WTO, Understanding the WTO — principles of the trading system
Principles of the trading system
- 1 Principles of the trading system
- 2 Trade without discrimination
- 3 Freer trade: gradually, through negotiation
- 4 Predictability: through binding and transparency
- 5 Operating Principles: What They Are and How to Use Them
- 6 Why and when to use operating principles
- 7 What does mountain climbing have to do with operating principles?
- 8 What do operating principles actually look like?
- 9 How to Document and Gain Buy-in on Operating Principles
- 10 Principles of peacekeeping
- 11 Operations Management 101 & 201: Definitions, Pro Tips, Trends
- 11.1 Deeper Definitions: What Does Operations Management Mean?
- 11.2 The History of Operations Management
- 11.3 The Importance of Operations Management
- 11.4 Functions and Roles in Operations Management
- 11.5 The Relationship of Operations Management to Other Departments
- 11.6 Operations Management Strategies
- 11.7 Levels of Operations Management
- 11.8 Principles of Operations Management
- 11.9 Types of Production and Production Systems
- 11.10 The Biggest Operations Management Challenges
- 11.11 Tips for Good Operations Management
- 11.12 Current Trends in Operations Management
- 11.13 The Pros Weigh In on Operations Management Trends
- 11.14 What Is the Future for Operations Management?
- 11.15 Other Resources for Operations Management
- 11.16 Effectively Manage Operations with Smartsheet
The WTO agreements are lengthy and complex because they are legal texts covering a wide range of activities. They deal with: agriculture, textiles and clothing, banking, telecommunications, government purchases, industrial standards and product safety, food sanitation regulations, intellectual property, and much more. But a number of simple, fundamental principles run throughout all of these documents. These principles are the foundation of the multilateral trading system.
A closer look at these principles:
More introductory information
Trade without discrimination
1. Most-favoured-nation (MFN): treating other people equally Under the WTO agreements, countries cannot normally discriminate between their trading partners. Grant someone a special favour (such as a lower customs duty rate for one of their products) and you have to do the same for all other WTO members.
This principle is known as most-favoured-nation (MFN) treatment (see box). It is so important that it is the first article of the General Agreement on Tariffs and Trade (GATT), which governs trade in goods. MFN is also a priority in the General Agreement on Trade in Services (GATS) (Article 2) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) (Article 4), although in each agreement the principle is handled slightly differently. Together, those three agreements cover all three main areas of trade handled by the WTO.
Some exceptions are allowed. For example, countries can set up a free trade agreement that applies only to goods traded within the group — discriminating against goods from outside. Or they can give developing countries special access to their markets. Or a country can raise barriers against products that are considered to be traded unfairly from specific countries. And in services, countries are allowed, in limited circumstances, to discriminate. But the agreements only permit these exceptions under strict conditions. In general, MFN means that every time a country lowers a trade barrier or opens up a market, it has to do so for the same goods or services from all its trading partners — whether rich or poor, weak or strong.
2. National treatment: Treating foreigners and locals equally Imported and locally-produced goods should be treated equally — at least after the foreign goods have entered the market. The same should apply to foreign and domestic services, and to foreign and local trademarks, copyrights and patents. This principle of “national treatment” (giving others the same treatment as one’s own nationals) is also found in all the three main WTO agreements (Article 3 of GATT, Article 17 of GATS and Article 3 of TRIPS), although once again the principle is handled slightly differently in each of these.
National treatment only applies once a product, service or item of intellectual property has entered the market. Therefore, charging customs duty on an import is not a violation of national treatment even if locally-produced products are not charged an equivalent tax.
Freer trade: gradually, through negotiation
Lowering trade barriers is one of the most obvious means of encouraging trade. The barriers concerned include customs duties (or tariffs) and measures such as import bans or quotas that restrict quantities selectively. From time to time other issues such as red tape and exchange rate policies have also been discussed.
Since GATT’s creation in 1947-48 there have been eight rounds of trade negotiations. A ninth round, under the Doha Development Agenda, is now underway. At first these focused on lowering tariffs (customs duties) on imported goods. As a result of the negotiations, by the mid-1990s industrial countries’ tariff rates on industrial goods had fallen steadily to less than 4%.
