What is Operations Management?

Operations management is the administration of best business practices for designing and controlling the creation of goods and services. Operation management is the core part of an organization. Operation management is responsible for optimum utilization of employees, material, equipment, and technology. Operations management handles various strategic, financial, manufacturing, and designing issues.

To effectively manage and run an organization, the operations manager must follow the step-by-step procedure to solve a problem. Using a systematic approach for solving a problem can help in identifying the root cause of the problem and finding an effective solution to the problem. These are called problem-solving techniques.

Problem Solving Process 

You can improve your problem-solving skills by systematically following the problem-solving process. The problem-solving process can be divided into five major steps:

Identifying the Problem

The operations manager should coordinate with the entire team. He should gather resources, right people and use his past experience. A strategy should be made to identify and approach the problem. A good strategy serves as a foundation to solve the problem. First, state the problem specifically. Consult each sector or process involved in the problem to find the source of the problem. Find all the contributing factors that have caused the problem. Determine the process which has caused the problem. Then, identify what standard or expectation is violated. Gather all the data to solve the problem.  Following questions should be asked to the concerned sector or departments to identify the problem:

  • What are the processes, products, or parts involved in the problem?
  • When did the problem occur?
  • Where did the problem occur?
  • Who is concerned with the problem?
  • How frequently has the problem occurred?

Determine the Cause

There can be single or multiple root causes of the problem. The root cause of the problem should be diagnosed. The simple problem can be solved using various methods such as:


From a simple problem in the organization, a 5-why the technique is used. The main goal of this technique is to determine the root cause of the problem by asking a sequence of "Why?" questions.

Procedure to use 5-Why

  1. The entire team members familiar with the problem should assemble in one place.
  2. Discuss the problem with the team and write a brief problem statement.
  3. Discuss with your team members the first "Why," which is the cause of the problem.
  4. The next "Why" of the 5-Why will be asked according to the answer of the first "Why." 
  5. When you identify that you have reached the root cause of the problem, "STOP."  You may have to ask "Why" iteratively in few cases.  And in other cases, you may not reach the fifth "Why "also.
  6. Address the root cause and agree on the countermeasures that will prevent the problem from recurring.

Fishbone Diagram

The fishbone diagram also called as Ishikawa diagram is used to analyze complex problems. The graph looks like a fish's skeleton with the situation at the head and the cause of the problem feeding into its spine.

" Fishbone Diagram"

Procedure to use Fishbone Diagram

1. Write the problem statement at the head or mouth of the fish. Draw a box around it.
2. Write the cause or categories of the problem as branches from the main arrow. Generic heading can be used, such as

  • Measurements
  • Materials
  • Personnel
  • Environment
  • Methods
  • Machines

3. Brainstorm all the possible causes and write it as a branch from the appropriate category. This involves some sort of questioning process such as 5-Why.
4. The process of breaking down each cause is continued to reach the root cause of the problem.
5. Focus on the chart until an outcome and next steps are agreed upon amongst the team.

Pareto Chart

A Pareto chart is used to analyze the frequency of the problem or causes in a process. A Pareto chart can be constructed by segmenting the range of data into groups. Customer complaints received in an organization can be divided into different categories using a Pareto chart.

Scatter Diagram

A Scatter diagram is used to study the correlation between two random variables.

Flow Chart

A flow chart is a pictorial representation of a process in sequential order.

Run Chart

A run chart is used when a quick visual analysis of the problem is done.

Generate Alternative Solutions

The next step is to consider the solutions that address the fundamental cause of the problem. Many alternative solutions to the problem should be generated before the final evaluation. Short- and long-term alternatives should be specified.

Select the Alternative

All proposed alternatives should be evaluated for selecting the best alternative.       

  • Evaluate all the alternatives.
  • Evaluate the alternative that helps to achieve the established goals.
  • Evaluate if the alternative fits within the organizational constraints.

 Implement the Solution

An action plan should be developed to implement the chosen solution. Allocate resources to the team and establish the timeline. Monitor the progress and gather feedback from all the affected sectors or processes in the organization. Evaluate long-term results based on the final solution.

Problem Solving Methodologies

Trial and error is a fundamental problem-solving technique. There are various problem-solving methodologies or techniques that you can use to identify challenges, create actionable goals, and resolve problems as they arise. Let's look into three such methodologies.

CATWOE Analysis

CATWOE analysis is a methodology for understanding the perspective of stakeholders. This methodology identifies each stakeholder's perspective individually and then collates this information to effectively manage the stakeholders. The six alphabets in the acronym CATWOE are the six elements of this analysis. These are: CUSTOMERS, ACTORS, TRANSFORMATION, WORLDVIEW, OWNER, and ENVIRONMENT.

" 6 CATWOE category: Customers, Actors, Transformation, Worldview, Owner and Environment"

Customers: These are the customers and clients on the receiving end. These questions should be answered should be kept in mind while solving the problem:

  • What problem do they currently have?
  • How will they react to your proposed solution?

Actors: These are the stakeholders of the business involved in carrying out the transformation.

Transformation: This is the business activity that delivers service to the customer. The organization takes the input and transforms it into output.

World View: This element summarizes the belief of the stakeholder about the organization. It also answers certain questions, such as why the organization exists.

Owner: This element will describe who should take ownership of the problem.

Environment: Every organization works with the constraints imposed by the business environment, such as policies, procedures, etc.

Failure Mode and Effects Analysis (FMEA)

FMEA is a structured way to discover potential failures that may exist within the design of the product or service. The failure mode is the way in which the process may fail. Effects are the outcome of the failures. Failure Mode and Effects Analysis is designed to identify, prioritize and limit these failure modes. The two types of FMEA are:

  • Design FMEA (DFMEA): It explores the failure of the products. It explores the reason for the product failure:
    • The geometry of the product
    • Reduced product life
    • Reasons for a product malfunction
    • Material of the product
  • Process FMEA (PFMEA Process FMEA (PFMEA): It explores the impact of the product failure. It will discover:
    • Impacts on the product quality
    • Reduced reliability of the process
    • Customer dissatisfaction

Hurson's Productive Thinking Model

This model was developed by author and creativity theorist Tim Hurson. This model helps in solving the problem in a creative manner. This model consists of six steps, as follows:

  1. Ask, "What is going on?"
  2. Ask, "What is success?"
  3. Ask, "What is the question?"
  4. Generate answers.
  5. Forge the solution.
  6. Align resources.

Context and Applications

This topic is significant in the professional exams for both undergraduate and postgraduate courses, especially for:

  • B.com (Honors)
  • M.com
  • Chartered Accountants (CA)
  • CMA (Certified Management Accountant)

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