Operations will Guide the Way

shutterstock_38579782The outcome of business operations is the creation of value from assets owned by a business. Assets can be either tangible or intangible. The effort involved in creating value is what constitutes business operations cycles.

The primary goal is to implement a sustainable delivery of goods and services to the business’ customers.  This should be done at a cost that is less than the funds acquired in exchanging products and services to produce profit. The income directly acquired by the business in exchange for the goods and services it delivers is the business’s revenue. The cost of developing, producing, and delivering these goods and services is the business’s expenses.

A business whose revenues are sufficiently greater than its expenses produces profit. Generating recurring “revenue” is not the main focus of operations management; what counts is management of the relationship between the cost of goods sold and the revenue derived from their sale. Efficient processes that reduce costs even while prices remain the same expand the gap between revenue and expenses and derive higher profitability. By detailing what is required from your operations to achieve your overall business objectives you will keep the business focused on the day to day events that are necessary to keep the business going. Your operating function is the core of your business and it’s extremely important to manage it effectively, while integrating all business functions into your planning. You can’t stay on top and stand still at the same time.

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