Difference between Operations and Project Management - Research Paper Example

Index Header Page No. Introduction and Focus 02 Difference between Operation and Project Management 03 Recognition of these Differencesin a Logistics Company 04 The Five Operational Performance Objectives 05 Relate each Objective, with Examples 08 Conclusion 09 Bibliography 11 Operations and Project Management With special focus on Logistics Industry Introduction and focus Project is the starting point of any operation. The relationship is necessary and progressive. A project has a start date and an end date- it starts with a proposal, an outline, plan of action and timelines, and it ends when set up is complete and the action settles down to full fledged routine activity, which is then called operations. There is a definite science to Operations Management, and there is an equally definite and important science to Project Management. The vital link is the transformation from project to operations which makes all the difference. The science of operations management rests on preset guidelines, though subject to change. There is a precedent to fall back on, and set benchmarks for the future. The forecasting techniques use past references for extrapolation. All guidance is empirical, based on past experiences in the business and the market. Market expansion and leadership(sales and marketing), innovation (R & D which may also result in New Projects), establishing financial viability(profits), employee welfare (HR Initiatives) and information sharing (two way communication and transparency) are some of the important functions of operations management. The team practices are established, though the incumbents may keep changing over time, bringing with them, a breath of fresh air in the form of refinement in processes. The science of Project Management, on the other hand, speaks of establishing or setting down the entire system basis a concept note or proposal which has been translated into an agenda driven exercise, and aims to achieve a certain minimum target, as the starting point, on which the operation will begin to build up. Market viability research, Financial Planning, Recruitment, Communication are the critical starting points of Project Management. Here, the focus will be on organizations offering logistic services. Simply stated, logistics covers the flow of material, from the raw material stage to the point of manufacturing, and thence to the end consumer for final consumption; after which the disposables or waste transportation is again, taken care of, by logistics. Over the years, logistics has become specialized and structured according to industry requirements. Professional skills in Logistics Management are being taught in premier institutes of learning. As businesses stretch out globally, logistic requirements become even more critical for the success of a business enterprise. For purposes of convenience, we will take logistics here to mean services offered for movement of goods and transportation, supply chain logistics where any manufacturing organization has outsourced its transportation needs to logistic experts and companies offering logistic services. It can include services used by manufacturing companies on a regular contractual basis, services catering to the distribution network of consumer goods both perishables and durables, relocation services, cargo and freight services, both domestic and global. The discussion will cover surface, air and marine logistics serving industry verticals like automobiles, pharmaceuticals, metal and metal products, agri produce including perishables, domestic and international trade. We will not cover internal logistic departments within organizations, just to simplify our argument. Difference between Operations and Project Management While the goal is the same, i.e. successful enterprise, the process and the strategy for management differs. A project expects stated results within a limited timeframe- an operation sustains results according to the ongoing strategy. The project manager is objective and his function is unique or for the first time; the operations manager is subjective, his function is set according to past experiences and present conditions, and he is answerable to the past and the present management. Operations management has innovation as part of a bigger more complex strategy, while in project management innovation is a vital, and probably the overriding strategy. A project, in fact, many projects, can be a part of an operation, but the operation begins only when the project matures, post implementation, integrates with and contributes to the ongoing enterprise. Managing an operation is strategy driven; managing a project is driven by a time bound implementation agenda. An operation can be flexible, a project has little or no flexibility - it has to adhere to sacrosanct guidelines for its success. A project brings something new to the table- an operation sustains that new service and takes it forward to higher levels of efficiency, through proper management. However, in order to succeed, both must be properly planned, controlled and executed. Recognition of these Differences in a Logistics Company A logistics company is governed by some key external factors like: Geographical factors which impacts proximity to raw materials and the end product markets. Geo Political factors which impacts demand across borders. Economic conditions which govern procurement and manufacturing. Internal policies governing industry that indicate the viability of all projects or operations. International policies governing commodities’ trade and movement which indicate the appetite for expansion of industries. Having said this, it is important to note the implications of the above on project management. A project in the logistics industry can be proposed either through organic growth or inorganic growth. The local environs, the geographical