But by the 1980s, the negotiations had expanded to cover non-tariff barriers on goods, and to the new areas such as services and intellectual property.
Opening markets can be beneficial, but it also requires adjustment. The WTO agreements allow countries to introduce changes gradually, through “progressive liberalization”. Developing countries are usually given longer to fulfil their obligations.
Predictability: through binding and transparency
Sometimes, promising not to raise a trade barrier can be as important as lowering one, because the promise gives businesses a clearer view of their future opportunities. With stability and predictability, investment is encouraged, jobs are created and consumers can fully enjoy the benefits of competition — choice and lower prices. The multilateral trading system is an attempt by governments to make the business environment stable and predictable.
The Uruguay Round increased bindings
Percentages of tariffs bound before and after the 1986-94 talks
Operating Principles: What They Are and How to Use Them
Operating Principles, or as they are often referred to, a company’s operating system, are essentially the way that organizations put their values into practice and get things done.
Many companies rely on operating principles to get things done faster. They also influence culture and values. Colorcon states that their operating principles “define our culture, values, and organization.” Wistia takes a slightly different angle, stating that their operating system is a “new methodology for how Wistia gets work done.”
There may be differing definitions of what operating principles are, but it’s clear that companies use them to create a company-wide focus and awareness of what the long-term, “big picture” objectives are for the organization.
Why and when to use operating principles
By choosing to use operating principles, you’re choosing to do much more than simply create another version of your previous business strategy or processes.
Operating principles give you a chance to clearly state what should not be done, as well as what should be done. This is an important detail to consider. Let’s look at an example from Boggis and Trafford’s work on how operating principles can forge meaningful strategy.
They refer to a situation in which a business opts to use an operating principle of “We continue to grow organically,” as opposed to: “We grow through acquisition.” By stating that the business opts for one thing over an alternative, they’re clearly articulating how they want to spend their time. This can be liberating for employees: it delineates an area of work that doesn’t need time or focus.
With operating principles, you can create a strategy that makes more sense to your employees, and as Boggis and Trafford suggest, a strategy that’s actually meaningful. This approach to strategy can be useful for managers or leaders who want to make their expectations and long-term aspirations clear, with operating principles offering guidance on how everyone can contribute through their decisions and actions.
What does mountain climbing have to do with operating principles?
Wistia, in introducing their “operating system,” found that mountain climbing was a helpful metaphor for their team to show exactly how they wanted them tackling their work on a daily and weekly basis.
According to Ed Viesturs, the only American to have climbed all fourteen of the world’s most legendary mountains, mountain-climbing is all about “coordinating responsibilities and pacing with your team of fellow climbers.”
Wistia took this approach and applied it to their product development. The result? An operating system that uses a base camp and summit strategy. During the base camp, team members explore new ideas and unleash their creativity. Once they begin the “summit” each person will have a series of expeditions (tasks, basically) that they have to carry out to ensure that the entire company reaches the peak (finishes the project).
Wistia believes that the operating system is their answer to keeping the business nimble, even as it grows. The principle of working in “short, controlled bursts with high-frequency feedback,” means that they can maintain control over how their company and product evolve over time.
What do operating principles actually look like?
We’ve given a few examples of how different organizations define specific operating principles and why they’ve introduced them. Now, let’s see what operating principles actually look like.
We share our own operating principles as well as our core values in this post about Tettra’s operating system. We also share specifics on how we use this system on a day-to-day basis. Finally, we offer best practices on how to build out your own operating system. This includes details on how to get everyone involved, but also how to clarify the directly responsible individual who’s ultimately accountable for finalizing the system.
Fort Wayne Metals
Fort Wayne Metals lists their seven operating principles after their company values. Their values and operating principles play a big role in attracting talent and helping candidates determine if they’re a good fit for the company. For example:
Operating Principle: “Everyone must be accountable for producing to his/her potential each day: We can only accomplish our goals if everyone is focused on their responsibilities each and every day. To do less is not respecting your co-workers, everyone must participate to reach our potential.”
University of California, Berkeley
Berkeley also has a series of operating principles that relate to their values. For example:
Operating Principle: “We simplify: We reduce unnecessary steps and make it easier to get things done. Our solutions are common where they can be, custom where it counts.”
