What is Operations

A simple note on the foundations of Operations. This post should give you a mental model to understand any operational workflow.

I did a Google search to see how to explain someone what Operations is in the simplest way possible. Unfortunately, most of the articles are SEO related with a lot of jargons. This is my mental model, hopefully, it will help you understand what Operations is.

Operations at the end of the day is managing repeatable processes. When you manage any kind of process flow that happens over and over again, you're running operations. Let me give a few example of operations
- You're managing an event. Setting up and executing the event is a type of Operations.
- You're a lending company, you get loan applications. Processing the loan application is operations
- You're in the Finance department. Creating a daily report for your management or updating your books end of the month is operations
- When a food delivery company delivers food to your home, it's operations.

The term Operations is applicable across a wide variety of industries and use cases. But across these use cases, there are some fundamental principles of how Operations work. By understanding this macro context, we can really understand how to optimize your individual operations workflows.

All Operations systems follow a similar structure show below.  This is the basic unit of Operations.

No matter what kind of operations you run, this is the general structure your system will follow. Let's say we want to look at the process flow of a loan processing unit, it will look like this.

Here,
Input -> Loan applications which are sent for processing
Loan Processing Unit -> This can be a human being, a computer system or a combination of both that processes these applications and spits out results.

This sample principle can be applied to all other kinds of industries and processes.

If you've worked on any of these, you understand that operational processes can be broken down into multiple sub processes up to a certain level. The sub processes in turn have a similar behavior to the primary operational process. This is how it looks.

We'll apply the same principles for our loan processesing system.

Here, there are multiple sub processes like credit check, document collection, verification and disbursal which get executed in order to complete the master process.
The sub processes can be executed in serial, parallel or a combination of both with or without inter dependencies to other processes in the system.

If you've understood this, it become very easy to figure out how to optimize the operational process at hand. For example, any operational unit execution can be measured using the following factors.
1. Number of inputs to the process
2. Variety of inputs to the process
3. Time taken for the process to execute
4. Cost of executing the process
5. Quality of the execution.

These parameters become the fundamental units of running an operational unit. When you think of streamlining your operations for better efficiency, cost or quality, these are the variables you have to work with.
Your objective then becomes, how you measure these inputs and then how you manipulate different inputs to improve the output.

Hope this helps you understand more about Operations in general.

Header image by Jessica Lewis on Unsplash