location of the proposed project in order to assure better business, the benefit of favourable international relations to facilitate cross border transactions, the existence and knowledge of favourable trade policies, all impact project planning and management efforts. The prime purpose of any business initiative and operation is to earn profits and generate viability- therefore a project or initiative in logistics is also designed with the same intent. Operations management, on the other hand, has already factored in these implications and focuses on global business strategy, forward and backward integration of supply chains of client organizations, business expansion through acquisition and mergers or inorganic growth; farming through added services in new areas to existing customers, etc. Logistics companies invariably benefit when their clients expand their operations, since they are the carriers. International growth is also spurred by alliances as opposed to a formal project in a logistics company, thereby putting to rest all doubts on viability of the project, and gives the management time to focus on operational issues. Liberalized export norms, and declining trade barriers add to the facilitation and operational management of such alliances. An emerging feature of companies operating logistic services is the Information Technology orientation, and prevalence of e business module, which will be detailed out in the operational performance objectives. The Five Operational Performance Objectives Manufacturing and production processes are objective driven. The same objectives hold good for service providers, like the logistic service providers; ultimately they are all businesses which run only when viable and have reasonably good bottom lines. The objectives provide guidance; operational performance depends on a careful study and analysis of every situation and application of objective guidance thereon. Quality Providing top of the line products and services is every organization’s priority. Quality is assured when the products are free from any manufacturing defects and conform to standards and certifications in its category. Raw material input is as important as the technology and process for manufacturing, in turning out a good quality product. This where a good logistic partner facilitates quality output by ensuring quality supplies of inputs. Quality in a logistic service organization essentially means timely deliveries of industrial or manufacturing inputs for quality products; efficient delivery of those products to points of sales and then onwards to the end consumers. Safety, security, time orientation and ease of use of the service, all go towards endorsing the quality of a logistic service. This can be possible only with efficient transport vehicles using environment friendly technology, fuel efficiency in order to economize on costs, safe and secure transit of goods and services and seamless backward integration with the client organization. Speed The global marketplace is dynamic; trends change and so do the preferences and priorities of the customers at every level. Speed is of essence for every organization to deliver products successfully and optimize on the return on investment. Time to market is a critical factor for the success and viability of any product in the market. Logistics plays a key role in making this possible- from the time a raw material is bought or inventory is created to the time the end product rolls out and reaches the end customer for direct consumption, at every intermediate stage, logistic requirements are apparent. Every intermediate stage is also at a certain cost to the organization. A good logistic backup ensures minimization of waiting time thereby reducing time to market, and in turn, cuts down on inventory costs and costs incurred due to delay at warehouses, on road, and supply constraints in the market for intermediate and finished goods. Fleet Management, loadability, truck turn around time, are some specific logistic KPIs(Key Performance Indicators). As an attribute of the logistics industry, speed is the first deliverable that comes to mind, when we think of transportation or movement. Whether the service provider ensures speed through mobile commerce dialogue, or technology deployment like SAP implementation or Robotics, is a matter of their operations strategy, but it is a key objective for a logistic company- speed is the determinant of the efficiency of service. Dependability A key objective for operational performance, dependability essentially means winning the trust of customers so that they are loyal to the product or service. A logistics service provider contributes substantially towards building up this dependability for its clients- in fact, it partners its client in becoming indispensible to the customers, while becoming a vital input for the client. Dependability criteria for a logistic company would mean safe and efficient transport of goods and services on behalf of its client. Flexibility All organizations need to respond to the changing environs in order to keep afloat. Flexibility is all about being able to adapt to change through active recognition and redressal of emerging needs in business. It is also about meeting customer and client expectations proactively, so as to sustain and nurture the relationship Flexibility for a logistic company means the ability to change in order to meet client expectations and handle their needs. It also means that the logistic company needs to extend itself to service the needs of customers according to the business imperatives of the customer. A logistic company is essentially a partner in growth of its client- it is not a mere service provider or buyer or seller of commodities and services. The ability to accommodate the emergent needs also qualifies as flexibility- it may be an extended warehousing need; or a change in schedule which needs to be