How to Document and Gain Buy-in on Operating Principles
If you think your organization is struggling to turn values into actions and results, it’s worth considering implementing operating principles of your own. Try running a workshop to define your core values and operating principles. We even built a template you can use to run this workshop with your team.
Here are other steps that can help facilitate the process:
- Ask yourself (or brainstorm with a colleague): “what does this look like day to day?” “What does this sound like?” For example, the core value “collaboration” might look like people from different teams sitting together at lunch. It might sound like someone asking “Hey, can I bounce something off you for a gut check?” Though it might seem goofy, envisioning actual examples will help you define how you want the company to run.
- Solicit feedback and input; do this early and often. It’s critical that people feel invested in the process. Explain what your goal is, and share these drafts with others on your team or in the company.
- Make these operating principles as accessible as possible. Put them in a place that everyone can access and seek input. Determine a date by which you’d like to receive final feedback, so that people know the process has an end date.
- Get to a stopping point, and publish your final version. Remind people not to let the perfect get in the way of the good. You can (and should) iterate on these later, once you’d had the chance to test them.
Ideally, you’re giving your teams and individual employees a clear focus on a daily and weekly basis that they can relate to the wider goals of the company, and in turn, feel like their work is having a meaningful impact.
Principles of peacekeeping
These three principles are inter-related and mutually reinforcing:
- Consent of the parties
- Non-use of force except in self-defence and defence of the mandate
1. Consent of the parties
UN peacekeeping operations are deployed with the consent of the main parties to the conflict. This requires a commitment by the parties to a political process. Their acceptance of a peacekeeping operation provides the UN with the necessary freedom of action, both political and physical, to carry out its mandated tasks.
In the absence of such consent, a peacekeeping operation risks becoming a party to the conflict; and being drawn towards enforcement action, and away from its fundamental role of keeping the peace.
The fact that the main parties have given their consent to the deployment of a United Nations peacekeeping operation does not necessarily imply or guarantee that there will also be consent at the local level, particularly if the main parties are internally divided or have weak command and control systems. Universality of consent becomes even less probable in volatile settings, characterized by the presence of armed groups not under the control of any of the parties, or by the presence of other spoilers.
Impartiality is crucial to maintaining the consent and cooperation of the main parties, but should not be confused with neutrality or inactivity. United Nations peacekeepers should be impartial in their dealings with the parties to the conflict, but not neutral in the execution of their mandate.
Just as a good referee is impartial, but will penalize infractions, so a peacekeeping operation should not condone actions by the parties that violate the undertakings of the peace process or the international norms and principles that a United Nations peacekeeping operation upholds.
Notwithstanding the need to establish and maintain good relations with the parties, a peacekeeping operation must scrupulously avoid activities that might compromise its image of impartiality. A mission should not shy away from a rigorous application of the principle of impartiality for fear of misinterpretation or retaliation.
Failure to do so may undermine the peacekeeping operation’s credibility and legitimacy, and may lead to a withdrawal of consent for its presence by one or more of the parties.
3. Non-use of force except in self-defence and defence of the mandate
UN peacekeeping operations are not an enforcement tool. However, they may use force at the tactical level, with the authorization of the Security Council, if acting in self-defence and defence of the mandate.
In certain volatile situations, the Security Council has given UN peacekeeping operations “robust” mandates authorizing them to “use all necessary means” to deter forceful attempts to disrupt the political process, protect civilians under imminent threat of physical attack, and/or assist the national authorities in maintaining law and order.
Although on the ground they may sometimes appear similar, robust peacekeeping should not be confused with peace enforcement, as envisaged under Chapter VII of the United Nations Charter.
- Robust peacekeeping involves the use of force at the tactical level with the authorization of the Security Council and consent of the host nation and/or the main parties to the conflict.
- By contrast, peace enforcement does not require the consent of the main parties and may involve the use of military force at the strategic or international level, which is normally prohibited for Member States under Article 2(4) of the Charter, unless authorized by the Security Council.
A UN peacekeeping operation should only use force as a measure of last resort. It should always be calibrated in a precise, proportional and appropriate manner, within the principle of the minimum force necessary to achieve the desired effect, while sustaining consent for the mission and its mandate. The use of force by a UN peacekeeping operation always has political implications and can often give rise to unforeseen circumstances.
