Lesson 1 of 4
Operations thinking: processes, capacity and metrics
2 min read
Operations is about delivering what the company promises, reliably, at the right cost. Whether it's a quick-commerce dark store, a factory, a hospital or a recruitment process, the same ideas apply.
Everything is a process
A process turns inputs into outputs through steps. To manage one:
- Map it: a flowchart or SIPOC (Suppliers, Inputs, Process, Outputs, Customers).
- Measure it: volume, time, cost, quality at each step.
- Find the bottleneck: the step with the least capacity limits the whole process (theory of constraints). Improving any other step doesn't increase output.
- Improve and standardise: fix the bottleneck, then document the new standard operating procedure (SOP).
- Control: monitor with dashboards and alerts.
Capacity and utilisation
- Capacity: the maximum output per period (orders packed per hour).
- Utilisation = actual output ÷ capacity. Running at 100% leaves no buffer for variability, so queues explode; 80–85% is often healthier.
- Throughput: actual rate of output. Cycle time: time per unit at a step. Lead time: total time from request to delivery.
- Little's Law: work in progress = throughput × lead time. To cut lead time, reduce the work waiting in the system.
Metrics operations teams live by
| Area | Metrics |
|---|---|
| Delivery | on-time delivery %, OTIF (on time, in full), average delivery time |
| Quality | defect rate, return rate, first-pass yield, complaints |
| Cost | cost per order, cost per unit, logistics cost as % of revenue |
| Inventory | inventory turnover, days of inventory, stockout rate, fill rate |
| People | productivity per hour, attrition, absenteeism |
| Customer | CSAT, NPS, SLA compliance |
Daily operations habits
Morning reviews of yesterday's numbers, a clear owner for every issue, root-cause analysis instead of firefighting the same problem daily, and communication across teams (sales, finance, warehouse, customer support).
Check yourself
- A packing line has three steps taking 2, 5 and 3 minutes per order. What's the bottleneck and the maximum output per hour?
- Why is 100% utilisation dangerous?
- Explain OTIF to a new joiner.
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