Myths About Operations Management

Do you know the biggest myths about Operations Management? Keep reading to learn more.

Myth #1: There Are No Additional Expenses Associated With Changes to Procedures and Processes

Changes that add extra time to perform a procedure or complete a process have an assignable cost.

The inability to assign costs may lead to poor business decisions.

Myth #2:  Forecasting Is Often Inaccurate and a Waste of Time  

Back office operations are dynamic and constantly changing. Forecasting increases the preparedness of the operation by narrowing the delta between actual and planned.

The better the ability to forecast the smaller the required realignment of management parameters; staffing allocation, processing hours, skills sets, etc.

Myth #3: Productivity Fluctuates With Volumes

Productivity is a relative constant. Fluctuations in productivity due to changes in volume is a management issue.

Production capacity should fluctuate with volume fluctuations resulting in a relatively constant productivity level.

Myth #4: Believe That There Is a Trade-Off Between Productivity and Quality

The vast majority of quality issues are related to training and procedural issues.

Instances of poor quality due to production rates are normally quickly resolved through other means.

Myth #5: It Is Easier and Safer to Use a Fixed Staff to Manage a Back Office Operation

Volumes fluctuate.  Excess staff on light volume days are an unnecessary expense.

Light staff on high volume days cost the business in either overtime, holdover or both.

Myth #6: Back Office Operations Are Only a Cost to the Business

Back office operations are a business necessity. Reductions in back office processing costs (savings) drop straight to the bottom line.

Operations savings can often yield as much profitability to an organization as the average sales person.

Myth #7: There Is No Need for Operations Training, Intuition, and Common Sense Are Sufficient

Intuition and common sense are great skills for sensing and resolving some problems; other issues require learned skills and knowledge to perform a more in-depth analysis and resolution.

Myth #8:  It Is Normal on High Volume Days to Have Higher Productivity Than Low Volume Days

Low productivity on low volume days is called pacing.

Operators slow down their production rate to spread the work over the day.

Pacing is an example of a manager responding to the production environment rather than controlling it.

Myth #9:  You Can’t Quantitatively Measure and Compare the Productivity of Staff Performing a Variety of Different Jobs

With simple math, a manager can quickly measure the efficiency of a staff member on individual tasks as well as their overall performance.

Myth #10:  the Most Efficient and Effective Way to Do Productivity Capacity Planning Is With Full-Time Staff

A combination of fixed and variable staffing minimizes the extremes of hold over and idle time, yielding a cost efficient operation.

Myth #11:  Variances in Operational Performance Can’t Be Predicted or Managed

A modal analysis determines the range of variances. Once the range of variation is defined, it can be managed.

Myth #12:  Idle Time Has No Impact on the Performance of an Operation

Idle time can be a greater expense than holdover to a department’s financial performance.

Myth #13:  Unit Cost Has Limited Value in Measuring the Performance of an Operation

Unit cost is the true measure of the effectiveness of an operation. A good manager maintains a relatively consistent unit cost independent of volume fluctuations.

High error rates, poor quality, low productivity, and mismatched staffing all contribute to higher unit costs.

Myth #14:  Asking Questions Is the Quickest Way to Develop a Solution to a Problem

Asking questions often lead to the solutions for symptoms of a problem.

Myth #15:  It Is Difficult and Challenging to Identify and Prioritize Customer Service and Operational Problems

Two simple tools, a Modal Analysis and a Pareto Analysis, can quickly identify and prioritize problems in an operation.

Myth #16:  Cross Training Has Limited Use as a Management Tool

Cross training is not only used for developing bench depth knowledge but can also be used to determine implementation times and staffing requirements for new processes, applications or business.

Myth #17:  Quality Management Is Expensive

The cost of quality is the expense of doing things wrong. Every penny not spent on doing things wrong or doing them over goes right to the bottom line.

Calculating the point of diminishing returns determines the required quality of an operation.

Myth #18:  Often a Problem Is Not Detected Until the End of the Month When Performance Reports Are Generated

Monthly reports accent operational problems.

Daily metrics and employing statistical process control assist in earlier problem identification and promotes proactive rather than reactive management.

For thirty years FTP has been assisting clients to dispel myths in their operation.

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Myths About Operations Management
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Do you know the biggest myths about Operations Management? Keep reading to learn more.
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