Operations Management: From Efficiency to Holistic Value Creation

Since its emergence as an independent field of study at the turn of the 20th century, operations management has been intrinsically linked to the final product reaching the customer. This was achieved by minimizing waste, rationalizing expenditure and savings, maximizing organizational efforts, and effectively managing available resources. The primary goals were always clear: customer satisfaction and loyalty, and the sustainable growth and increased profitability of the organization.

However, as we observe, the nature of the market is rapidly changing; indeed, the world itself is transforming at an unprecedented pace. Therefore, organizations need to evolve their operations management practices to keep pace with these changes and their demands. What does this truly mean?

In this article, we discuss how operational management has evolved, delve into the concept of holistic value, and explore the philosophical dimension behind this transformation.

Operations Management in its Traditional Sense: What It Does and Why

Effective operations management practices prevent companies and organizations from wasting time, money, and resources on activities that do not support their strategic objectives. Its importance lies in ensuring that daily work contributes to the broader, overarching goals of the organization. Operations management directly impacts key business outcomes, including profitability, productivity, customer satisfaction, compliance, and the ability to grow and compete over time.  

Smart process optimization leads to faster delivery, better quality, and less resource utilization – all of which help a company operate more efficiently and, consequently, expand sustainably. Robust quality control reduces the error rate, which in turn enhances brand reputation, and subsequently leads to acquiring or strengthening customer loyalty. Effective operations management can also help a company respond to changing markets without losing performance momentum, thereby mitigating the impact of risks such as supply chain disruptions. 

This describes the traditional role of operations management. So, what has changed? Or rather, what should change?

The change stems from the evolving concept of value. Value traditionally referred to what the customer received in exchange for payment – the final product – ultimately leading to the organization achieving its objectives. All the aforementioned points describe this value. However, recently, human resources – being the hands that produce this product – have entered the value equation.

You, dear reader, have undoubtedly heard that the exploitation of labor by some large corporations in certain countries, such as East Asia, through underpaying wages or operating in inhumane conditions and neglecting physical and mental health, has directly impacted the value of these companies with such poor practices. This has led to the loss of loyalty from many of their customers.

If this indicates anything, it suggests that labor or human resources are now a significant part of the value that the conscious customer increasingly seeks. Furthermore, caring for employees is no longer just a slogan or a luxury for some companies; it has become a necessity for all businesses to integrate into their approach. This ultimately led to the emergence of what is known as Holistic Value.

Holistic Value, in essence, encompasses customer satisfaction with the final product and their loyalty to the company, which in turn leads to the satisfaction of the organization's owners and the achievement of their goals, in addition to the satisfaction of the employees within the organization, as a core part of the entire process.

How Modern Operations Management Contributes to Value Creation in its Current Form as Holistic Value

Modern operations management transcends mere internal efficiency and cost reduction to create value that extends to both customers and employees. While traditional definitions of operations management often focus on internal efficiency, cost reduction, and profitability as primary objectives , prominent operations management methodologies like Lean emphasize "defining value from the customer's perspective". Six Sigma aims to reduce defects to improve "output quality" and "customer satisfaction".  

However, for instance, the benefits of the Lean Six Sigma methodology explicitly include "improving the work and customer experience" and "employee development". This indicates a profound strategic evolution in operations management, where the discipline is no longer solely about  

doing things right for the final product and customer satisfaction (efficiency and cost reduction) but has expanded to encompass doing the right things for both the customer and the people doing the work (holistic value creation). 

A company's ability to deliver on time, for example, directly impacts customer satisfaction and brand reputation. Similarly, modern operational processes can increase customer loyalty on one hand, and attract new talent on the other, thereby enhancing the company's market reputation. When employees feel they are part of efficient and improved processes, it boosts their engagement and satisfaction, leading to increased productivity and innovation.  

The Philosophical Shift: From Focusing on Customer Satisfaction to Satisfying All Stakeholders

The scope of operations management has expanded from purely quantitative metrics (such as units produced, costs saved) to include crucial qualitative aspects like customer satisfaction, brand reputation, and employee well-being. This philosophical shift acknowledges that these qualitative factors are not merely "nice-to-haves," but rather indirect yet powerful drivers of long-term profitability and sustainable competitiveness.  

Leading organizations today recognize that optimizing operations is not just about reducing waste or accelerating production; it also involves creating a work environment that supports employees and empowers them to deliver their best. For example, modern technologies such as Artificial Intelligence and automation can reduce routine tasks, saving employees time and effort and allowing them to focus their efforts on decision-making and situation analysis. This transformation not only increases productivity but also reduces job-related stress and enhances employee satisfaction.  

At the core of this transformation lies the idea that effective operations are those that serve all stakeholders: customers who receive high-quality products and services, employees who work in a supportive and motivating environment, and the organization that achieves its strategic goals and grows sustainably.