1.6 Key Trends in Operations Management

In the previous section, we looked at the evolution of operations management. Those changes largely took place in response to the business and economic changes that aimed at improving productivity through innovation in pursuit of greater economic gains. In doing so, however, the business world realized the need to balance economic and non-economic bottom lines. Such realization created some key trends that impacted operations management.

Globalization

The economic principle of “competitive advantage” led both the public and private sectors in many countries to part from “self-sufficiency” and “protectionism” and open doors to trade. This change allowed companies to obtain their material or establish manufacturing facilities in a country at a lower cost.

Supply Chain Expansion

With larger trade volume, supply chains also expanded, making it easier for businesses to find more supply sources and/or new markets for their products. The expanded chains also made it possible to find more distributors, wholesalers, manufacturers, and other partners in the chain, such as logistics companies and warehouses. The longer supply chain allowed more companies to get involved, from providers of raw materials to the sellers of final products.

E-Commerce

Allowed businesses to sell to other businesses or customers online. As e-commerce relies on internet use, however, businesses and consumers may not use it with equal success. For example, many small businesses, which contribute significantly to almost any economy’s gross domestic product (GDP), do not use e-commerce. This is true for many consumers as well.

Technology

Information technology (IT) has played a vital role in facilitating commerce between businesses (B2B) or between businesses and consumers. An example of such impact can be found in the order-to-delivery process in Amazon, whereby a Canadian places an order for pieces of custom-made clothing that are made in China and Brazil and have it delivered to their front door in days.

Sustainability

Aside from profit (economic gain), in the past few decades, businesses have also paid attention to social and environmental gains. Metaphorically, these three can be perceived as a tripod; if the economic leg is heavier, the tripod will become imbalanced. Therefore, such initiatives that pay closer attention to the social well-being of underpaid workers that work in sweatshops have gained a place in business practices. In addition, closer attention to “closed-loop supply chain” and “life cycle analysis” have been encouraged in product design.

Recent (Post-Covid) Trends

The COVID-19 pandemic changed business practices in many ways and created new trends in their operations. While some of the previously mentioned trends helped business companies during the Pandemic, the human/social aftermath of COVID-19 seems to have created new challenges in business operations. For example, while enhanced information technology (IT) and advances in artificial intelligence (AI) led to better digital communication and increased productivity, they also took away personal connections and led people to scrutinize business corporations’ social/environmental footprint. The following video explains these trends in more detail.