What is a transformation process in operations management? Why is it important? How to go about it? These are common questions for people working in operations, and with this guide we try to give you a complete answer to all of those.
While this article is meant to be read by operations manager and other operations staff, we decided to write it in a way that even outsiders of operations can understand what we are talking about. This is because a transformation process in operations management is an activity that can be benefit any business and should be understood by anyone working in business.
What is a Transformation Process in Operations Management?
What is a Transformation Process?
Before describing a transformation process in operations management, let’s start describing a transformation process in general. It is no secret that a transformation process is a process that transforms things.
A process is a set of actions. Unlike a project, that has a clear start and finish, a process is something more continuous and tends to be permanent, never ending. So, a transformation process is a set of actions to change things. Of course, since it is a set of intentional actions – things we do on purpose – it aims to change things for the better and make improvements.
Transformation processes are at the heart of business, they are the way a business can react to changes: changes in the marketplace, change in culture, changes in technology, and so on. It is how a business remains responsive and keeps a competitive edge.
What is Operations Management?
You may be familiar with this, but since we are talking about a transformation process in operations management it is worth to have a quick refresher.
Operations Management is the management of the operations of a business. Operations are the activities of the business that gets things done, such as manufacturing products, designing new services, handling customer calls – the “core” activity of the business, which of course depends on the business itself. Operations Management is studying how these activities work, ensuring they perform according to specification and run efficiently.
Any business has some sort of operation, and as such it needs operations management. For a web agency creating websites, operations might be creating the websites. For a producer of breakfast cereals, operations will be putting cereals in boxes. In the airline industry, scheduling and running flights on time is operations. Operations is everywhere.
What is a Transformation Process in Operations Management?
We can now join the two terms to explain what is a transformation process in operations management.
A transformation process in operations management is the act of changing some part of the operations to improve it in some way. For example, to make it more effective, faster, more reliable, less expensive, and so on. Of course, the actual goal will depend, but the idea that the operation is performing in some way, and you alter that through a transformation process.
A transformation process in operation management will typically involve some of the following components:
- Changing physical characteristics of materials used in the operation, for example switching from a type of plastic to another.
- Changing the location of materials or customers, for example having customers pay at the table instead of at the counter for a restaurant (for the process of collecting payment, which is operational in a restaurant).
- Changing who owns materials or information, for example switching from a “buy” approach to a “lease” or rent approach, or even outsource part of the things your company traditionally performed internally.
- Changes to the information, for example collecting more information as goods move through the warehouse by using RFIDs
So, the overall definition of a transformation process in operations is really that simple. It is changing something to try make things better. Typically, you will not change just one single item, but you will try to tweak several items, and repeat that in various iterations until you get everything right.
Why are Transformation Processes Important in Operations Management?
As we know, operations are the way a business “get things done”. However, “getting things done” is not enough for a business to thrive. It needs to do the right things. The problem with that is that it is not often clear what the right things are, and to make things worse they tend to change over time.
So, you need to constantly adapt to changing customer needs, pressure from competitor in terms of lower prices and/or higher quality, different geographies (not all cultures want the same product in the same way), environmental disruption, and more. You may need to change some things to comply to a new law, or to become “greener” and more sustainable overall.
In other words, you need to be dynamic to stay in business over time. You need to adapt to things. Transformation processes are important for this, they transform your operations to shift and adapt to changing circumstances.
But understanding what a transformation process is might not be enough. How do you apply a transformation to your operations in a way that is effective?
Effective Transformation Process in Operations Management
Okay, now we know the ins and outs of a transformation process in operations management. In this part of the guide, we will see how to actually put in place such process.
Start With Goals
To make an effective transformation process in operations management, start by having clear what you aim to accomplish. Here, you will have to be quite specific, because “make things better” won’t cut it.
You need to be clear about the goals and how those goals can be measured: how will you know if you have succeeded? Don’t be shy of putting bold goals, as long as they are reasonable and can be measured. If the goals are clear, ensure they are relevant to the organization. Ask yourself: why this matters? If you can clearly articulate the reasons in a compelling way, it will be easier to bring more people on board with your vision.
Common goals for a transformation process in operations management are typically related to speed, flexibility, cost, and quality. The actual goal will vary from company to company, depending on the industry, the operation, and the competitive advantage they are trying to seek. Nonetheless, here are some examples goals you can use to take inspiration:
- For a cereal producer putting cereals into boxes: reduce the variability of the amount of cereals for 3gr to 1gr (e.g. if the target weight is 300gr, shift from a range of 297-303gr to 299-301gr). (quality)
- For a generic manufacturer: reduce the defective parts produced from 1 in 200 to 1 in 1000 (quality, and cost as you don’t need to produce again the defective parts).
- For a computer assembler: reduce the time to assemble a computer by 30 seconds
- For a contact center: enable the contact center to handle calls from banking customers, in addition to the existing calls from insurance customers (flexibility, one contact center can do multiple things)
As you can see, goals can apply both to product and service operations.
Measure, Analyze, Find Why
Now that you know your goals, you should try to understand why things are the way they are rather than the way you want them to be. You should start with this analysis before attempting to change anything, otherwise your transformation process may produce unexpected results.
In this stage you will need to involve many stakeholders that are involved in the operations. For example, let’s take the first goal from the previous chapter: reducing the variability of the amount of cereals in a box. Here, you will need to understand why the current variability is 3gr rather than 1gr you want.
If you reduce it, you will save on average 2gr of cereals for each box. If you produce millions of boxes, this can be a significant improvement for your operations. So why is the variability so high now? You will need to talk to the people on the production line to understand if the machine is capable of producing 1gr variability. But it might not be a technical problem.
For example, the machine may be able to have a 1gr variability, but to do that it will need to operate at a slower pace, and this would mean less boxes of cereals produced per hours. Is the reduction in variability worth more than the production speed? It might be to a point: you need to evaluate pros and cons.
Suppose the reduction of speed is so prohibitive that we cannot change the variability as our process will slow down too much. Now, the evaluation is: should we change the machine with one that can be more precise while remaining fast? This will depend on the cost of replacing the machine and the expected saving.
Approach everything with curiosity, and remember that often things are happening in a given way for a reason. You will need to understand that before you attempt to change things.
Execute The Transformation Process
At some point, you need to actually do the transformation process in operations management. This is done by changing machinery, creating new procedures and documents, training people, changing information systems, and the like.
Specifically when you are executing your transformation process, it is important that you closely monitor how is the operations “taking it in”. Are there some unforeseen challenges? Do you see some stakeholders that are pushing against this change? Look for any barrier to the successful implementation continuously and tackle them head on before they become unsurmountable.
Continuous Improvement
Any transformation process in operations management is a continuous process. It never ends, as perfection is the goal. So, rather than settling for just one measurable goal, you should set a direction and set every time more and more challenging goals.
For example, if you were able to reduce the variability of your cereal amount from 3gr to 2gr, why not reducing it to 0.5gr. If you were able to do that, why not aiming at 0.2gr now? You can always push further and further with your improvement.
There are many approaches that advocate for this style of transformation processes. They are mainly related to quality, and are initiative like Total Quality Management (TQM) or Six Sigma. You don’t need to know the details, because they idea is simple: always try to get better and never settle.
Transformation Process in Operations Management in Summary
To recap, a transformation process in operations management is a set of activities that aim to make the operations of a business better. Operations are the core activities of a business, like making bread for a bakery or providing electricity for a utility provider.
You need to continuously use transformation processes because competitors are getting better and customers are demanding more and more, transformation processes are your way to survive and thrive.
Now that you know what is a transformation process, continue learning by reading about business processes.
