Operating principles, or as they are often called, a company's operating system, are essentially the way in which organizations put their values into practice and do things. Many companies rely on operating principles to get things done faster and more efficiently. Operations management refers to the management of business practices that create goods and provide services. In manufacturing, this refers to all the processes that transform raw materials into finished products.
Operating principles are a way in which companies implement their core values to achieve their objectives. These principles will help your employees see the big picture and make them aware of the long-term objectives of your organization. Operating principles influence the culture and values of your company. The objective of an operating principle is to provide a basic frame of reference for achieving a balance between priorities and motivations when making any decision about how to act and what to do under different circumstances. The management principles were presented by Randall Schaeffer, an experienced production and operations manager, an industry philosopher and a regular speaker at conferences organized by APICS, the leading supply chain and operations management association in the United States.
The principles of operations management balance disciplined control of the fundamental elements of operational efficiency, creative problem solving, and agile change management. Operating principles provide the essential frame of reference to help balance conflicting motivations and priorities when deciding what to do and how to act in different situations. Let's take a closer look at Schaefer's operations management principles and apply them to modern businesses. In the next section, I'll share the values and operating principles followed by leading companies such as Google, O'Reilly Media, Colorcon and UC Berkeley. Companies that practice the fundamental principles of operations management are the most profitable and competitive. Randall Schaeffer presented the 10 principles of operations management at an APICS conference.
These include: Adaptability, Change Management, Creative Problem Solving, Root Cause Analysis, Quality Control, Cost Control, Risk Management, Process Improvement, Resource Optimization and Strategic Planning. Each principle is designed to help organizations achieve operational efficiency. Adaptability is key for any organization that wants to remain competitive in today's ever-changing business environment. Change management is essential for any organization that wants to stay ahead of its competitors. Creative problem solving helps organizations identify new solutions to existing problems.
Root cause analysis helps organizations identify the underlying causes of problems so they can be addressed effectively. Quality control is essential for any organization that wants to ensure its products or services meet customer expectations. Cost control helps organizations reduce costs while still providing quality products or services. Risk management helps organizations identify potential risks before they become problems. Process improvement helps organizations streamline their processes for greater efficiency. Resource optimization helps organizations maximize their resources while minimizing waste.
Strategic planning helps organizations set long-term goals and objectives that will guide their decisions in the future. These are just some of the operating principles that can help organizations achieve operational efficiency. That doesn't mean trying to predict the future (although the advent of data analysis, machine learning and the Internet of Things have helped managers to have greater visibility into operations and information to make more accurate decisions). The operating principles of the team are the rules that allow employees to know what is acceptable and what is not in their company.
Operating principles are essential for any organization that wants to remain competitive in today's ever-changing business environment. They provide a basic frame of reference for achieving a balance between priorities and motivations when making decisions about how to act and what to do under different circumstances. Companies that practice these fundamental principles of operations management are more likely to be profitable and competitive.