Strategic Operations Management And It Impacts On

Organizational Efficiency And Effectiveness In Business

Organizations In Bangladesh : An Empirical Analysis

Jesmin Islam* and Muhammad Mahboob Ali **

Operations management in both service and manufacturing industries

deal with the supply of goods and services and connect with the
conscientiousness to make business operations efficient in terms of
utilizing resources as necessary and effective in terms of gathering
customers necessities. As such strategic operations management can
create core competencies along with distinct capabilities in business
organizations.
The research question in this study is whether
improved operations management in different business organizations
in Bangladesh can lead to increased efficiency and effectiveness of
those organizations. This study involves collecting data through
primary sources by preparing a questionnaire and randomly
conducting survey among 380 respondents. The authors suggested
that through strategic operations management techniques, efficiency
and effectiveness of organizations can be increased which will
ultimately raise long term sustainability and competencies of
companies.

Key words: Operations Management, efficiency and effectiveness of organizations,

Bangladesh
______________________________________________________________________
*Dr. Jesmin Islam,
Assistant Professor, Faculty of Business and Government, University of Canberra, Australia.
**Prof. Muhammad Mahboob Ali,PhD
Professor, Department of Business Administration, Atish Dipankar University of Science and Technology
(ADUST), Bangladesh

Introduction
Strategic operations management often includes considerable measurement and
analysis of internal and external factors. Operations management strategies in both
service and manufacturing industries deal with the supply of goods and services and
engage with the responsibility to make business operations efficient in terms of using
resources as required and effective in terms of meeting customers requirements. The
process of operations management involves value chain facilities which convert input to
output. This may be helpful or creating core competencies as well as achieving distinct
capabilities.
The function of operations management is to convert an organizations inputs into the
finished goods or services. The nature of how operations management is carried out in
an organization depends on the nature of the products or services in the organization.
The success of the organization generally depends on the control and fulfillment of the
business processes. It is important to note that appropriate management of operations
can lead to an organizations achievement whereas appropriate organizational structure
of operations can lead to collapse. Operations management can be implied in the
business organization through business process reengineering, product design and
specification, strategic capacity planning for products and services, aggregate planning,
improving supply chain management during introducing just in time services, improving
waiting line and carrying efficiency in inventory management as well as project
management.
Operations management must add value during the conversion process and value chain
may be created for the betterment of the business organizations. As a resultant factor
cost may be minimized and profit may be raised. This will create efficiency and
effectiveness so that distinct competencies can be earned which ultimately achieve long
run sustainability.
The research has been undertaken as Bangladesh is one of the least developed
countries for which it must improve its overall operation management of manufacturing
and service oriented organizations. As such the research question of this study is
whether improved strategic operations management in different types of business
organizations in Bangladesh can lead to increased efficiency and effectiveness of those
organizations.

Literature Review
Skinner (1985) reviews the evolution of manufacturing leadership from 1780 to 1980s.
This study suggests that the period from 1890 to 1920, which was regarded as scientific
management, witnessed the emergence of operations management. In the U.S., the
period from 1920 to 1960, except for the great depression, was defined as the golden
age of industrial development. During the period, operations management was focused
on the improvements of labor productivity. Queuing theory, motion study, production

control were the major techniques to promote the labor productivity (Bayraktar et al.,
2007).
From 1946 to 1970, the operations management researches were mainly on resolving
optimization problems in several functional areas. The focuses of operations
management were management science applications and operation research (Chopra
et al., 2004). Chase and Prentis (1987) found that the concept of operations
management started to become more popular in 1960s. The scope of operations
management was extended into service organizations. Harry and Schroeder (2000)
define operations management as a transformation process. In their study, Six Sigma, a
technique, is introduced to concentrate on the processes that create or eliminate defects
for quality control.
Filippini (1997) argues that operations management, being one of the functional fields of
an organization, had been widely accepted in 1980s. With the success of Japanese
manufacturing products in the global markets, the operations management had
commenced to focus on lowering the cost, developing new product, promoting service
operations and improving manufacturing strategies. Ward et al. (1998) study on
manufacturing firms in the U.S. found four scales for competitive priorities, which
included quality, cost, flexibility and delivery time.
Brown et al. (2001) argue that an operating strategy cannot focus simply on the core of
the manufacturing or service activities and their immediate supports but must take into
account the market and delivery. Wright and Mechling (2002) determine which
operations management problems are the most important to small service organizations.
Forecasting, quality management, and resource utilization are important operational
issues for service organizations. However, the results also indicate that facility location
and layout, waiting line systems, and distribution requirements planning were for the
most part unimportant to the respondent service organizations.
In addition, Schmenner's (1986) service typology does not provide an explanatory basis
for the variations in the factor results. Lastly, the results are used to suggest operations
management techniques that should be taught to students who are expected to work in
service organizations upon graduation. Heizer and Render (2006) also suggest that
lowering the cost was the key function of operations management in 1980s. However,
the function had been shifted to quality in 1990s by linking leanness with information
systems. In the recent decade, practitioners used customization as a method to fulfill the
requirements of customers in a customer-oriented market.
Yang Hsu and Ching (2002) suggest that product design chain activities (PDC) can be
used to develop a framework which links customers, product design engineers, and
manufacturing planners. The key factors identified in the PDC include the method for
determining how to shorten the time needed to complete a project and how to enhance
the product manufacturing process and quality. These researchers describe the
application of the TP (what is TP) to PDC activities to find and solve problems of product
development so as to shorten time-to-market, and to produce more customer-oriented
products.
3