Judgments concerning its use need to be made at the appropriate level within a mission, based on a combination of factors including mission capability; public perceptions; humanitarian impact; force protection; safety and security of personnel; and, most importantly, the effect that such action will have on national and local consent for the mission.
Operations Management 101 & 201: Definitions, Pro Tips, Trends
The term operations management encompasses planning, implementing, and supervising the production of goods or services. Operations managers have responsibilities in both strategy and day-to-day production, in either manufacturing or services. Sometimes called production management, the field is cross-functional, tying in with other departments such as sales, marketing, and finance. It’s involved in product or service creation, development, production, and distribution. In effect, it connects dots along the value chain.
Technology, ever changing, plays a key role in springboarding constant advancements in operations management (OM). That’s truer now than ever before thanks to budding advancements like self-maintaining smart machines (for production) and drones (for distribution). Companies that use technology well can thrive, and those that don’t may not survive.
“The future of operations management is going to involve increasing automation to the point that we will hardly recognize the way new organizations function,’’ says Iris Tsidon, Co-Founder and CEO of Okapi Vision, a cloud-based key performance indicator (KPI) platform.
This article will provide an overview of operations management: its history, importance, functions, strategies, principles, and types of production. You’ll also hear from seven operations management professionals about tips, challenges, trends, and the future.
Deeper Definitions: What Does Operations Management Mean?
In its broadest sense, operations management is responsible for all aspects of creating goods and services. It manages resources such as materials, machines, technology, and people, and makes products and services that the marketplace wants. The whole chain of events must be well managed for a business to be competitive.
As we define operations management more fully, we consider these foundations of OM:
- Planning: Operations managers must constantly forecast, plan, and adjust to optimize processes based on conditions.
- Process: Production of goods or services requires having strong, repeatable processes.
- Efficiency: Managers must troubleshoot bottlenecks, inadequate resources, and downtimes to create optimal efficiency.
- Cost Control: Production is typically a major part of a company’s cost structure, and you must manage it wisely.
- Quality: Good quality control is necessary to maintain customer satisfaction and the company’s reputation. Companies can greatly suffer without it.
- Continuous Improvement: To remain competitive, companies need to have processes in place to consistently seek better ways of doing things.
- Technology: Underlying all of these foundations is technology. Well-used technology keeps a company ahead of the curve.
- Profitability: Executed properly, all of the above foundations lead to a strong bottom line.
The History of Operations Management
We can trace the origins of production management back to 5000 B.C. with the Sumerians, who tracked inventories, transactions, and taxes. Later, the Romans used early operations management methods to plan and build projects, such as the pyramids. Here are other historical highlights:
- The Industrial Revolution (1760s to early 1800s) ushered in the foundations of division of labor and interchangeable parts, keys to efficient production. Eli Whitney, inventor of the cotton gin, also manufactured 10,000 muskets by using the concept of interchangeable parts.
- In 1883, Frederick Winslow Taylor used the stopwatch method to time tasks for complex jobs. This became key for studying efficiency and productivity.
- In about 1912, Frank and Lillian Gilbreth laid the foundation for predetermined motion time systems (PMTS), which predict the time it takes to complete tasks.
- In 1913, Henry Ford’s first moving assembly line started rolling, cutting production time for a car from 12 hours to less than three.
- In post-World War II Japan, Toyota developed just-in-time production (JIT), later called the Toyota Production System. The company designed it to eliminate waste and increase productivity and quality.
- In 1971, FedEx started overnight package deliveries. Nowadays, Amazon even offers same-day delivery on orders.
The Importance of Operations Management
Operations management serves as the engine room of the organization, planning and driving manufacturing or services. To compete in an ever-changing market, operations managers must maximize efficiency, productivity, and profit, which have always been vital to a company’s survival. At most companies, there are many operations employees, and the department’s budget is large. Forbes magazine reported in 2011 that three-quarters of CEOs come from an operations background, showing the importance of understanding how a company functions.
We can also see the importance of operations management in these aspects of a company’s success:
- Customer service
- Product or service quality
- Correctly-functioning processes
- Market competitiveness
- Technological advances
It’s no exaggeration to say everything depends on operations.