implemented without any preliminaries. Cost Pricing has always been a key determinant of demand, but not at the risk of having a sub standard product or service on hand. Demand actually responds to the value for money argument. A product may be good, it may not be the best; but if supported by good service and customer relations, it tends to do well in the market. On the other hand, a low priced product may appeal but may not be bought because of after sales service constraints and other shortcomings. Value for money is a very subjective argument- there is no thumb rule to determine how one product is superior to another. However, containing costs and providing all round product support is a very important operations objective. Without compromising on quality, if a manufacturer can deliver goods and services at an attractively low price, then this objective has been met. In the logistics world, cost is determined by various factors, both local and global, since the service is usually across political and economic boundaries. Cost components may include fuel costs, transit duties, tax barriers, vehicle maintenance, insurance, payments made to employees on that job which also includes labour at the origin and destination, premium charges for specialized services, money paid to alliances for rendering extraordinary services on client demand. The operations objective here is to contain the costs so as to make an irresistible value proposition to the clients. Relate each objective to an operation you are familiar with, in the logistics industry, with examples The Logistics industry is structured and specialized according to the vertical categories serviced, the geographical locations networked, the kind of product consignments handled. A new project in a logistic company may mean a foray into another new industry vertical offering the same transportation and logistics services that they do or other industry categories, at an attractive price. It may also mean expansion through organic growth, alliances or inorganic growth or acquisitions. Once the project is fully implemented and becomes operational, the 5 operations objectives, as propounded by Toyota and adopted by the entire world, are the sacrosanct parameters for doing business. Referring to the first operational performance objective, Quality, timely deliveries and security during shipment is one aspect of the logistic industry I would like to relate. Provision of updated logistic equipment, ease of use of service, alignment with global business strategy of self and client are also a statement of quality. Speed which is the overriding objective for a logistics company, relates to it by way of optimum time deliveries of goods and services, streamlined documentation procedure, sacrosanct delivery schedules, reducing time to market, and following the ‘just in time’ approach. Dependability as an operational performance objective is more qualitative and inspired by perception and positioning of the product or service. The image a logistics company must aim to acquire is ‘consign and forget - we are there to take care of your shipment’. A dynamic example of creating dependability in logistics is the facility of tracking and shipment location through information technology proliferation which enables the client to place his goods in the company’s charge with confidence. Flexibility as an operational performance objective translates into adaptation to newer methods of transportation and logistics and gearing up to deliver on the customer’s emerging needs. An example of flexibility in logistics is when the carrier company stretches itself to form network alliances to cater to the new requirements of clients in hitherto unexplored geography or economic zones. Another example of flexibility is the introduction of multi language transaction facilities in order to encourage global businesses. Cost as an operational performance objective is becoming increasingly relevant to the growth of a business. Viability, especially today when times are difficult and costs are going up is a necessity since companies are unable to afford cost overruns in any function. It is imperative that logistics companies contain their costs and become more competitive in maximizing business for themselves and their clients. An example of costs as an operations objective is when bulk rates are offered to clients to ensure viability and a long term relationship assuring revenue inflows. Cost cutting through alliances for expansion rather than organic growth is another way of containing costs, since paying for an existing infrastructure is quicker and better than creating one at its own expense. Conclusion However, it is important to note that the industry faces challenges as well, and needs to be equipped to handle them. The challenges which are most common include emission norms, financial disclosures and global accounting, taxation and fiscal practices which are different for different countries and locations, infrastructure facilities, partnerships and alliances for extended reach, industry trends, changes in client needs, updating of equipment which is required to provide the service, capital investment criteria and capability, among others. The learning here clearly points out that the success of any enterprise is guided by the operational performance objectives, for which each one designs management path according to their priorities and judgement of what is best for them. In conclusion, as Jim Collins says, “Visionary companies don’t put in place any random set of mechanisms or processes. They put in place, pieces that reinforce each other, clustered together to deliver a powerful combined punch. They search for synergy and linkages...” (Page 214). Bibliography Collins, Jim & Porras, Jerry I. Built to Last. Successful Habits of Visionary Companies. 10th Anniversary Edition. Hardcover. Published by Random House Business Books in UK. 2005. Read More