Question

What does a company's core processes or core competencies consist of? Why is it important for an operations manager to focus on this concept? Describe potential decisions resulting from this concept.

Answer 1

A company’s core processes or competencies are the source of its competitive advantages and this consist of the way the business operations are managed with an optimal allocation of resources. So for example, for an online retailer, the core process would be to get orders via its online portal and fulfil them at an optimal cost.

It is important for an operations manager to focus on this concept as through bringing more efficiency to this core process, the company can become more efficient, grow more and also become more profitable.

Potential decisions resulting from focussing on core processes and optimizing this further are:-

• Allocation of resources to core processes and their quantum
• Decision to keep which part of processes to themselves and how much to outsource
• Deciding on key metrics such inventory, credit period and target cost of the business operation step.
• Major improvement initiatives to be taken to reduce wastage and optimize the core processes

Thus understanding the core process and competency allows one to further analysis the process to drive improvement.