Excellent Operations Management For SMEs

Many SMEs in Africa find the going tough the first 3 to 5 years of their businesses for various reasons such as finances, lack of business model, unsupportive national legislation, poor operations planning etc

In this article we will briefly highlight importance of operational management for SMEs .Specifically we will evaluate the relevance of organizations structure for SMEs

Organizations are managed within the constraints and boundaries of hierarchical structures that allow for its various strategies to be implemented.

The following are the functions of structures in an organization: Organization structures allow us to organize and deploy resource, they allow us to define job activities, responsibilities, and accountabilities, they provide for decision making and information flows, they help establish power structure for the organization, they influence the identity and corporate image of the organization, they establish people’s attitudes, organizational structures can be an influential elements in whether or not an organization can be effective.

Before, you can decide on the appropriate structure to use in an organization, the following should be put into consideration: is the structure appropriate to handle the tasks and opportunities that it faces, Is there an appropriate fit between strategy and the structure adopted, Does the established structure provide a right balance of information, power, and resources to support the various activities within an organization etc

These questions and more are important, because the nature of the organization will determine the kind of structure to be adopted.

Management structures and management in action

Organization structures allow us to organize and deploy resources. They allow us to define job activities, responsibilities, and accountabilities. They provide for decisions making and information flows. They help to establish the power structure for the organization.  They influence the identity and corporate image of the organization.

There are six alternative models structures: Simple/entrepreneurial structure, functional structure, product structure, divisional structure, matrix structure, and government structure.

Entrepreneurial structure

This is the simplest of the model structures. Every decision depends on the entrepreneur or owner of the business.  They solely make all the decisions, other employees take on to carry out specific tasks, has little or no identifiable departmental structures, are flexible organizations. Growth and geographical dispersion and the need for outside investment can create pressure to change from this structure.

Functional structure

Growth often leads to the development of a functional structure. Similar activities are grouped into departments, such as personnel, marketing, finance, and operations.  Coordination is achieved through a board of directors or management committee overseen by a managing director or general manager.  If the organization is not too large the functional structure provides three main advantages:

1-It allows for the development of particular kinds of expertise

2-It provides a clear path for professional staff who work with and then manage people from similar background

3-It provides for the effective utilization of personnel across various departments.

Product Structure

Managers operating within a functional structure are unlikely to devote the necessary time and commitment to each of a range of products or service or markets.

In the product structure activities are grouped around products/services/markets. Each group has its own specialist who is best organized at product level.

Typically the finance and personnel may remain functionally organized, reporting directly to the management committee or board alongside the product groups. The advantage of this structure is that the product groups are better equipped to respond to market demand for growth or change to products/services. They do not need to compete for resources unless the rate of growth is such that the resources allocated to them must be expended. Also, the work of various specialists becomes directly related to the market.

Matrix structure

This is a structure that combines both market and functional focus. They are often found in large organizations and that deal with more than one complex project, hence, there is need to coordinate and develop projects and various specialist activities. As the demand for various specialist inputs is variable over the life of a product, we need a structure which promotes both effective deployment on a project when needed and adaptability over time so that resources can be easily switched between projects. The matrix structure identifies project management structure accountable for the project, and the functional structures accountable for each discipline.

Dilemmas of organizations

In as much as management structures are important considerations for SMEs, too much emphasis on them may be misleading since SMEs are often designing and redesigning the management structure, assigning different responsibilities and resources to divisions and departments.  Decisions about the management structure pose a number of dilemmas which must be resolved if an organization is to be managed effectively.

Managers of SMEs need to decide which structure fits their organization based on the nature of the organization and organization development stage in order for them to manage effectively and turn their structure into a competitive advantage tool. This is only a snap shot of operations management for SMEs, if you are having challenges in your organization developing the right structure to effectively compete or are you desirous to have your organizational structure become a competitive tool kindly get in touch