M.

OPERATIONAL

 Definition: MO: a series of activities focused on the

production process and maximum management in the use
of various production factors, starting from raw materials,
machines, equipment, human resources, etc. in the process
of turning them into various kinds of products/services, so
as to achieve targets, namely on time, right quantity, right
quality, with efficient and effective cost allocation
 Objective:
1. Increasing company efficiency ( Efficiency ).
2. Increase company productivity ( Productivity ).
3. Reducing the costs of various company activities ( Economy ).
4. Improving the company's quality ( Quality ).
5. Reducing a company's production process time ( Reduced processing time ).

The main goal is to maximize all instruments that support the production process & carry
out the input to output transformation process effectively and efficiently. PRODUCTION
SYSTEM. Inputs: main sources , and other sources needed to support the entire production
process. Output : in the form of finished goods, semi-finished goods, or a service.

INPUT
(energi, sdm, modal, PROSES OUTPUT
material. Informasi, Transformasi Barang/jasa
manajemen)
 Scope:
1. Production system planning (includes product planning, factory location planning, factory
layout planning, work environment planning, production standards planning. The aim is to
ensure that production results are in line with consumer expectations. Starting from quality,
price and profits)
2. Production control system ( aspects related to controlling production plans with job
realities. including control of production processes, materials, labor, costs, quality and
maintenance)
3. Aspects of production information systems (internal information (organizational structure),
customers (products on an order basis) and markets)
 Characteristics of Operational Management. In the opinion of Zulian Yamit (2003), in
operational management there are 3 characteristics or characteristics, namely:
1. Has a goal, namely producing goods and services.
2. Has production activities that are in the process of transformation.
3. There is a mechanism that controls operational processes.
 Why is m.opr important? Operations management is very important in achieving company
goals, namely profit and business sustainability. This is related to 3 important elements, namely
input, process, output . And it is very closely related to the effectiveness and efficiency of an
existing business. // operational processes are quite crucial in a business. Believe it or not, a
company will not make a profit without having good operational processes. The main reason is
that mobile operations cover almost all aspects of the company. So, companies will not be able
to make better business decisions if they do not work optimally according to operational
management
 Some of the main tasks of the Operations Manager in the production process are:
1. Planning the quality and quantity of raw materials in the production process;
2. Determine and arrange the location of the factory layout
3. Determine and organize the efficient location of inventory warehouses and machine
equipment to save time in mobilization;
4. Perform maintenance on factory equipment to ensure operational reliability and continuity;
5. Creating quality and unique product strategies to be able to compete in the market cost-
effectively;
6. Prepare efficient work schedules by evaluating labor costs. (arrange schedules if there is
additional labor both in the field and in the office area, and reduce overtime costs)
7. Responsible for the sustainability of production results both in terms of quality and quantity.
 10 Operational Management decisions J ay Heizer and Barry Render (2011)
1. Design of goods and services : the design of goods and services determines most of the
transformation processes that will be carried out . Cost, quality and human resource decisions
depend on design decisions.
2. Quality management: customer expectations for quality must be set, regulations and
procedures implemented to identify and achieve these quality standards.
3. Process and capacity design: the process decisions taken make management take
commitments in terms of technology, quality, human resource users and specific maintenance .
These expenditure and capital commitments will determine the basic cost structure of a company.
4. Location strategy : the location decisions of manufacturing and service organizations determine
the success of the company.
5. Layout strategy: raw material flow , required capacity, employee levels, technology decisions
and inventory needs influence the layout .
6. Human resources and job design: people are an integral and expensive part of the overall
system design. Therefore , the quality of the work environment provided, the talents and skills
required, and wages must be clearly defined.
7. Supply chain management: these decisions explain what to make and what to buy.
8. Inventory, planning, raw material requirements , and JIT ( just in time ): inventory
decisions can be optimized only if customer satisfaction, supplier satisfaction, production planning
and human resources are considered.
9. Medium-term and short-term scheduling: a workable and efficient production schedule must
be developed.
10. Maintenance/maintenance: decisions must be made on the desired level of reliability and
stability.
 Product quality: Kotler and Armstrong (2012), product quality is the ability of a product to
perform its function, this includes overall durability, reliability, accuracy, ease of operation,
and product repair, as well as other product attributes. 7 quality control tools:
1. Check sheet (data collection during the production process)
2. Pareto diagram (bar graph that shows problems in order of the number of events)
 3. Cause & effect diagram (to identify and show the relationship between cause and effect in
order to find the root cause of a problem)
4. Histogram (shows data distribution visually)
5. Control chart (a form of graph used to monitor the stability of a process)
6. Scatter diagram (testing how strong the relationship is between 2 variables and determining the type of
relationship)
7. Stratification (dividing and grouping data into smaller categories that have the same characteristics)
 How to reduce quality defects
1. Inspection before production . The QC department must ensure that the main raw materials for
making products are the best and selected materials. Followed by control of the machines used as
manufacturing tools.
2. Inspection during production. When running a production machine, the QC must carry out an
inspection by taking random sampling from the machine.
3. Test the product after production. Usually each company has its own way of determining the
suitability of a product.

