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Efficiency in Business Operations

Fall 2022

Professor Jordi villanova

Jordi.villanova27@gmail.com

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Presentation:

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Presentation:

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Presentation:

2002 2010 2018

BA Logistics Consultant and

Bu Integrated Representative for Associate
Logistics Manager Southern Europe Professor
SOMFY SOMFY Freelance

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 Presentations
1. Name and family name
2. Where are you from?
3. Previous studies?
4. Working experience?
5. 3 Things we need to know about you
6. Why this course? Expectations?

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Some basic rules:

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 Some basic rules:

▪ Be aware your
assignments will be
checked for
Plagiarism

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Efficiency in Business Operations

• Class 1: Introduction to business operations management

• Presentations (Professor, students, course)
• Learning Objectives:
• Basic concepts in operations
• Operations management

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COMPANY:

Administration

Finance

HHRR

Marketing

Sales - Commercial

Operations

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OPERATIONS:

planning

Materials Management -
Purchasing

production

Logistics - Storage

Logistics - Distribution

Total quality

Supply Chain
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Organizational Charts
Organizational Charts
Organizational Charts
What are Operations?

Operations are the business activities that a firm engages in

to convert materials into finished products or services, sell
them to customers, and earn a profit.

These procedures are used to create goods and services,

market them to customers, and deliver the final products.
Thus, every business’ operations are slightly different.

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A manufacturer’s activities largely consist of purchasing raw
materials and turning those materials into actual products.
These activities include machining, milling, sandblasting,
painting, and assembling materials. All of these activities add
value to the product and the company overall.

Contrast that with a retailer that doesn’t create any products. It

simply purchases goods from manufacturers and wholesalers
and markets these goods to customers. A retailer’s operations
consist mainly of logistics and marketing activities.

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Operations:

Operation means The actions and decisions made by

participants and members of a business that affect the
production, distribution, service, management, etc.
needed for a company to function that requires the
use of resources and assets.

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What Is Operations Management?

Operations management is the administration of business

practices to create the highest level of efficiency possible
within an organization. It is concerned with converting
materials and labour into goods and services as efficiently
as possible to maximize the profit of an organization.

Operations management teams attempt to balance costs

with revenue to achieve the highest net operating profit
possible.

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Operations management is the administration of business
practices to create the highest level of efficiency possible
within an organization.

Is concerned with converting materials and labour into

goods and services as efficiently as possible.

Corporate operations management professionals try to

balance costs with revenue to maximize net operating profit.

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Some considerations:

Operations management involves utilizing resources

from staff, materials, equipment, and technology.

Operations managers acquire, develop, and deliver

goods to clients based on client needs and the abilities
of the company.

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A critical function of operations management relates to the
management of inventory through the supply chain.

To be an effective operations management professional, one

must be able to understand the processes that are essential to
what a company does and get them to flow and work together.

The coordination involved in setting up business processes in

an efficient way requires a solid understanding of logistics.

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 The Supply Chain
▶ A global network of organizations and activities that
supply a firm with goods and services
▶ Members of the supply chain collaborate to achieve
high levels of customer satisfaction, efficiency and
competitive advantage.

