Article OPERATIONS MANAGEMENT MADE SIMPLE

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By Jan Erik Dahl In recent years, many organisations and management and Anders Bogason, ­ [email protected], teams have achieved significant results by working in a Implement Consulting Group structured manner with operations management – both at an operational and tactical level.

However, for many of the involved lead- another way, a balanced approach where ers this means that they suddenly find we cultivate skilled, business-oriented themselves in a very different leadership leaders of people who can add life and role in which they are also confronted intelligence to the rationally sound with a vast number of new methods and operations management tools. tools. Seeing that the leaders are the ones who drive operations management, and thus have the key to success, it is of great Operations management does importance that the leaders receive the not need to be complex necessary support to successfully get As specialists, we tend to make opera- through this transformation. The support tions management more complex than is to be found in the operations manage- necessary. An example of this is uncritical ment tools which should be based on a references to a vast number of different more rational operations management toolboxes and tools which all can help theory as well as the actual leadership the organisation’s leaders in relation skills which should be based on a to specific operations management humanistic perspective. Or put in challenges, e.g.

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• The supply chain management toolbox, to make corrective actions before it is too which contains a number of planning late as well as gather learning based on tools such as Enterprise Resource the deviations from what was expected. Planning (ERP), Capacity Requirements As a result of the built-in correction and Planning, Material Requirements learning mechanisms, the PDCA cycle Planning (MRP) and Forecasting both supports improved goal fulfilment (Arnold et al., 2012). in the short term as well as continuous improvement in the long term. • The policy deployment toolbox, which contains a number of different tools By using the PDCA cycle, the leader for roll-out and execution of strategic gains access to three rational operations plans, performance management etc. management elements: (Dennis, 2006). 1. Operations planning (PLAN) • The Six Sigma toolbox, which contains a 2. Operations follow-up (CHECK) number of tools for professionalisation 3. Operations optimisation (ACT) of the improvement work (Gitlow et al., 2005). The DO element represents the daily work in the teams and is therefore not a The list of toolboxes and tools is, of coordination or governance element. course, much longer. However, the point is that what leaders really need in their work The idea behind the PLAN – DO – CHECK with operations management is simplicity – ACT (PDCA) mechanism is far from new and overview rather than more tools. as it can be traced back to Deming and his mentor Shewhart at the beginning of the last century, but also to the theo- The simple version of operations ries developed from the work of Francis management Bacon around 1620. Others will argue Basically, operations management that it is a rational learning mechanism focuses on supporting the organisation which should be ascribed to other great in achieving the best possible business thinkers dating all the way back to the results both in the short term and in ancient Greeks. The point is, however, that the long term. In a rational operations operations management is based on very management context (as illustrated by simple, well-proven and widely accepted the PDCA cycle in figure 1), the individual mechanisms. leader is expected to have a plan for successful goal fulfilment that the leader continuously follows up upon the execu- Operations management in a tion of. Following up enables the leader local operational team The PDCA cycle provides a good frame of understanding when dealing with operations management in a local Figure 1: GOAL The PDCA cycle operational team. Here we find the everyday version of:

PLAN • Local operational planning (For success) • Local operational follow-up • Local operational optimisation

ACT DO Expected … typically on a short-term day-week time (Improvement) (Execution) result horizon. Here operations management often takes the form of visual standards such as whiteboards and shelves where CHECK Significant the overall plans for and status of success deviation (Follow-up) are visualised.

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Figure 2: Figure 2 illustrates a local operational merely a tool which gives the operational Example of a local operational management board for a back-office team a place to meet and discuss their management board team in a financial company where the mutual local operational management, employees are responsible for handling i.e. local operational planning, follow-up a number of case-like tasks as well as in and optimisation. It is the people around direct contact with customers via email the board who create the results – not the and telephone. The local operational plan- board itself. ning on the board takes its starting point in the local operational team’s existing common operations model or best prac- Operations management systems tice which is based on the principle that are also simple the best result is achieved if as much as It is one thing to look at one local opera- possible of the case handling is clarified tional team and another thing is to look at while the customer is on the phone. Thus, an entire organisation which consists of the quality of the input is improved for many local operational teams. Here you the case-handling employees who the both need to take into account that each operational team tries to protect in the operational team has a local PDCA cycle best possible manner against external and that operations management takes disturbances in their everyday work. The place across the individual operational local operational management board teams. In the literature, this is referred supports both the operational team’s to as concentric PDCA (Dennis, 2005), daily and weekly distribution of tasks and which is an illustration of how to talk roles as well as visualises expectations about operations management – both at and status in relation to the expectations, department level and at company level. which provides input for the operational It can be difficult to visualise in practice, team’s mutual optimisation work. which is why we have developed the operations management system as It is important to understand that the illustrated in figure 3. local operational management board is

