and retention suffers both with customers and employees. Costs go up and sales go down — not a good formula for success.
What Is Operations Management?
Think of operations management as the way business is run. Using different techniques, managers try to get employees to perform their jobs well to reach their goals and objectives while satisfying customers. In today’s business world, it is all about providing excellent customer service. Scott Tillery feels companies should also get products or services produced and brought through the supply chain quickly enough to be available when needed or desired by customers for prices that will hopefully result in a healthy profit margin without tying up capital in excess inventory.
With excellent Internet competition, balancing these factors might be difficult, because many Internet-based companies do not require you to drive to a store to make a purchase. You click on a button that says, “Add to Cart,” for example, and the product is shipped to you within a few days. This means that offering excellent customer service also requires having products available through online sales. If customers cannot find the items they want on your website, there is no guarantee that they will not look elsewhere; it could be that they will order from other companies instead.
Businesses are in the business of making money. The primary way this is achieved is by creating an energized accountable culture focused on continuous improvement, providing value to customers, and encouraging customers to make purchases with your business rather than shopping elsewhere. This process involves decreasing expenses by finding ways to increase productivity or efficiency while maintaining quality control to meet the organization’s goals.
Below we will discuss The 5 C’s of Operations Management.
Customer Service
Customer Service has always been the number one priority of successful business owners. Scott Tillery believes that even the most demanding customers can be won over by developing a partnership relationship with customers, opening up effective lines of communications with customers, and offering excellent customer service with polite and respectful behavior anytime questions or problems occur.
This factor comprises two different aspects: cost control and increasing productivity while maintaining quality control. The trick here is finding a balance between these factors so that costs do not get out of hand and product availability meets demand without a backlog that keeps customers waiting too long for things they have paid for to come in the mail or from being available store shelves.
Inventory management has to become very important, because keeping enough inventory on hand to meet demand means that any unforeseen circumstances will not result in telling customers that they cannot have any more items because the store has run out of inventory.
Cost Control
This is one of the most important factors to consider in maintaining a successful business. Ultimately, there should not be any costs, as each expenditure should be considered an investment in the business and the anticipated return on that investment calculated and monitored. If expenses become too high, they can affect your ability to retain customers. Scott Tillery understands that it is difficult for customers or clients who pay their invoices on time (if not early) to continue doing business with you if costs continue to increase as they have been.
Some ways that businesses maximize investments/decrease expenditures include:
- Increase employee engagement.
- Implement key performance indicators centering on safety, quality, and productivity.
- Implement incentive programs for all employees focused on safety, quality, and productivity.
- Improve the accuracy and speed in which financials are delivered.
- Institute a rigorous inventory management program.
- Establish lean methodologies.
Capacity
The amount of product produced or sold in a given period is called capacity. Businesses need to understand how quickly they can have their products each month, whether one widget every five minutes at the factory or 100 copies of a magazine per hour at the local print shop.
Capacity must be managed carefully as increasing production means hiring more employees and spending more money on salaries and benefits. Cash flow will be affected in the short term as the investment in growth occurs. Suppose demand is not high enough to meet your capacity. In that case, you might find yourself with too many employees who cannot work efficiently (or at all) because there is not enough work available for everybody. Taking a strategic approach to capacity is critical.
Constraints
Every business has a set of constraints to deal with to remain successful. These can include space, machinery, labor capacity, and materials used in the production process. It is essential to find ways to remove those barriers as much as possible so that those factors do not increase costs.
Change Management
Change is a constant factor in business. Being a leader in that change could increase your market share. New competitors emerge and new technologies roll out, making certain aspects of your product or service obsolete. Changes in the economy and significant weather-related events can affect how much money your business generates if you cannot adapt quickly enough to those changes.
Businesses have to be willing to invest time and resources into training employees to deal with different obstacles that come up from time to time. It also requires research into technological advancements that might improve the current state of a company’s operations to be prepared for future change rather than being stuck behind a competitor who has adopted a newer method of doing things.
Final Thoughts
As we can see, operations management is a complex and ever-changing field. What is on the horizon — in terms of new technology, changes in demand for products and services, and even competitors trying to find ways to get ahead of the curve — is exciting and ever evolving.
Businesses need to remain engaged with their internal and external customers and remain flexible enough to adapt quickly when problems arise, while remaining efficient enough to produce the highest possible quality product or service at an affordable price point for customers or clients.
