You may have heard the phrase “operations process” in relation to small business ownership before, but what is it exactly?
Basically, operations processes transform inputs to outputs. Inputs are things like raw materials, labour, equipment, information, and money. Outputs are products or services, as well as the level of customer satisfaction people have after they’ve purchased from you. Operations processes are different for retail, manufacturing, and service businesses – but the underlying idea is the same for all businesses, big and small.
Want to see it in action? Let’s use a flower shop as an example. Lauren, the shop’s owner, has to transform cut flowers, ribbons, wire vases, florist time, knowledge, and other resources into a deliverable flower arrangement. This arrangement must be packaged with a card delivered to the right person at the right time, and make the customer happy. All of this is Lauren’s operations process in action.
Here’s a closer look at the different components of Lauren’s operations process. She must:
- Purchase the right flowers from the right suppliers (purchasing);
- Have those flowers delivered at the right time in perfect condition to the shop (materials management);
- Make sure to have a trained florist on hand to assist customers (knowledge, labour and production);
- Create the floral arrangements in such a way that they are consistently high quality and works of art (quality control); and
- Ensure each and every customer is thrilled (customer satisfaction).
As you can see, an operations process is linear. The inputs go through a transformation stage and become outputs.
Every business undergoes some version of this process. Some companies are better at it than others, which becomes a competitive advantage for those small companies that learn to do this well. Each component of your operations process must be managed, measured for efficiency, and tested for effectiveness.
Next week we’ll talk about how the operations process differs between services businesses and product businesses. See you then!