Farmer Syrup Bottler Distributor Retailer

producer
What Operations Managers Do
Basic Management Functions

▶ Planning
▶ Organizing
▶ Staffing
▶ Leading
▶ Controlling
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 Ten Strategic Decisions
TABLE 1.2
DECISION
1. Design of goods and services
2. Managing quality
3. Process and capacity design
4. Location strategy
5. Layout strategy
6. Human resources and job design
7. Supply-chain management
8. Inventory management
9. Scheduling
10. Maintenance
 The Strategic Decisions
1. Design of goods and services
▶ Defines what is required of operations
▶ Product design determines quality,
sustainability and human resources
 The Strategic Decisions
2. Managing quality
▶ Determine the customer’s quality
expectations
▶ Establish policies and procedures to
identify and achieve that quality
 The Strategic Decisions
3. Process and capacity design
▶ How is a good or service produced?
▶ Commits management to specific
technology, quality, resources, and
investment.
 The Strategic Decisions
4. Location strategy
▶ Nearness to customers, suppliers, and talent.
▶ Considering costs, infrastructure, logistics,
and government.
 The Strategic Decisions
5. Layout strategy
▶ Integrate capacity needs, personnel levels,
technology, and inventory
▶ Determine the efficient flow of materials,
people, and information.
 The Strategic Decisions
6. Human resources and job design
▶ Recruit, motivate, and retain personnel with
the required talent and skills.
▶ Integral and expensive part of the total system
design.
 The Strategic Decisions
7. Supply-chain management
▶ Integrate supply chain into the firm’s strategy.
▶ Determine what is to be purchased, from whom,
and under what conditions.
 The Strategic Decisions
8. Inventory management
▶ Inventory ordering and holding decisions.
▶ Optimize considering customer satisfaction,
supplier capability, and production schedules.
 The Strategic Decisions
9. Scheduling
▶ Determine and implement intermediate-
and short-term schedules.
▶ Utilize personnel and facilities while
meeting customer demands.
 The Strategic Decisions
10. Maintenance
▶ Consider facility capacity, production
demands, and personnel.
▶ Maintain a reliable and stable process.
Where are the OM Jobs?
▶ Technology/methods
▶ Facilities/space utilization
▶ Strategic issues
▶ Response time
▶ People/team development
▶ Customer service
▶ Quality
▶ Cost reduction
▶ Inventory reduction
▶ Productivity improvement
The Approaches To Operations Management

Operations Management encompasses a number of theoretical

concepts, suitability and application of which varies within and
across the organizations.

Key factors include but are not limited to capacity planning,

inventory management, supply chain design, performance
measures and total quality management.

In goods based organizations the concepts of inventory, supply

chain, quality and capacity planning are highly critical.

In service based organizations factors relating to human

resources, performance and quality management are given
prime importance.
Operations Management is a key business process in any
organization, whether it deals in products or in services.

The principles or concepts of operations management and

their implementation differ in these industries.

“integrated products and services” is clearly emerging as a

unified entity.

Operations management will prove to be an integral

business process and a key differentiator between leaders
and followers in these changing times.

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 THE OPERATION PROCESS

THE RELATIONSHIP BETWEEN OPERATIONS AND OTHER BUSINESS FACTORS

The operation process in a service sector and

manufacturing sector organisation.

The relationship between operations and other

business functions.

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Though the primary function of both manufacturers
and service providers is to satisfy customer needs,
there are several important differences between the
two types of operations.

Let’s focus on three of them:

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•Intangibility.

Manufacturers produce tangible products—things

that can be touched or handled, such as
automobiles and appliances.

Service companies provide intangible products,

such as banking, entertainment, or education.

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•Customization.
•Manufactured goods are generally standardized; one
twelve-ounce bottle of Pepsi is the same as any other
twelve-ounce bottle of Pepsi.
•Services, by contrast, are often customized to satisfy
the specific needs of a customer. When you go to the
barber or the hairdresser, you ask for a haircut that
looks good on you because of the shape of your face
and the texture of your hair.
•When you go to the dentist, you ask him or her to fill or
pull the tooth that’s bothering you.

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•Customer contact.
•You could spend your entire working life assembling cars
in Detroit and never meet a customer who bought a car that
you helped to make.
•But if you were a waitress, you’d interact with customers
every day. In fact, their satisfaction with your product would
be determined in part by the service that you provided.
•Unlike manufactured goods, many services are bought
and consumed at the same time.

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Operations Planning

When starting or expanding operations, businesses in the

service sector must make a number of decisions quite similar
to those made by manufacturers:

What services (and perhaps what goods) should they offer?

How will they provide these services?
Where will they locate their business, and what will their
facilities look like?
How will they forecast demand for their services?

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Operations Processes
Service organizations succeed by providing services that
satisfy customers’ needs.
Companies that provide transportation, such as airlines, have
to get customers to their destinations as quickly and safely as
possible.
Companies that deliver packages, such as FedEx, must pick
up, sort, and deliver packages in a timely manner. Colleges
must provide quality educations.
Companies that provide both services and goods, such as
Domino’s Pizza, have a dual challenge: they must produce a
quality good and deliver it satisfactorily

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Service providers that produce goods can, like
manufacturers, adopt either a make-to-order or a
make-to-stock approach to manufacturing them.
Like manufacturers, service providers must continuously
look for ways to improve operational efficiency.
Facilities

When starting or expanding a service business, owners and

managers must invest a lot of time in selecting a location,
determining its size and layout, and forecasting demand.