Functions and Roles in Operations Management
The field of operations management includes a diverse set of functions and roles, which can differ among industries and different-sized companies:
- Planning and implementing manufacturing plants
- Managing projects
- Planning information systems
- Helping to design and develop products and services
- Managing inventory through the supply chain
- Managing delivery to customers in a timely manner
- Optimizing quality control
- Conducting procurement/purchasing
- Managing logistics
- Managing transportation and distribution
- Managing and maintaining facilities
- Conducting enterprise resource planning (ERP)
- Forecasting for planning
- Planning for capacity
- Navigating industrial labor relations
- Analyzing the value chain
- Optimizing resource usage
- Eliminating waste and bottlenecks
- Continuously improving processes
- Executing a company’s strategic plan
To carry out these tasks well, operations managers need to be organized, analytical, creative, resourceful, versatile, and skilled in leading people. Now more than ever, they also need to be tech savvy in a rapidly changing market. They make multiple decisions every day that affect the company’s ability to compete. One avenue to consider to become a more proficient OM is pursuing an MBA in operations management. This specialization can arm you with the analytical and problem-solving skills vital to succeeding in this information and technology-driven field.
The Relationship of Operations Management to Other Departments
This depends on the company’s size and industry. At startups or small companies, the operations person or people will work hand in hand with sales, marketing, finance, IT, and other people. However, operations teams at large companies also need to work closely with other departments to be effective. The work of operations, from planning to production to distribution, touches the work of most other departments. A company’s product or service is its lifeblood, and that’s what operations provides. Everything else in other departments should, in a sense, support that.
Operations Management Strategies
Today’s operations managers are deeply involved in strategy, along with their daily production role. Here are several key strategy and tactics points:
- Use of Data: Analytics are essential for strong planning, adjustments, and decision making. Two common types are efficiency metrics and effectiveness metrics.
- Inventory Analysis: To manage inventory in the supply chain, ABC analysis (also called Pareto analysis) comes into play. It divides inventory into three categories A, B, and C; “A” has the most value and tightest controls, and “C” has the least.
- Data Challenges: Data is often siloed, which makes it difficult to compare. But newer systems and setups are making this easier and helping analysts and managers examine data in new, helpful ways.
- Process Design: Researching, forecasting, and developing a sound process takes expertise and energy, but the results can be lasting.
- Forecasting and Goal Setting: The best forecasting often combines a look at historical data with analysis of changing conditions.
- Collaboration Among Departments: With good communication and collaboration, operations management can work effectively with finance, sales, marketing, human resources, and other departments.
- Being Green: Ecological soundness has become a strategic and legal necessity at companies nowadays, especially in manufacturing.
- Managing People: With all the advancements in machinery and technology, people remain critical to the equation, though often in different types of jobs.
Levels of Operations Management
You can think of operations management as three levels: strategic, tactical, and operations. To achieve the company’s goals, operations managers develop strategies. Under those broad strategies are tactics, or specific tasks and steps to implement the strategies. The third level, operations, refers to the daily control of production, such as scheduling, monitoring, and adjusting.
Principles of Operations Management
Randall Schaefer, CPIM, described The 10 Principles of Operations Management at his presentation at the 2007 conference of the American Production and Inventory Control Society (APICS).
- Reality: There is no universal solution to the problems in your business.
- Organization: You must organize all aspects of production into a coherent whole.
- Fundamentals: Adhere to fundamentals, such as accurate inventory records.
- Accountability: People try harder when they’re held accountable.
- Variance: Variance is part of every process.
- Causality: Problems are often symptoms. Get to the root cause.
- Managed Passion: People with a passion for their jobs will drive your company.
- Humility: You don’t have to know everything.
- Success: Define success, and change with the market.
- Change: Every manufacturing solution is temporary.
Another set of operations management principles comes from author Dr. Richard Schonberger. His 16 principles are:
- Team up with customers. Know what they buy and use.
- Engage in continual, rapid improvement.
- Maintain a unified purpose. Involve employees in strategy.
- Know the competition.
- Organize resources.
- Invest in HR.
- Maintain equipment.
- Use the simplest, best equipment.
- Minimize human error.
- Cut times. Shorten the product path to the customer.
- Cut setup.