 Inventory/component management m.opr

 JIT/Just in Time: a production system used to meet customer needs on time according to the
quantity they want. So only buy supplies when you need them. The aim of the Just In Time
(JIT) production system is to avoid excess quantity in production (overproduction), excess
inventory and also waste in waiting time . (+) low inventory levels so storage space & related
costs such as insurance/rental costs are economical. The rate of damaged products will be
lower. Avoiding the accumulation of unsold finished products due to sudden changes in
demand. (- ) zero tolerance 4 mistakes (difficult to carry out repairs because the level of
material supply is minimal). Very high dependence on suppliers.

 MRP/Material Requirement Planning : inventory control and planning method to ensure raw
materials are always available. The purpose of the MRP system is to control inventory levels,
determine item priorities, and plan the capacity that will be assigned to the production
system. In general, the objectives of inventory management using the MRP system are no
different from other systems, namely:
1. improve service to customers,
2. minimize investment in inventory, and
3. maximize operational efficiency
The MRP philosophy is to "provide" the required components and materials at the right
quantity, time and place. Where MRP is also closely related to scheduling priorities. Because
the system will order goods exactly when they are needed and prevent two dates from being
missed.

 EOQ /Economic Order Quantity: a method of

inventory control by paying attention to economical
order quantities. EOQ aims to overcome the
problem of inventory piling up so that ordering
goods can run optimally. There are 2 things that
must be calculated, ordering costs and carrying costs . Both must be balanced so that there
are no cost overruns or problems with ordering excess goods. When is EOQ used? When
ordering goods , EOQ itself is used to calculate the number of units that the company must
add to inventory each time an order is placed.
 fees : Ordering costs are funds used to order the required number of goods . Orders are
tailored to the company's needs for raw materials , semi-finished products and finished
products. Ordering fees can change and do not depend on the number of items ordered.
In ordering costs, there are 4 factors that must be considered, namely: Preparation costs.
Delivery costs or travel fees for staff in charge of placing orders. Costs for receiving
ordered goods. Fees for completing payment for goods that have been ordered
 Storage costs: costs related to storing goods. Apart from storing goods, companies also
need funds for investment in goods . The factors included in this section are: Insurance.
Tax. Flower. Warehouse rental costs . electricity cost . damage costs
 Benefits of EOQ: Helps small business owners make decisions about how much
inventory to keep. Helps business owners decide how many items to order. Helps business
owners know how often to reorder.
 ROP/Re-order point: method for determining the time period for reordering raw materials or
other materials from vendors/suppliers. // _ The point at which an item in the warehouse
must be increased in stock before it runs out. What determines ROP is lead time (the waiting
period from ordering goods until the goods arrive) and safety stock (the minimum inventory
in the company). ROP = safety stock + usage during lead time.

 Assignment problem : a program carried out to determine the most efficient

allocation of tasks to be carried out by whom in a project. Each worker should be
assigned to only 1 task.
Objectives: maximization (to seek maximum profit in employee assignments) and
minimization (to seek minimum costs in employee assignments).