Figure 3: Local operational Operations strategy 3 – 5 years management system (own interpretation) Executives

3 – 18 Act Plan

months Check Portfolio of Operations optimisationprojects managers 1 – 3 Act Plan

months Check Portfolio of local optimisationprojects Local operational Tactical leaders Week operations Act

Plan – month

management Check Managing level Optimisation efforts Executing level Well-functioning Local operational local operational Day

management teams Act Plan – week Check

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The structure of the operations local conditions and the local operational management system in brief standards. Thus, it is important that you Before we look into how the operations higher up in the operations management management system works, let us briefly system ensure a good framework and touch upon the structure of the individual support around the operational teams elements. in order for them to be able to meet the customer’s needs in day-to-day opera- The operations management system is tions as well as use their experience to built up around two dimensions, namely improve the local operational standards. a vertical dimension that represents the organisational dimension and a horizontal The balance between tactical operations dimension that represents the leader’s management and local operational three rational operations management management is key to a well-functioning elements in the form of the columns operations management system. The derived from the PDCA cycle in figure 1. important balance between the respect for the common elements from the At the top of the operations management “top-down” governance levels and the system, we find the operations strategy respect for local “bottom-up” involvement which sets the common direction for in the local operational management is how Operations must act and develop to emphasised by the two triangles in the ensure the deliverables together with the operations management system (Imai, market side of the strategy. 1997).

Below the strategic level, we find the tactical governance where cross-disci- The operations management plinary tactical operations management system in practice and coordination take place. It is through When working with the operations the tactical operations planning that the management system in practice, it is, common plans, policies, standards and as previously mentioned, important to strategic goals etc. are coordinated and achieve an appropriate balance between rolled out across the organisation (Imai, “the two triangles” in the form of tacti- 1997). Tactical operations management cal operations management and local typically takes place with an increasing operational management. The reason for time horizon as you move up through this is that without effective local opera- the different levels of management in tional management, even the best plans the operations management system. fail, and without common coordination Expressed in popular terms, it is in the we risk running in different directions and tactical operations management that end up working counter to one another. you will find operations management We have already discussed local opera- that addresses the cross-functional tional management. In the following, we co-ordination and the deployment of will therefore focus on tactical operations common goals. management between the operations strategy and the local operational team. At the bottom of the operations management system, we find the local A characteristic of tactical operations operational management. This is where management is that it is performed with the above-mentioned operational teams, medium term time frames at many consisting of local operational leaders different management levels in the and operational employees, ensure the organisation. This means that contrary to daily and weekly delivery to the customers the local operational team we cannot find in the organisation’s different operations a specific local operational management environments. The employees’ close board but instead see a large number of contact to the products – and often the different governance and optimisation customers – provides the operational efforts which accumulated create the employees a unique insight into the overall tactical operations management in

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the organisation. In practice, tactical responsible for medium-term task and operations management is, thus, dis- capacity management. The complex tasks tributed on a number of large or small remained with the specialists in the groupings of leaders different places and operational teams while a number of at different levels in the organisation. simple tasks, which could easily be solved This means that operations managers by all the employees, were made mutual must have a more organic and systemic tasks, e.g. the handling of driving licences, approach in their work with the organisa- passports, telephone duty etc. In this tion’s tactical operations management. manner, these tasks could be used for levelling the load between the operational In practice, this does not need to be teams. Further­more, rotation training especially difficult as the operations between the operational teams was management system in figure 3 provides implemented, allowing the allocation the necessary overview, enabling the of more hands to the most overloaded operations managers to begin discuss- operational teams. Local operational ing which decisions and efforts belong management today still takes place out at which level in the organisation. In this in the operational teams under the local manner, the operations management operational leaders. The difference is system provides a good starting point that by relocating task and capacity for discussions of which toolboxes and management to the leadership team the governance structures the operations operations manager is responsible for managers need to build a basic frame- creating a fair balance between tasks and work supporting the organisation’s need resources, which provides the individual for operations management both in the operational teams a more stable short term and in the long term. framework to perform within.

