I know I am in danger of sounding paranoid, but for a long time I’ve wondered why Operations Management has a too low profile and fails to get the credit it deserves. I’ve recently blogged about HR and Finance and the (over) influence they may have within an organisation. Maybe it’s because I’ve worked in Business Schools for so long? I’ve sat in meetings where there were too many modules to fit onto an undergraduate degree programme in Business Studies, and heard it suggested that the Operations module be dropped to make room for the others. I’ve found graduates seeking jobs in HR, marketing or finance – anything but operations – due it’s perceived lack of glamour, poor pay, or whatever. And it’s not just an academic phenomenon. In many industry sectors, it’s normal for the former Director of Finance or Marketing to become the CEO, but noteworthy if an Operations person does so.
To be fair, I think there has been a shift in thinking since firms have started to demonstrate how powerful their operations are in achieving competitive advantage. ‘Lean’ has played a large part in this. And it’s not as if the importance of operations had not been recognised (sort of) as far back as 1985, when Michael Porter proposed the value chain. This model proposed a sequence of five activities – inbound logistics, operations, outbound logistics, marketing & sales, service – supported by four organisation wide activities – firm infrastructure, human resource management, technology development, procurement. The irony of this model is that ‘operations’ would seem to be just one of the nine elements, when actually it encompasses six out of the nine i.e. inbound logistics, operations, outbound logistics, service, technology development, procurement.
Looked at in this way, two thirds of the value chain relies on the performance of the operations function. As we say in our book (page 5) “Generally most employees are engaged in operations, most of the revenue generated and costs incurred derive from operations, and most of the organisations’s assets… are used for operational purposes”. But other management functions have been very clever (devious?) in raising their profile and elevating their importance. None less so than Marketing. Consider one of the basic concepts of this field of study – the so-called Four Ps – product, place, price and promotion.
- Product? Whilst marketeers may have some input into the development of product, responsibility for product is clearly an operations management function.
- Place? This relates to distribution, again an activity in which the operations function plays a significant role.
- Price? Operations management controls production and hence costs, so price is largely in their hands.
- Promotion? This is the only one of the four Ps that is exclusively the responsibility of marketeers.
So what is the purpose of this rant? (What’s a blog for if you can’t have an occasional rant?). It’s not to start finding fault with anyone or allocating blame for this state of affairs. I’d be the first to admit my analysis might be at fault. No. It’s just to assert – and invite others to quietly assert – just how important operations management is. And to hope that one day soon it will go to the ball and live happily ever after.