• Operations management: Why can’t we hack it?



    You’re stuck in line at the bank, waiting for your turn. You’re kept on hold calling customer service. The elevator at your office building breaks down. Your local grocery is out of milk. Your hospital bill has an error.

    Do any of these sounds familiar? Time and time again, we don’t get the service we expect.
    These modern day inconveniences can be avoided if good attention is given to operations management. Operations management, as a discipline, is concerned with planning and controlling the processes for delivering goods or services, thus maximizing value for customers, and shareholders (in the case of a for-profit operation).

    Since moving back to the Philippines two years ago, I’ve often asked myself why we don’t have many local examples of operational excellence. Why don’t our trains run on time like they do in other countries? Why are inventory levels so high, and yet stock outs occur so frequently? Why are we constantly frustrated with the way things work in our country?

    It’s not that we don’t know the tools of operations management. Our universities’ Business Administration and Industrial Management Engineering programs are on par with the best in the world. We have been applying continuous improvement techniques in Business Process Outsourcing operations for a decade now, showing dramatic gains in productivity.

    I would like to hazard a guess why we cannot replicate what we have done in the Outsourcing arena in other industry sectors. My theory is that up to now, we still aren’t very good at working across functions to execute processes and manage improvement.

    Despite all the 21st century management theory and rhetoric, we have difficulty coordinating across departments and integrating our operations to deliver to customers.

    So to me, the root cause is behavioral. Maybe some elements of our “Filipino-ness” is a barrier to achieving the efficiency that the Japanese are renowned for. Maybe it’s ningas kugon, or our bahala na attitude, or the tendency toward hierarchical management culture. Maybe we are just too happy and content as people to care.

    So what can a Chief Operating Officer do to get out of this rut? PwC’s recent Global Operations Survey gives us a few pointers.

    First, start by getting operations to be more aligned to strategy. This can be done by involving leaders of operations more intimately in making strategic decisions about products and services, so that the operational implications of these decisions are considered early. It requires a departure from the old way of doing things. Too often, strategy, product development and marketing come up with go-to-market plans first, then toss them over the wall to supply chain or operations to deal with and execute. This has to change.

    Second, make operations more cross-functional and integrated. This includes conducting regular, cross-functional reviews of products and services, and assigning an individual or team to ensure that processes tie together end-to-end and are designed to meet customer demand consistently.

    Finally, focus improvement efforts on a handful of closely linked capabilities that truly differentiate your organization from the competition. Trying to adopt “best practices” for all operational processes will result in diffused effort and ultimately, frustration. What the COO needs to do is to pour investment into the capabilities (and related processes, teams and technology) that enable the organization’s strategy, and deliver a product or service experience that customers really value. Whether that means improving maintenance management practices to increase availability of your taxi fleet, or implementing advanced planning systems to ensure that your products are where your customers want it, the choice on what to work on will depend on what will give you the “right to win” in the marketplace.

    To do all these things right will require a culture change within the organization. It will require behaviors that at first may seem uncomfortable. Operations executives will need to think about operations much more broadly than they did in the past. They will need to be comfortable talking to people from product management, marketing, sales, and information technology, adapting their language as they interact with different functions.

    They will have to learn to put themselves in their customers’ shoes, to understand what they value and be able to translate that into operational impacts. And finally, they will need to be able to transform the organization’s ways of working while not letting day-to-day performance slip.

    At a personal level, operations executives at all levels, from the COO to the front line manager, will require persistence, patience, and courage to break barriers in order to make change stick. They must be willing to try and try again in the face of resistance from colleagues and bosses. They will be more likely to succeed if they know how to build involvement and gain the trust of managers from other departments, and are able to craft a pace and approach to change that is appropriate to the willingness and ability of the organization to transform itself.

    As an Industrial Engineer by training, I am almost obsessed with operations management (much to the annoyance of my beloved better half when I try to run our home like a factory!). I get irritated when things break down, when the waiter gets my order wrong, or when written procedures are not followed. In finally putting my frustrations with operations management down on paper, I have discovered that there is something we can do to make things better. We just need the will and the grit to get it done.

    Benjamin Azada is a Principal from PricewaterhouseCoopers Consulting Services Philippines Co.Ltd. Email your comments and questions to markets@ph.pwc.com. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.


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    1 Comment

    1. tony urbiztondo on

      mr. azada: in addition to your theories, may i add mine . . .we simply do not have the “engineering” frame of mind when it comes to infrastructure and all the systems that it entails. . .look at the skyways roads public transport systems we have – maganda lang tingnan but the bottlenecks, dead elevators/escalators/traffic signals. . . kulang talaga tayo sa engineering capabilities kung paano magpatakbo ng mga national infrastructure! dagdagan pa na halos lahat na namumuno ng mga public works, transport offices etc. ay mga ABOGADO! oh diosko. . .