A poor location or a badly designed facility can cost

customers, and inaccurate estimates of demand for products
can result in poor service, excessive costs, or both.
Site Selection
People in the real estate industry often say that the three
most important factors to consider when you’re buying a
home are location, location, location. The same principle
applies when you’re trying to locate a service business.
To be successful in a service industry, you need to be
accessible to your customers. Some service businesses,
such as cable-TV providers, package-delivery services,
and e-retailers, go to their customers. Many others, as
hotels or restaurants, have to attract customers to their
facilities. These businesses must locate where there’s a
high volume of available customers.

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For instance, once planners find a site with an
acceptable traffic count, they apply other criteria.

It must, for example, be easy for vehicles to enter and

exit the site, which must also provide enough parking to
handle projected dine-in business.

Local zoning must permit standard signage, especially

along interstate highways.

Finally, expected business must be high enough to

justify the cost of the land and building.

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Size and Layout

Because manufacturers do business out of plants

rarely visited by customers, they base the size and
layout of their facilities solely on production needs.

In the service sector, however, most businesses must

design their facilities with the customer in mind: they
must accommodate the needs of their customers
while keeping costs as low as possible. Performing
this twofold task isn’t easy.

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Capacity Planning

Estimating capacity needs for a service business isn’t the

same thing as estimating those of a manufacturer. A
manufacturer can predict overall demand, produce the
product, store it in inventory, and ship it to a customer
when it’s ordered.

Service providers, however, can’t store their products for

later use: hairdressers can’t “inventory” haircuts, hospitals
can’t “inventory” operations, and amusement parks can’t
“inventory” roller-coaster rides. Service firms have to build
sufficient capacity to satisfy customers’ needs on an “as-
demanded” basis.

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Like manufacturers, service providers must consider
many variables when estimating demand and capacity:

How many customers will I have?

When will they want my services (which days of the

week, which times of the day)?

How long will it take to serve each customer?

How will external factors, such as weather or holidays,

affect the demand for my services?

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Soma variables to analyse:

- Internal and external stability

- Efficiency and effectiveness

- Level of uncertainaty

- Level of Responsiveness

- Proactivity Vs. Reactivity

- Scenarios: Pesimistic, realistic and Optimistic

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Managing Operations

Overseeing a service organization puts special demands on

managers, especially those running firms, such as hotels,
retail stores, and restaurants, that have a high degree of
contact with customers.

Service firms provide customers with personal attention and

must satisfy their needs in a timely manner. This task is
complicated by the fact that demand can vary greatly over
the course of any given day. Managers, therefore, must pay
particular attention to employee work schedules and (in
some cases) inventory management.

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Scheduling

In manufacturing, managers focus on scheduling the

activities needed to transform raw materials into
finished goods.

In service organizations, they focus on scheduling

workers so that they’re available to handle
fluctuating customer demand.

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Inventory Control

Businesses that provide both goods and services, such

as retail stores and auto-repair shops, have the same
inventory-control problems as manufacturers: keeping
levels too high costs money, while running out of
inventory costs sales.

Technology can help and also knowledge of the market.

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Key Conclusions:

* Though the primary function of both manufacturers and

service providers is to satisfy customer needs, there are
several important differences between the two types of
operations.

* While manufacturers produce tangible, generally

standardized products, service firms provide intangible
products that are often customized to satisfy specific needs.
Unlike manufactured goods, many services are bought and
consumed at the same time.

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* Operational efficiency is just as important in service
industries as it is in manufacturing.

* Operations managers in the service sector make many

decisions that are similar to those made by
manufacturers: they decide which services to offer, how to
provide these services, where to locate their businesses,
what their facilities will look like, and what the demand will
be for their services.

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* Service providers that produce goods can, like
manufacturers, adopt either a make-to-order approach
(in which products are made to customer satisfaction) or
make-to-stock approach (in which products are made for
inventory) to manufacturing them.

* Estimating capacity needs for a service business is

more difficult than for a manufacturer. Service providers
can’t store their services for later use: services must be
delivered on an as-needed basis.

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Relationship of Operations Management

The relationship of operations management with other

functional areas in the overall organizational strategy is
important to consider.

The cost of goods sold is not the only area where costs
controls take place.

The business leaders need to consider all levels of costs

from operations, sales, administrative and distribution.
Strategies must match the overall mission and vision of
the company.
The ideal situation for a business organization is to
achieve an economic match of supply and demand.
The key functions on the supply side are operations
and supply chains, and sales and marketing on the
demand side.