- Pull the system. Improve the workflow and cut the waste by producing on demand.
- Employ total quality control.
- Fix root causes.
- Manage visibility. Let the market know about your achievements.
Types of Production and Production Systems
You can categorize production and production systems in a number of ways:
- By technical elements, such as machines and tools, and organizational behavior, such as people, division of labor, and information flow.
- By process production versus parts production. Process means it undergoes a physical-chemical transformation, such as paper or cement. Parts means parts are made and assembled into a product.
- By lead time. Categories include purchase to order, make to order, assemble to order, and make to stock.
A noted production method is Material requirements planning and its successor, MRP II. It’s a software-based planning, scheduling, and inventory control system used to manage manufacturing processes.
The Biggest Operations Management Challenges
Our seven experts weigh in on today’s biggest OM challenges. Common themes include the right technology and the right people.
Iris Tsidon: The CEO of Okapi Vision notes that, “Today’s biggest challenges in operations are all related to keeping up with the pace of innovation. Millennials are the largest population entering the workforce. They expect that the companies they work for are going to be as tech savvy as they are, yet existing employees resist change and implementing new technologies. So there is a clash between generations, and operations management needs to balance between the two.”
Daisy Jing: CEO and founder of Banish beauty product line says the biggest challenges are “making sure that we get the right people and maintain their good performance for years to come.”
Katharine Leonard: Lean Six Sigma Black Belt and Co-Founder of ShiftChange says, “It’s when you don’t have the right resources and the time or leadership support to solve business problems and instead [put] a Band-Aid on problems. Because of this, teams end up overcomplicating their processes and relying on a few experts, who become the single point of failure for your business.”
Matt Wilhelmi: Associate Business Consultant for Individual Advantages Business Advisors advises, “Managing the operations of small and medium-sized businesses comes down to effective communication. There are so many distractions in today’s workplace that we sometimes lose sight of how we communicate. In our experience, effective communication means being consistent and fair. The challenge in effective communication is that sometimes an operations manager needs to encourage and other times needs to discipline/coach. This all happens while maintaining the vision he or she casts for the team.”
Chris Wiegand: CEO of the Jibestream “indoor navigation” platform, comments, The ‘Internet of Things’ — the interconnection of computerized devices via the Internet — has the potential to drive efficiency, but it also brings challenges in complexity and cost. To be efficient, companies need a location infrastructure using addressable maps and technologies, like Bluetooth beacons. An example is a hospital knowing the real-time location of its infusion pumps and other devices to organize their usage. A big challenge is that companies often store data in separate databases, leaving analysts to pull it into spreadsheets to compare. «There’s no single dashboard to bring it into.”
Richard Lowe, Jr.: The former Director of Computer Operations for Trader Joe’s and current Owner and Senior Writer of The Writing King says, “The technology is changing so quickly, it makes it hard on an operations manager to keep up. The whole model of the way things are working is changing.» Using the example of trucking for product distribution, concepts such as robotic trucks and location-aware tracking bring challenges along with advancement. «It’s a lot more data to manage.» Technology training presents challenges too. «How do you keep people up to speed with new technologies?”
David Shelton: COO of healthcare service company PatientMatters lists these challenges: “Staffing: I’m convinced your staffing determines your success. A mixture of new employees combined with seasoned experts allows your operation to maintain stability while training staff, expanding sales opportunities, and identifying new solutions to existing problems. Technology: Whether a service provider or manufacturer, new technology and your ability to understand and react to internal data will dictate your operational success. Growth: Do you have the materials, vendor relationships, and labor to keep pace with your sales team and market demands?»
Tips for Good Operations Management
Once again, our seven experts highlight the importance of technology and people. We’ve asked each of our experts to weigh in with their three top pieces of advice to achieve good operations management:
- Iris Tsidon: “Here are three tips for good operations management: Keep current on innovation trends, and take the time to listen to suggestions of tech-savvy employees; only use technology that is simple to use and engaging for employees at every skill level; invest in educating managers and employees on the goals of implementing new systems; and make sure to build in rewards so that everyone is motivated to learn and use new technology.”