 Maintenance management : activities to maintain/keep factory facilities/equipment

in good standard condition (preventive and corrective). Objectives: extend the life of
assets, ensure optimum availability of equipment for production and obtain the
maximum possible return on investment, then guarantee operational readiness of all
required equipment, guarantee the safety of people who use it, avoid losses due to
damage.

 BEP/Break Even Point Analysis : the point where income is

equal to the capital spent, there is no loss or profit. BEP also
includes an analysis to determine and find the amount of
goods or services that must be sold to consumers at a certain
price to cover the costs incurred and make a profit. Basically,
there are two types of BEP calculations, namely calculating
how many units must be sold in order for the Break Even Point
to occur and calculating how many rupiah sales need to be
received in order for the BEP to occur. This “Break-Even Point” usually compares the amount
of revenue or number of units that must be sold to cover the fixed costs and variable costs
involved in generating a sale.
Function: min amount of sales must be maintained to avoid losses. Measure and maintain
that sales and production levels are not smaller than BEP. As a planning tool to generate
profits. And evaluate the profit of the company as a whole.
B. var : b which changes based on the amount of output produced. raw material costs, labor costs, and
overhead costs, equipment, fuel, overtime wages, communication costs, goods delivery costs, energy
source costs, etc. B. fixed: the amount is not influenced by the volume of company activities, both in
production and in sales; These fixed costs include salaries paid by the company to employees, interest
payments, rent, etc.
 Objective:
1. To reduce production and operational costs and make them as low
as possible without compromising quality and quantity.
2. To determine the product price with full calculation so that the
product price is in accordance with the profits and targets that have
been planned.
3. To increase the volume of activities as much as possible (Measure
and maintain that sales and production levels are not smaller than BEP)
 Value chain: is a series of activities carried out by a company to produce products or
services. According to this concept, company activities are divided into 2, namely: (the one
with the orange)

 Supply Chain: a coordinated network of companies that work together to create & deliver a
product to the end user/consumer. Managed products, information, finance . // network of
all related elements (i.e. company, resources, employees, technology and activities) and
those involved directly or indirectly in the manufacture and sale of a finished product. SCM is
simply a sequential activity from
procuring resources (raw materials)
from suppliers (suppliers) to factories
(manufacturing), then sending them
to final consumers.

FLOW OF GOODS: one example of a form of goods

flow is the flow of raw materials sent from suppliers
to processing factories. Next, after going through the
production process, the goods will be sent to distributors who will continue with the delivery of goods to retailers and finally
the goods will move from the hands of retailers to final consumers.

 Location planning : The location must have or provide profitable options from a number of
existing accesses. The more strategic the location of a company's location, the greater the
opportunity for profits to be obtained. CORE: increase profits by reducing production costs
and achieving a wider market share. because location can also affect tax costs, wages, raw
material costs and rent.
A good factory location by itself will contribute a lot to efforts to minimize costs. A good
factory location will result in relatively small transportation costs, production costs and
 distribution costs for finished goods.
Primary Factors in Factory Location Selection. What is meant by main factors in this context
are factors that are definitely needed by all types of industry. The main factors included are:
a) Proximity to the Raw Material Source Location
b) Proximity to the Company's Product Market Locationc) Availability of Transportation
Facilitiesd) Availability of Labore) Availability of Power Generation
Secondary factors : additional factors if needed. Some factors that are included in the non-
main factors include: (factors outside the production process. Focus on the primary priorities
first because we'll never know what might happen next )
a) Future plans for the factory
b) Possible company expansion c) Possible expansion of the city ) Service facilities for
machines and production equipment
g) Housing and other facilities h) Land and building costs, local government regulations, local
community attitudes. Climate , land conditions, environmental conditions