While the operations function is responsible for

producing products and/or delivering services, it
needs the support and input from other areas of the
organization.

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The sequence begins with basic suppliers of raw
materials and extends all the way to the final customer,
as in this figure:

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Facilities might include warehouses, factories,
processing centres, offices, distribution centres, and
retail outlets.

Functions and activities include forecasting, purchasing,

inventory management, information management,
quality assurance, scheduling, production, distribution,
delivery, and customer service.

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 OVERSEEING THE DESIGN

IMPLEMENTATION AND EFECTIVENESS OF AN OPERATIONS FUNCTION

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Key Operations questions

•Why is good product and service design important?

•What are the stages in product and service design?
•Why should product and service design and process
design be considered interactively?

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5.4
Nature and purpose of the design activity

Products, services and the processes which produce

them all have to be designed.

Decisions taken during the design of a product or

service will have an impact on the decisions taken
during the design of the process which produces
those products or services and vice versa.

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5.6
What is designed in a product or service?

A concept the understanding of the nature, use and

value of the service or product;

the group of ‘component’ products and

A package services that provide those benefits defined
in the concept;

the way in which the component products

A process and services will be created and delivered.

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The stages of product / service design

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Where should the management attention be?
Organization structures for the design activity

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Some Key questions:

1.Product variety – Is the product highly standardized, or

is the product highly customized?

2.Volume of output – Is the business created to produce

large volumes or a small amount of output?

3.Is the technology to be used general purpose or

specialized? Is it capital intensive?

4.The skill level of employees, it is very high or low?

5.What is the expected duration?

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Make-to-order and Make-to-stock

It is useful to categorize processes as either make-to-order

or make-to-stock.

In a make-to-order business, the customer’s order is not

manufactured until the order is received. This allows
customization to the exact specifications that the customer
requires. It may also be referred to as build-to-order. This
type of production is considered a pull type system. The
work is “pulled” through the process when customer demand
is present.

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The disadvantage of this type of system is that it takes time
for the firm to acquire any materials and needed
components, and then to schedule and produce the
customers order. Goods are made in small amounts, and
may be more expensive.

The advantage of this type of process is that inventory is

lower than in a typical make-to-stock system. There is not
any uncertainty about what the customer desires and there
is no obsolete stock to be disposed of. Dell Computer has
utilized this type of system to produce personal computers
very successfully.
In a make-to-stock process, goods are produced in
anticipation of customer demand, usually from a sales
forecast.

These products are generally made in larger amounts

and put into storage to wait for customer orders.

Although the unit cost may be lower due to large

production volumes, there may be losses due to
forecast error, excess inventory, obsolescence and
theft. Lead times however are short because goods are
available when the customer places the order.

These goods are not customized, but standardized.

Facility Layout

Layout refers to the way in which organizations position

their equipment, departments, or WorkCentre. Having
an effective layout can streamline production activities,
eliminate wasted or redundant movement and improve
safety. The general types of layouts are: a fixed position
layout, a process layout (functional), a product (line)
layout, and a cellular layout, which is considered a hybrid.
Other common layouts include office layouts, retail
layouts, and warehouse layout.

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What is an Operations Manager?

An operations manager is someone who oversees the day-to-day

operations at all levels of an organization.

The main duties of operations managers also include overseeing

manufacturing processes, procuring materials, inventory management,
customer service and logistics. Basically anything you can think of that
has an effect on the way things work at your company.

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For example, in a clothing factory, an operations manager
coordinates all factors of production from beginning to end — they
oversee the entire operations, from ordering the materials for
garments, turning them into finished products, and shipping them
to customers.

In a transportation company, the operations manager controls all

aspects of fleet management and oversees the entire operations of
a transportation network, including scheduling drivers, maintaining
vehicles, and ensuring that cargo arrives on time.

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Job Requirement for an Operations Manager:

- Developing Operations Strategy

- Making Operations Plan
- Budget Management
- Operational Performance Management
- People Management
- Stakeholder Management

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Key Skills for Operations Manager

- Good judgment
- Active Listener
- Curiosity
- Emotional intelligence
- Accountability
- Influencing

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What makes a good operations manager?

1. Good Organisation
2. Focusing on Customers’ Demands
3. Managing Operational Risk
4. Breaking the Silo Mentality
6. Building a Genuine Operations Team

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