The fact that tactical operations manage­ In other organisations, seasonal fluctua- ment does not need to be complex can tions are compensated even higher up in be illustrated by an example from a the organisation, usually at vice president municipal citizen service centre with four level. Here management teams from independent operational teams (Hous- Operations and the sales organisations ing, Tax, Family and Senior citizens) with meet around a “forecast” – typically on each their local operational leader. The a 3 –18 month horizon. The time horizon operations manager of the service centre makes it possible for the managers to experienced that due to seasonal fluctu- initiate the necessary initiatives well ations during certain periods of the year before the fluctuations are expected to the individual operational teams typically affect the operational teams. It may be built up large backlogs, which created initiatives in relation to manning such problems in relation to the municipality’s as hiring, competence development or citizens, a great deal of additional work holiday planning. But it may also be other and overloaded employees in the area. initiatives such as optimisation projects, The challenges were intensified by the outsourcing or sales campaigns in the fact that the individual operational teams sales organisation which typically can be were vulnerable to absence due to illness executed within a time horizon of 3 –18 or other unanticipated circumstances months. In this situation, the Sales & which often coincided with periods of Operations Planning toolbox gives the heavy workload in the operational team. It leaders a number of tools to be used in was, however, interesting that the season- their work with improving this part of the al fluctuations between all four opera- tactical operations management system. tional teams were distributed fairly evenly throughout the entire year. In practice, this While the above examples take their meant that sufficient resources should starting point at different levels in the always be available in the area. The planning column of the operations simple solution consisted in making the management system in figure 3, other operations manager of the service centre challenges may take their starting point

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in the follow-up column or the improve­ Summing up ment column – or even represent cross-­ Hopefully, this article has provided the disciplinary challenges. Altogether, this promised simple overview of the opera- emphasises once again the “systemic” tions management system, which can be approach to tactical operations manage- used in relation to your own operations ment in which you by improving a couple management in your organisation. That of “weak” elements in the system can being said, here are a couple of practical affect and improve the entire operations tips based on our own experience from management system. the operations management journey:

1. Make your operations management simple – Otherwise, it will fail in a complex world – “Less is more”.

2. Make your operations management come alive – Operations management is driven by proficient leaders togeth- Literature er with skilled employees – do not let “dead unintelligent” tools get in the way of their, and thus the organisation’s, Introduction to Materials Management development. J.R. Tony Arnold, Stephen N. Chapman & Lloyd M. Clive, 2012 7th edition, Prentice Hall 3. Balance the efforts – Work with both local operational management and Getting the Right Things Done: tactical operations management – A Leader’s Guide to Planning and Execution otherwise, you risk creating unsound “action without a direction” or Pascal Dennis, December 2006, “direction without action”. Lean Enterprise Institute 4. Look for new potential in new places Andy & Me: in the operations management system Crisis & Transformation on the Lean Journey – Otherwise, you will just end up doing more of what you are already good Pascal Dennis, 2005 at – so try to identify the weak links in Productivity Press you operations management system.

Six Sigma for Green Belts and Champions: 5. Operations management creates Foundations, DMAIC, Tools, Cases, and Certification noticeable and measurable effect Howard S. Gitlow & David M. Levine, 2005 every third month – If this is not the Pearson Education Inc. case, it is a good idea to talk to the responsible leader about the elements in the operations management loop. Gemba Kaizen: The answers will tell you why the exist- A Commonsense, Low-Cost Approach to Management ing operations management does not Masaaki Imai, 1997 provide the expected results. McGraw-Hill Good luck on the operations management journey – experience from a number of large companies and organisations shows that improving your operations manage- ment system has the ability to benefit your customers, your employees, your managers and your company.

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