Operations management is a type of management that oversees, designs, and controls a company's production processes. This type of management is also tasked with redesigning business operations in the production of goods and/or services, if that is necessary. Operations managers are responsible for ensuring that business operations are efficient, both in terms of conserving resources and in terms of meeting customer requirements. They manage the process that converts inputs (materials, labor, and energy) into outputs (goods and services). In order to accomplish this task, managers utilize various tools, two of the most influential being Six Sigma and Lean.
Six Sigma
Six Sigma is a strategy designed to improve the quality of process outputs. The Six Sigma program accomplishes this by identifying and removing the causes of defects (errors) and by minimizing the variability present in manufacturing and business processes.
This strategy relies on particular quality-management methods, such as statistical analytics, and creates a special infrastructure of employees within an organization (e.g., "Black Belts," "Green Belts") who are experts in these methods. Each Six Sigma project in an organization follows a defined sequence of steps and has quantified financial targets such as reducing costs or increasing profits. Among the tools used in Six Sigma are process mapping, trending charts, calculations of potential defects, ratios, and statistics. Best practices for work within a team are also used.
Six Sigma
Six Sigma is a tool used by many managers when determining how to reduce the number of defects created by their processes.
Lean
Lean is similar to Six Sigma, but is slightly less focused on defect rate and more focused on eliminating the amount of waste and excessive steps in an operation. Lean is a production theory that considers the expenditure of resources for any goal other than the creation of value for the customer wasteful, and thus a target for elimination. Beginning from the perspective of the consumer of a product or service, "value" is defined as any action or process that a customer would be willing to pay for. Lean employs tools to evaluate production workflow and determine where there is waste. Examples of this waste would be excess motion, inventory, and overproduction.
Examples of Six Sigma and Lean
In many ways, Lean manufacturing and Six Sigma is reminiscent of Henry Ford and systematic process improvements. The overarching theme is simply to minimize time expenditures on behalf of employees and maximize output with the same amount of input. Toyota (and the concept of kaizen) is a fantastic example of Lean manufacturing and what is called just-in-time (JIT) inventory management. Toyota became famous in manufacturing for timing every specific element of the manufacturing process to ensure that minimal warehousing was required, delivering each new add-on component at precisely the time it would be needed and in exactly the location it would be installed. This created a process flow that minimized space usage (lowering costs), optimized timing, and created widespread consistency of operational flow.
Lean and Six Sigma are the two main tools for managers in operations management. Both of these operational strategies offer managers an extensive toolbox with which to analyze how efficiently their production is running. These tools analyze workflow, evaluate the presence and cause of waste, and decrease defects in products or services, all of which make a company more efficient.