Principles of Operations Management in Business


Business operations and its management is an inevitable part of all organizations irrespective of the sector. It comprises of all the activities that are involved in the procurement of inputs to the final delivery of goods or services. Numerous business processes and operations are engaged throughout the business cycle. Only effective management of these business operations help the company to deliver quality products or services with reduced cost and wastages.

In other words, proper operations management helps to increase efficiency of a business. It comprises of all the steps and sub units that help channel the inputs to finished goods or service that finally gets delivered to the customer.

This tutorial discusses two major principles of operations management that will help the operations team to map out efficient work flow, find limitations and reduce labour hours and improve compliance. The following two set of principles put forward by Randall Schaeffer and Dr. Richard Schonberger highlights the ideal way of delivering quality output through flawless use of material and man power available in the organization.

Randall Schaeffer’s Ten Principles

Randall Schaeffer is an experienced manufacturing and operations management professional, an industrial philosopher, and spokesperson at the leading US association of supply chain and operations management. He presented his list of 10 principles of operations management at an APICS conference in 2007. His principles received much acclaim many business houses adopted it to excel their operations management. The ten principles by Schaeffer are as below:

  • Reality − Operations management should try to identify and focus on the real issue faced, rather than giving umpteen importance only to techniques or processes in place. Only the identification and analysis of the real problem can give a proper solution.

  • Organization − All business processes and departments should be logically connected and collaborated. A cost reduction in one unit may not prove successful if the other unit incur heavy cost for the same product line.

  • Fundamentals − Sticking on the fundamental aspects of business will prove good in the long run. 80% of success comes from a strict adherence to precisely maintaining records and disciplines, and only 20% comes from applying new techniques to the processes.

  • Accountability − Operational efficiency is a result of efficient management. Managers are bound to formulate rules, and define responsibilities to their subordinate employees. This would ensure that the workers put in the necessary efforts.

  • Variance − A difference of business processes needs to be encouraged. Practically the variance might prove efficient than the originally set plan. Logically and cautiously managed variance can be sources of creativity.

  • Causality − Any problem identified should be carefully analysed to find the real cause that triggered the issue. The rectification of the actual cause alone can give a permanent fix to the problem faced.

  • Managed passion − As in any task the passion of employees towards each task they carry out is the driving force of success. However, stable dedication and passion cannot be expected at all times. In such situations managers should pitch in to instil passion and commitment among the employees.

  • Humility − It is always better to accept the situation and ask for help than going for costlier trial and error techniques that might make the scenario even worse.

  • Success − The concept of success of an organization will always depend on the interest if the customer. In order to maintain the market share and clientele, all the other principles have to be revised accordingly.

  • Change − Changes are inevitable and should always be embraced. New theories, principles and solutions, keep coming in proving better efficiency. Such alternatives should be put to effect and effectively managed for business success.

16 Principles by Dr. Richard Schonberger

Richard J. Schonberger is a renowned scholar, theoretician, and master of production and manufacturing. He is the author of the best-selling Manufacturing Books. He has become widely known by his set of 16 customer-focused principles in operations. They are −

  • Continuous improvement − Consistent and continuous efforts to improve its services to deliver best quality are vital for an organization. Continuous improvement helps businesses to become flexible to adapt to changes.

  • Team up with your customer − The second important principle is to align the business activities along with the preference of its customers. Customer choices and cost likely to spend directly affects the business. Hence it is very much important to know the customer.

  • Being aware of competitors − It is very much crucial to have an in-depth understanding about the competitors, their customer relations, and business strategies. This will help to make necessary modifications or strategy updates for boosting efficiency.

  • Single-purpose − It’s not the intention of the top management alone, but the employees too that should be driven towards the achievement of a single aim of attaining the business goal.

  • Getting organized − All resources need to be organised in such a way that it can be put to optimum utilization and timely delivery.

  • Focus − Business should always concentrate on manufacturing goods or services as expected or demanded by customers.

  • Proper care of equipments − Machinery and business equipments are assets of a company and hence sincere efforts should be put towards maintaining them.

  • Managing human resources − Human resources of a company need to be efficiently managed by providing proper training and develop their skills. Offering job safety mechanisms, fair pay, rewards and recognitions will help increase their productivity.

  • Reduce human errors − Making employees accountable for their actions will help reduce human errors to an extent.

  • Acquire simple but best equipment − While investing in equipment, it is always good to purchase simple and the best available in the market. It will help to stay ahead in the competition and deliver better to your customers.

  • Cut setup − The cut setup means to be ready for different types of processes. Keep your information and tools prepared to meet the surge in demand.

  • Cut times − Cut times mean reducing the total delivery time that is taken to deliver products to customers. This can be achieved by adopting the latest technology and delivery methods.

  • Total quality control − The quality of your final product will depend on the types of material and techniques that is put to use during production.

  • Pull system − On-demand production could be encouraged to reduce wastage and save cost.

  • Visibility management − Promotional activates need to be given more emphasis to improve the visibility of the business to the market and outside world.

  • Fix causes − Problems are caused in the system by the underlying cause. Correcting the root cause of an issue will solve the problem permanently.


Operations management treats materials, human resources, technology and utilization of equipment hand in hand. The operations team identifies repetitive and redundant tasks, incorporate technology aid where needed and scrapes off extra cost. This facilitates quality product delivery with optimum use of available resources ensuring customer satisfaction in reduced costs.

Principles applied for efficiency help operations management, like organizing resources or cut times and waste. Thus, by adopting these principles in operations management, business tend to improve with increased output and better quality of products with enhanced customer satisfaction.

Updated on: 18-Apr-2023


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