- Daisy Jing: “Have good communication. Make sure that processes, rules, and policies are well-communicated to everyone. Have a smart marketing plan and be up to date. Pattern your marketing plan after whatever is on trend. Do it ASAP, and use that concrete plan with a timeline until a new trend arrives. Have weekly reports of everything about the company. Then, from there, manage everything based on the need of each category.”
- Katharine Leonard: “Collect data electronically: Having team members write down their processing numbers for data collection can lead to inaccurate data and [will] not give you the results you need to run your operations efficiently. Use report dashboards and rely on data and analytics: Determine what information you need to run your business, measure it, and use analysis to augment your process and continually improve your operations. Be customer-focused: Design your processes with the end customer in mind. Think about what they see as value and what they’re willing to pay for, as well as how quickly they expect to get results.”
- David Shelton: “Listen to your internal and external teams. Field-level employees, internal sales, and vendors have invaluable information and know what is going on with your product/services and the competition. Measure and analyze. We are constantly examining our internal processing times and employee performance and measuring success rates. Measuring your internal performance allows you to exceed customer demand. Expand your network. Managers from competitive firms change jobs. A friendly relationship can become a key alliance. Vendor partnerships in developing new products/services allow you to grow your operations while controlling costs. Joint ventures that benefit both parties can substantially increase your knowledge base while increasing your speed to market.”
- Matt Wilhelmi: “Slow down. It’s important to consider the side effects of each decision and how you relay communication to the team. People tend to like working for (and have higher engagement with) leaders who maintain a level head and aren’t too quick to pass judgment. Be proactive and strategic. It’s important that leaders aren’t reacting all day. The constant reactionary environment can turn great leaders into fire chasers, which tends to devolve their communication. Stay focused on the numbers. If something isn’t working like it should, it’s better to focus on the measurable data than on the emotion of the disappointment or the result. When you can tweak a process and measure it along the way, you remove the subjectivity and remain objective.”
- Chris Wiegand: Make sure any project has an internal owner, or it can go off track. Understand the key performance indicators that will drive the business. «Just because you can measure it doesn’t mean it matters.»Protect the data. Operations managers have to safeguard the info.» Consider leveraging infrastructure as a service, with hosting, security, and redundancy built in.”
- Richard Lowe, Jr.: Read a lot. Learn a lot. Keep up with your field. If you’re a logistics manager, connect with your tech people. «Now you need to work much more closely with them.» Get trained so you understand tech trends. «Understand the tidal wave.”
Current Trends in Operations Management
Some of these have been around a while, but they remain popular trends in operations management:
- Business process reengineering, or BPR, which helps companies revamp their organizations from the ground up
- Lean manufacturing, Six Sigma, and Agile are disciplines focused on efficient, adaptable production and continue to be mainstay approaches
- Reconfigurable manufacturing systems, designed for flexibility with sudden market changes
- Behavioral operations management, which focuses on human behavior as it relates to operations management
- Sustainability, or maintaining ecologically minded practices, under changing laws.
The Pros Weigh In on Operations Management Trends
One common theme is that computers and tech are in the center of everything.
- Iris Tsidon: “The key trends that I see are companies combining data visualization with key performance indicators, artificial intelligence and machine learning increasing productivity, innovation and function merging to create real-time monitoring and management systems, employee retention getting increasingly difficult to maintain, customer service merging between online and retail, and automation making some current positions obsolete.”
- Katharine Leonard: “I see firms moving toward technology to solve the mundane, time- consuming, and error-prone tasks that inhibit operations teams from providing the best service to customers.”
- David Shelton: “How can you incorporate internal and external data to make decisions that are ahead of the curve? The best sports analogy I know is ‘Skate where the puck is going.’ We’ve got to be planning ahead in order to anticipate customer needs and beat our competitors. Managing resources and minimizing waste. Both product and service organizations wrestle with maximizing resources (materials or staff) to produce the best product for the consumer.”
- Matt Wilhelmi: “I see operations management becoming more closely aligned with human resources as companies are increasingly aware of how important their culture and human capital are as they relate to operations and engagement.”
- Chris Wiegand: “With hyper-accurate location services, one trend is using that technology for real-time alerts, such as for a dementia patient wandering off.”
