Operations management and startup company
What is the product? Is there a market? Where does the seed funding come from? What experience does the management team have? These are some of the first questions investors and lenders want answered when researching a start-up, and for good reason. The business plan generally addresses these and other related questions in some detail, but what about an operations plan? If Operations is mentioned, the details are likely incomplete at best. Does operations management play a role in the startup business, and if so, what is the role? As we look at the role of operations management in the startup company, we must address the roles and responsibilities of two key players; the entrepreneur and the operations management professional.
First, we must realize the truth that Operations may not play a significant or significant role in a start-up company. It depends on the type of product or service that the company is producing and the stage of development in which the company is. But again, operations can play a critical role, and when it does, operations management professionals need to be prepared. This is where the entrepreneur or the owners come into play. It is the responsibility of the entrepreneur to understand the needs of the organization at any given time and the skills and experience that must be incorporated in the different stages of development. Entrepreneurs are often experts in their fields and tend to be creative “idea people” who see the big picture and can envision the future of the business. Many entrepreneurs struggle with the day-to-day details of running a business, and many have no formal education or experience in operations management. These entrepreneurs must understand the skills that operations management professionals bring and where and how they fit into the startup organization (and when). It is the responsibility of the operations management professional, who is comfortable with the details, adapting their skills and knowledge to the business environment, and developing the day-to-day operations and systems that will help guide the organization to long-term success. .
There are significant differences between a mature, established organization and a new company, and many operations management professionals may not have the skills and experience necessary to help guide the startup on its path to success. If you’ve spent your career working in large, well-established bureaucratic organizations, you may not be ready for life in a business organization. The speed at which decisions can be made and direction changes can occur in a small business or a new company can be mind-boggling for those used to bureaucracy. Detailed analysis and lengthy planning are luxuries that few entrepreneurs or startup managers can afford. Experience, intuition, and back-of-the-envelope calculations often rule the day. Operations management professionals need to be able to adapt to this environment and have the confidence to act without the details and support they are often used to.
As for the entrepreneur, how do you determine when and if a more important role should be considered for Operations, and how is the Operations Plan developed? Well, the first thing to do is understand what we are talking about when we talk about Operations and Operations Management. Simply put, operations management refers to the processes and procedures that an organization uses to produce its product or provide its service. Quality and customer service are important components that fall under the umbrella of operations. For the organization to be successful, operations must have well-integrated links to all other functional areas, including strategic planning, marketing and sales, and accounting and finance. There must be a formal integration even if all these functions fall under one or a few people.
You need to have a viable product or service, you need a good marketing strategy, you need funds, and you need to be able to deliver the product or service. You can have a wonderful product, a continuous flow of new products, an exciting marketing campaign, and lots of cash, but if you can’t satisfy your customers by delivering the highest quality product or service, with the highest level of service. . , you will fail. The delivery of the product or service is in the scope of operations. The Operations role will vary, of course, depending on the nature of the business and the life stage of the company. A software development company in the initial stages of writing code will not need to pay much attention to operations. The company in the R&D stage of integrating that software into OEM components needs a well-developed operations strategy. The device manufacturer that is in the transition stage from R&D and prototyping to full production must have a highly developed and detailed plan of operations if it hopes to compete in today’s global market. The device manufacturer must have an operations strategy and plan from day one, as operations are such an important component of its future success. Even if it takes several years to get to full production mode, you should start developing your operations plan early in the business. You will have an advantage over any competition if you have developed your operations plan and strategy as you grow, rather than waiting until you are ready to increase production. If you wait, it may already be too late.
I have recently been working with a small contracting company. The owner approached me to help him with his business plan for a new line of business. Although I have no knowledge or experience in his industry, he understands the value of operations management and how it can help improve your existing business and help get the new line of business off to a good start. The existing business would have benefited from planning and managing operations in earlier stages, but the new line of business will have an advantage by starting this planning in the early stages of development. The Operations Management profession as a whole has a largely untapped market in start-ups in almost any industry. Operations management professionals must tailor their knowledge and skills to this audience.
Also, as I said earlier, it is probably a pretty safe bet to say that many, if not most, entrepreneurs have no Operations experience, so what should be considered in the Operations Plan? The operations cover everything from the acquisition of the materials and resources necessary to produce the product or provide the service, to the delivery of the product or service to the customer or end consumer. The operations plan should address how the organization will perform these tasks. The field of operations management is riddled with buzzwords (value stream, process mapping), various systems and techniques (Lean Manufacturing, Six Sigma), and three-letter acronyms (ERP, for enterprise resource planning, which generally means a computer system, and SCM for Supply Chain Management). The operations plan has to eliminate clutter and simply state how the organization will satisfy its customers and drive profitability.
Some elements of the operations plan to look for are:
o Sourcing strategy, including supplier selection criteria and supplier evaluations
o Quality system: how will the processes be monitored and controlled? How will authority and responsibility for quality be assigned and distributed throughout the organization? What results are expected?
o Production and inventory management (applies to products and services): where will you meet the customer? Will you build to order, build to stock, or what? What is the production control and production methodology? What are the materials and information flows?
o Logistics and delivery: will warehousing and delivery services be performed in-house or will they be outsourced? What are the distribution channels?
o Customer service: how much authority will be given to customer service personnel? Will there be dedicated customer service staff or will it be the responsibility of operations, sales and marketing, or who? What are the customer satisfaction expectations?
o Integration: How will the operations be integrated with the other areas of the organization?
Operations are a vital component of any organization. The role and responsibilities of Operations will vary by organization, industry, and organization life stage, but importance will not. Every organization, product manufacturer or service provider, for profit or not, governmental or private, must efficiently produce and deliver its product or service to satisfy its customers and investors. Operations play a key role in every business and must be committed to ensure success. Every business plan should include a well-developed and detailed plan of operations, and all business owners should understand the role of operations in their organization.