Chapter 1: Introduction to Operations
“Operations” is the cornerstone of business. It's the process that turns great ideas into consumable products or services. All of the services and products we enjoy as consumers come as the result of business operations. Consequentially, the connections between our daily lives and the operational activities of business are direct. For example, the ice cream we have for dessert is a direct result of business operations. The car we drive to work is a direct result of business operations. The clothes we wear to the park are a direct result of business operations. The books we read for pleasure… well, you get the idea.
Consequently, your business probably began its life with an operations based agenda. You (or whoever started your business) probably began by focusing on the outstanding services and/or products you would provide to the marketplace. If you own a bakery, you probably thought about your breads or pastries. If you own an accounting firm, you probably thought about the accounting services you would provide or perhaps about the superior level of personalized service you might offer.
As you know, there are six Key Business Areas (KBAs) that must be fully engaged in, if a business is to reach its potential. These are “Leadership, Management, Marketing, Finance, Operations, and Sales.” All are necessary, but it is your business operations that ultimately provide the most value to your customers.
From a Financial perspective, we can see that your business Operations create the value that eventually becomes your profit and from a Marketing perspective we can see why. When your products and services are designed with your customers' needs in mind, their value increases accordingly. This is why the work you did in “Marketing” is so important. Your in-depth understanding of your customers' needs permits you to maximize the value created by your operational activities.
Essentially, “operations” are:
The research and development of your products and services.
The production or manufacturing of those products and services.
The delivery of those products and services to your customers.
In the end, what matters most to your customers is the quality of the output from your operations, in other words, your products and services. All aspects of your business are important, but from your customers' perspective, your products and services are the primary reason they are there. Certainly they were attracted by your marketing activities, but marketing is essentially a promise to your customers that you are ready, willing, and able to deliver. Fall short of this promise too often and even your best customers will eventually leave. It's the responsibility of your business operations to keep that from happening.
One can think of a service-based business and a product-based business as two ends of a continuum with most businesses existing someplace in between. For our purposes, however, when we use the word “products,” we are referring to both “products and services.”