- Richard Lowe, Jr.: “Internet shopping continues to be a big trend, involving pretty much any product, including food. Amazon sends some products within a few hours of being ordered. You better be able to match that. You have to be able to meet tighter inventories, such as just-in-time stocking, with some food staples, such as bread and eggs, arriving two or three times per day.”
What Is the Future for Operations Management?
We ask our experts to look ahead for operations management. They see a future of increasing data and technology, including convoys of driverless trucks.
- Iris Tsidon: With increasing automation will come sweeping organizational change. Tsidon says, “Operations are going to reduce hierarchy and make management easier, so, while many are concerned about the loss of low-level jobs, I see that there will be a sweeping change at every level, including upper management. Previous positions that needed highly skilled workers will no longer exist because artificial intelligence will provide better results without human error. In the future, the most valuable management skills will be the ability to combine data analysis with emotional intelligence. This is something that no algorithm can replace and that will be more crucial than ever.”
- Daisy Jing: “Remotely handled operations management. Nowadays, there’s nothing a remote worker cannot do. It is possible, and it will be the next trend.”
- Katharine Leonard: “I envision operations management becoming a high-tech position, requiring a highly analytical skill set and product-focused mindset. With Amazon delivering packages on the same day, customers are coming to expect instantaneous results, and, to maintain competitiveness, operations needs to drive toward that type of success.”
- David Shelton: “There are opportunities presented by technology to build or service faster, better, and cheaper. It’s critical to utilize technology, interpret data, source new materials, and identify talented labor. You must confront labor challenges and build a better workforce. How do you better utilize your labor force? Improved recruiting techniques allow you to draw in new labor, but how can you also better train existing staff to advance within the organization? This is a key area we are focusing on. We strongly believe we have an obligation to train our existing team to grow and advance internally.”
- Matt Wilhelmi: “I have lots of clients who ask me to look into my crystal ball. My crystal ball gets a workout! The future of operations management is sliding toward creating data (so it can be measured and studied from an objective position) around the healthiness (culture) of a company’s human operations. Dozens of reports have come out in the past few years that are confirming that lack of engagement by employees leads to a substantial loss of productivity or worse, high turnover. In the truest sense, it’s the operations manager’s responsibility to maximize his or her operations. The better your culture, the better your operations.”
- Chris Wiegand: The future will include location-aware devices and “smart buildings that will maintain themselves. For example, an elevator could know that it needs service work through data inputs and could initiate the repair as part of a structured workflow,” he notes. “There will be greater use of artificial intelligence to recognize a problem and start a workflow. There will also be more use of predictive analytics. Moreover, you’ll see greater protection of proprietary data, especially if problems result from data being too available. Finally, you’ll find greater gender equality in operations management. We certainly have great female leaders in operations today. That diversity brings a lot of value.”
- Richard Lowe, Jr.: The future features the coming wave of the Internet of Things, including a rapidly growing number of connected devices at home and work. It could include homes with 50 computer devices and entire car factories with virtually no people. “We’re in the middle of the beginning of the tidal wave of the Internet of Things,” Lowe says. Understanding this trend is essential. “You better push your company in that direction…The machines are going to take over a lot of things,” he adds. “In addition to driverless cars, you might see a convoy of 30 driverless trucks on the highway transporting goods. What’s holding it back right now is more a legal issue than a technical one. The trend is more and more automation, more and more artificial intelligence…The people who can’t keep up with that will need to find something else to do.”
Other Resources for Operations Management
- American Production and Inventory Control Society (APICS)
- Journal of Operations Management
- Professor Gad Allon’s online course, Northwestern University
- Wharton online course
- University of Illinois online course
- Introducing Operations Management
Effectively Manage Operations with Smartsheet
Effectively managing operations planning to reduce over- or under-production is essential for companies to meet their goals and maximize profitability. That’s why it’s important to find the right tool to help you plan, track, and manage all the details. Smartsheet is a work management and automation platform that enables sales enterprises and teams to work better.
With Smartsheet, operations teams can improve transparency to process and procedure, optimize operations with cross-department collaboration, and accelerate team output. Since operations is critical to all other company functions, it’s useful to implement a solution that works well for other teams across the organization. Plus, Smartsheet integrates with several tools that many teams already use. From big picture progress to detailed execution, Smartsheet helps operations professionals focus on what matters most.
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