managing

the operations
function
by group two - stem
what is the concept of operations function?

planning + implementing
+ monitoring of the
process of producing
goods + services
01
component manager
- oversee the resources available to the enterprise for
production activities
- plans the structure of production
- supervises the process of combining materials
together with other inputs
- assess the performance of production
 02
important business
activities attached to
business management
WAREHOUSING - security and INVENTORY - crucial in narrowing
storage of the materials needed the gap between proximate future
for production demand and next production
MAINTENANCE - ensures the QUALITY CONTROL - to assure
continuous productivity of the customers that the product is
firm’s capital equipment consistent and reliable
 assessing the performance
of a business enterprise
two levels in evaluating the performance of a business:
performance effectiveness
indicates how the output of the firm was able to achieve the objectives
set by the business enterprise
performance efficiency
denotes how the output of the firm was realized through the use of
resources
framework for analyzing the
operations of an enterprise
- helps to understand how the
production is structured

- two ways of understanding how

operations proceed in an enterprise:

1. SYSTEM APPROACH
2. VALUE CHAIN APPROACH
SYSTEM APPROACH
an arrangement of relationships between inputs and output

a. input
MATERIALS
- semi-processed goods, raw materials or intermediate inputs
MANPOWER
- human resource input used in production process
MACHINERY
- all man-made physical capital used in the production process
METHOD
- process of combining raw materials and how these are going to be transformed
MONEY
- financial resource used to purchase all the resources needed for its operation
 SYSTEM APPROACH
an arrangement of relationships between inputs and output

b. process
PHYSICAL TRANSFORMATION
- when the processing of raw materials convert them into altered new product
LOCATIONAL TRANSFORMATION
- when a product changes in location through transportation & communication
INFORMATION TRANSFORMATION
- when knowledge & specialized skills of providers are transmitted to customer
EXCHANGE INFORMATION
- when a commodity is transmitted from their supplier to its buyer
EXTRACTIVE TRANSFORMATION
- when a natural resource is taken out from our habitat
SYSTEM APPROACH
an arrangement of relationships between inputs and output

c. output
result of production process and most important component in the IPO
Framework since the goal of production is the realization of an output

Outputs from Physical Transformation

Outputs from Locational Transformation
Outputs from Information Transformation
Outputs from Exchange Information
Outputs from Extractive Transformation
VALUE CHAIN
APPROACH
traces the value of a commodity in terms on how
factor input are adding value to the raw material

VALUE OF COMMODITY is represented by:

- Value of raw materials
- Value-added factors
Wages (cost of labor)
Interest (cost of capital)
Rent (cost of land)
Royalty (cost of technology)
Profit (return to entrepreneur)
measures of productivity
productivity is a concept of measuring output relative to the
value of inputs used in production

measures of partial productivity:

AVERAGE PRODUCTIVITY OF LABOR
- value of total production per unit of labor input
AVERAGE PRODUCTIVITY OF CAPITAL
- value of total production per unit of capital input
MARGINAL PRODUCTIVITY OF LABOR
- additional output per additional unit of labor input
MARGINAL PRODUCTIVITY OF CAPITAL
- additional output per additional unit of capital unit
measures of productivity
productivity is a concept of measuring output relative to the
value of inputs used in production

measures of costs:
AVERAGE COST
- total cost of production per unit of
output
MARGINAL COST
- additional cost of production per
additional unit of production
ways of
improving the
firm's a. Increasing output
per unit of input

productivity b. reduce the cost of

production
c. motivation

where to next?
balanced scorecard
A scorecard reflects not only the
output of the firm but also the
interests of its various stakeholders.
The balanced scorecard considers
the variety of interests that the firm
pursues besides the production of
an output to earn profit for the
owners of the enterprise as
reflected in financial reports.
 stakeholders of a firm and their
corresponding interests:
SHAREHOLDERS - owners of the enterprise are interested in the continuity, stability,
and growth of the firm.
MANAGERS - administrators that may want to control in managing risks affecting the
business enterprise and adequate compensation.
WORKERS - adequate compensation, good working environment, and production of
labor rights
CUSTOMERS - reliability, consistency, and quality of goods and services
GOVERNMENT - how the firm can generate and provide employment to
a growing labor force
GENERAL PUBLIC - responsibility of the firm to its intermediate
neighborhood and the care for the environment
scorecard summarizing four
perspectives of a firm:

learning and growth perspectives

business process perspective
customer perspective
financial perspective
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