Entrepreneurship:

A Catalyst in Nation Building

 Chapter 7:
Managing the
Operations Functions
 Learning Objectives

• To know what the Enterprise

delivery System (EDS) is all about
• To identify the Six Ms of Operations
• To understand the critical
sub-processes or sub-systems in the
transformation process
The Enterprise Delivery System (EDS)
It is defined by customers’ quality, delivery, and price
expectations.

It starts from the Input (resources mobilized), proceeds to

the Throughput (or the transformation process where input
is converted into output) and produces the Output (the
product). The output is then marketed to the customers (in
the case of goods) or experienced by the customers (in the
case of services).

The customer satisfaction level, revenues generated,

and the profits realized from the transactions are the
customer, market, and financial outcomes of the EDS.
 The Six Ms of Operations

• Money
• Men
• Machines
• Materials
• Methods
• Management
Enterprise Delivery System
and the QDP
Critical Sub-Processes or Sub-Systems
in the Transformation Process
1. Technology Application and Utilization
2. Operating Work Flow
3. Layouting
4. Production Programming and Scheduling
5. Quality Control
6. Operating Systems and Procedures
7. Operations Management, Supervision, and Control
8. Worker Motivation, Skilling, Deployment,
Compensation, and Control
9. Support Services
 Technology Application
and Utilization
The enterprise managers and technicians must understand
how the technology works and how it should be properly
utilized.

The technology provider should be tasked to transfer all the

relevant technical and procedural information, train the key
operators of the technology, provide after-sales and
maintenance services, supply spare parts, and continue giving
advisory services. If the technology being applied and utilized
is quite common and known to many, then there will probably
be no technology contracts with the suppliers.
 Operating Work Flow (OWF)
OWF should follow the rationale of the technology being
adopted and used.

Guiding principles should dictate the OWF:

▪ The OWF must be very efficient in terms of time,
movement, and utilization of resources.
▪ The OWF must be balanced capacity-wise.
 Layouting
The operating work flow must translate into an
appropriately-designed and executed physical layout of the
factory or service shop.
The principles of layout are:
1. The physical layout must allow the goods or the
customers being processed to go from one step to
another with very little distance and time spent between
steps.
2. There should be minimal or no crisscrossing of goods or
customers within the physical space.
3. The layout should capture the physical and psychological
atmosphere desired.
4. From the management perspective, the layout must be
easy to see, follow, monitor, and control.
 Production Programming
and Scheduling (PPS)
PPS is the proper determination of: (1) what goods or
services to produce, (2) in what sizes and packaging, (3) in
what machinery and equipment (or production/service line),
(4) in how many units, and (5) precisely when.

Critical factors in determining the right PPS are: (1) market

demand in terms of volume expectations, trends, cycles, and
seasonality; (2) capital investment and financing
requirements; (3) product line profitability and capacity
utilization; and (4) the number of products and market
segments the enterprise wants to serve and their
implications on the complexity and dexterity of the
production system.
 Quality Control
The Quality, Delivery, and Price expectations of customers
must be matched with the Quality, Delivery, and Productivity
measurement, monitoring and evaluation system at every
stage of the EDS.

Before the input is accepted by the Transformation Process, it

must conform strictly to certain QDP specifications at this
input acceptance stage.

Every step in the Transformation Process must also be

measured, monitored, and evaluated according to the QDP
standards of the transformation stage.
 Quality Control
The Quality, Delivery, and Price expectations of customers
must be matched with the Quality, Delivery, and Productivity
(QDP) measurement, monitoring and evaluation system at
every stage of the EDS.
Before the input is accepted by the Transformation Process, it
must conform strictly to certain QDP specifications at this
input acceptance stage.
Every step in the Transformation Process must also be
measured, monitored, and evaluated according to the QDP
standards of the transformation stage.
There are QDP specifications at the output stage. The output
should be very acceptable to customers.
Operating Systems and Procedures
Distinct phases of managing and controlling the EDS are:
(1) Pre-operations; (2) Operations Proper; and (3)
Post-operations.
These phases are illustrated in the chart below.
Operating Systems and Procedures
Operations managers are responsible for: (a) selecting, sourcing,
and storing the appropriate raw materials and supplies; (b)
recruiting and deploying the right manpower; (c) running and
maintaining the factory or service shop using all the proper
technical, supervisory, and control methods; (d) continuously
improving operations and upgrading facilities; (e) quality
assurance; and (f) productivity, cost, and profit management.

Good operations management, supervision, and control should

focus on: (1) creating the right metrics of performance; (2)
perfecting the enterprise operating methods; and (3) optimizing
the mix of men, materials, and machines.
 Worker Motivation, Skilling,
Deployment, Compensation,
and Control
Hiring the right people is the first step to good operations
management.

The operations manager should properly motivate the

people.

Implementing people control is a must.

 Support Services
Operations must obtain a good sales forecast from the
Marketing department.

Operations must obtain the required resources from

Finance in order to acquire machinery and equipment,
improve facilities, purchase materials, compensate
workers, and pay suppliers.

Operations must coordinate with the Human Resource

Department for the hiring and training of workers and
supervisors.
 Support Services
Operations must make sure that the Maintenance
department is able to do its preventive maintenance
and its trouble-shooting interventions in case problems
erupt.

Operations must get the support of the Logistics

department for the delivery of the materials to the
factory or service shop and the distribution of goods to
the customers.