 Layout : layout/arrangement of facilities, machines and factory equipment owned by the

company. The aim of layout planning is to obtain the most optimal layout of the production
facilities available within the company. With this optimal layout, it is hoped that the
implementation of the production process can be achieved runs efficiently and smoothly.
There are four types of layouts, namely:
1. Process Layout or Functional Layout or Process Layout
machines and equipment that have the same function are grouped and placed in one
particular place or space. This kind of layout is usually used for companies that produce to
fulfill orders where there are many orders that differ in form, quality and quantity.
2. Product Layout or Line Layout Or Product Layout or Line Layout
In this type of layout, the machines and factory equipment are arranged based on the
sequence of production process operations required to make a product.
3. Group Layout: In this layout, machines and equipment are used to make or process the same
component
4. Fixed Position Layout : This layout is an arrangement of machines and production facilities
arranged near the production process site in a fixed position.
Benefits of layout : increasing production volume, reducing waiting time, saving space use,
efficient use of facilities, shortening waiting time.
Additional : U-Shape Layout: The entry and exit doors for raw materials and final production
are in the same position.

 TQM/Total Quality Management : management strategy regarding a continuous improvement

management approach for an organization that is focused on quality , based on the participation
of all its members and aims for long-term success through customer satisfaction and providing
benefits for all members in the organization and society.

// Total Quality Management (TQM) is a management approach to achieve long-term success

 through Total Satisfaction / / Total (overall processes, products and services as well as the
organization), Quality (quality, degree/level of excellence of goods or services), Management
(actions , art, handling, control, direction). Of the three words it has , Total Quality Management
(TQM) is a management science theory that directs organizational leaders and personnel to
carry out continuous quality improvement programs that focus on achieving customer
satisfaction . TQM has been used widely in manufacturing, education, government, and service
industries. QUALITY -> HAPPY CONSUMERS -> PRSHN SUCCESS. TQM elements :
1. Focus on customers. 6. Continuous system improvement.
2. Obsession with quality. 7. Education and training.
3. Scientific approach. 8. Controlled freedom
4. Long-term commitment. 9. Unity of purpose.
5. Teamwork . 10. There is employee involvement and empowerment

 Six sigma: a management tool that is very focused on quality control by exploring the company's
production system as a whole. It aims to eliminate production defects, reduce product
manufacturing time, and eliminate costs.
Six sigma is called a strategy, a discipline, and a tool – a strategy for achieving and
supporting business success that is focused on increased customer satisfaction . It is called a
scientific discipline because it follows a formal model, namely DMAIC (Define, Measure, Analyze,
Improve, Control). And it is called a tool because it is used in conjunction with others such as
Pareto charts and histograms . CORE CONCEPT : Prioritizing customers, management based on
factual data, focus on process, management and improvement. Unlimited collaboration. Always
pursue perfection.
Define : record everything that is known about the process to be improved. Clarify existing facts
and determine goals and form a team that will carry out the project
Measure : this phase is about data collection. the project team decides what to measure and
how to measure it.
Analyze : The data collected in the measure phase is analyzed and the root causes of the
problems investigated at this stage. This is done to find the cause of the problem and the cause
of the defect.
Improve : Identify creative solutions to fix and prevent problems in the process. Use
brainstorming techniques such as Six Hats or Random Word.
Advantages of 6sigma : can be applied in all fields. Focus on Product Process People. Impact on
human investment. Impact on costs. Data processing using a statistical approach (real data).
Control : Monitor the improvements made to ensure continued success. Create a control plan.
Update the document.

 Differences between TQM and Six Sigma

 TQM focuses on maintaining existing quality standards, while six sigma focuses primarily on
making small changes necessary in processes & systems to ensure high quality. TQM focuses
on improving product quality. 6Sigma focuses on products, processes, people.
  TQM processes involve improvements in existing policies and procedures to ensure high
quality, whereas 6Sigma focuses on improving quality by minimizing and eliminating defects
from the system.
 TQM does not require extensive training whereas 6sigma involves specially trained
individuals
 TQM is a little more complicated than 6sigma. 6sigma is known to provide better and more
effective results compared to TQM. The 6 sigma process is based on customer feedback and
is more accurate and results-oriented.
SIMILARITY : Total Quality Management (TQM) and Six Sigma are both measuring tools for
testing improvements in product or service quality in a company, but you need to know why
these two systems work differently .

 Differences in goods or services