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Why Operations Management is Important for Your Company

Operations management is a fundamental part of any organization. In fact, Forbes magazine reported in 2011 that about three quarters of all CEOs came from an operations background. Not all these CEOs studied operations in school; only some of them did. Many majored in finance, marketing, information systems, or engineering and ended up in operations at some point in their careers.

Even if you don’t want to be a CEO or ever work in operations, you’ll probably have to work with operations people during your career. So consider these facts about the impact of operations on various business functions:

  • Engineering: Engineers are notoriously great with numbers and focus. That doesn’t always translate to being great with operations. Operations analysis is both quantitative and intuitive, and engineers without operations training can — and do! — waste millions of dollars when tasked to oversee operations.

    For maximum benefit, you need to evaluate the individual process in the context of the overall system of processes it connects to. So some operations knowledge can help engineers place their analysis of an individual process into an overall context of the operations system.

  • Finance: Corporate finance folks exercise oversight over budgets, so having some operations knowledge can help this team make good decisions. For instance, when an operations leader asks for money to de-bottleneck a process, knowing what this means tells you the intent is to increase the capacity of an existing operation.

    This almost always makes more economic sense than building a new plant. It also makes it easier to evaluate costs and benefits of the investment. Otherwise, you may suspect it’s like spending money to put paint on an old jalopy.

  • Information technology (IT): A big part of IT within some companies is to automate operations. Knowing the core principles of operations can help these folks build an operations superhighway instead of paving a cow path. Companies tend to easily accept the traditional way of doing things without question.

    There’s a great temptation to simply automate an existing process with imbedded inefficiencies. Some knowledge of operations may help IT professionals to more effectively partner with operations management people to truly create competitive advantage by improving processes while they automate.

  • Marketing: When the marketing folks come up with a new product idea or promotions concept, they need to talk to operations to find out whether it can be produced profitably. If the answer is no — operations managers are sometimes a grumpy lot — persuading them to find a solution may be easier if marketing can speak the language of operations and understand their concerns.

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