Chopra, Lovejoy and Yano (2004) identify the design and management of the
transformation processes in manufacturing and service organizations that create value
for society. Operations are the function that is uniquely associated with the design and
management of these processes. The problems of concern to the department have
been, and remain, the managing of inputs, the transformation process itself, and the
distribution of outputs for creating value.
Bayraktar et al. (2007) reveals that the current practices of operations management
integrated many classical functions of the enterprise that are under the label of business
processes. The processes started with reengineering approach. Dess et al.(2007)
observe that rule- based controls are most appropriate in organizations with the
following characteristics: environments are stable and predictable; Employees are
largely unskilled and interchangeable; Consistency in product and service is critical; the
risk of malfeasance is extremely high and control must e implemented to guard against
improper conduct.
Islam,Miah and Miah(2007) depicts that a single stochastic inventory model with two
different production rates where demand follows Poisson distribution and product has
finite lifetime which is level dependent. Roth (2007) highlights the contributions that
empirical science can make to operations management (OM) research and practice. In
particular, the role of theory building and testing as a motivation for OM empirical
research is emphasized. Ahmed and Ferdousi (2009) argue that the benefits of lean
manufacturing are evident in factories across the world. With a view to achieve
performance improvement both the developed and developing countries are practicing
lean. In this study nine garment manufacturing companies were selected as sample.
The findings indicate that the selected companies have adopted a wide variety of lean
tools and techniques and gained many performance improvements. Findings also
identified the business challenges that drive the companies to practice lean as well as
the areas where changes have been made.
Dhingra, Singh and Sinha (2009) establish a framework for the firms located inside
special. The paper on location strategy for competitiveness of SEZs helps in identifying
a framework including various prepositions that lead to superior firm performance. The
approach emphasizes multiple interrelationships between sets of variables and also
suggests a quantitative research methodology, i.e. structured equation modeling, to test
empirically. Nuruzzaman and Haque (2009) analyze the business process of the
garment sector to find out its lead time minimization process. Through analysis of
empirical data they found that import dependency is the major bottleneck and it is the
main factor for greater lead time (contributing 50% or more in the problem of long lead
time). Just due to import of fabrics manufacturers are to count shipment time, unloading
time, customs clearance time and transportation time. Sample approval is another factor
contributing for long lead time. So, reduction of lead time is possible when the
businesses ensure the availability of fabrics from the local market by developing
backward linkage industry and by establishing textile mills by the buyer for their own
consumption.

Karim (2010) comments that success of JIT system in the manufacturing environment
has been documented by a large number of researchers. Much has been written
regarding the positive strategic influence of JIT especially on the Japanese
manufacturing sector and other developed countries like USA, UK, and Australia.
However the implementation of quality operations management practices like JIT is yet
to be explored in a developing country like Bangladesh. Bangladesh has been
endeavoring to industrialization. It faces manifold major problems, one of, which is how
to control cost of production. Most of these cost as we know incur in the form of what is
known as system losses or non-value added activities. The industrial managers have
been trying to implement modern tools and techniques that result in reduction of
opportunities for errors, waste reduction and ultimately contribute in cost minimization
and provide competitive advantages.
The above literature review shows that although some work has been done in the
operations management area, not much research has been done in assessing
operations management in business organizations in Bangladesh and how that impacts
on efficiency and effectiveness of organizations. Our current study seeks to fill that gap
in this research area.

Objectives of the Study

Therefore following from the above sections the objectives of this study are:
i)
To assess operations management techniques in different business
organizations in Bangladesh in terms of their efficiency and effectiveness;
ii)
To determine obstacles of operations managements;
iii) To provide some policy implications for organizations and government in Bangladesh.

Methodology of the Study

The study is done on the basis of primary sources. On the basis of the questionnaire
we randomly collected information from 380 persons including entrepreneurs,
industrialists, executives, journalists, customers etc. The study has done chi-square test
.It also done ordinary least square regression analysis .which has been given in the
appendix .Some preliminary findings are given in the main text. This study was under
taken from August 2010 to October, 2010.

Regression Equation
The study has formed following regression model:
OM=f(IP,POLQ,FVCS,PI,ISSRF,ISURF,LTPF,LCE,RS,GDW)
Where:
OM=Operations Management;
IP= Infrastructural problem

POLQ= Poor Organizational Leadership Quality

FVCS= Faulty Value Chain system
PI= Political Instability
ISSRF =Incapability to solve Systematic Risk factors;
ISURF =Incapability to solve unsystematic Risk factors;
LTPF =Lengthy time to solve the problems and faulty system to solve the problem;
LCE =Lack of corporate Environment;
RS,=Rent seeking;
GDW =Global and Domestic Warming
A priori relationship between dependent and independent variables are given below:
If Infrastructural problem can be solved than operations management will be expedited.
Poor organizational leadership quality creates problem for operations management.
Faulty Value Chain system has negative impact on operations management. Similarly
other dependent factors are also negative impact on operations management.

Results of Estimation on the basis of Survey

The following table shows the respondents on the basis of survey result.
Table 1. The most important problem for executing
management in the service and manufacturing organizations
Types of Problems(X)
Total(Y)
Infrastructural problem
65
Poor
Organizational 57
Leadership Quality
Faulty
Value
Chain 31
system
Political Instability
46
Incapability
to
solve 19
Systematic Risk factors
Incapability
to
solve 28
unsystematic Risk factors
Lengthy time to solve the 37
problems
and
faulty
system to solve the
problem
Lack
of
corporate 22
Environment
Rent seeking
31
Global and Domestic 44
Warming

proper

operations

In the present study, the chi-square goodness of fit test was used to test whether
differences in frequency exist across responses categories. In terms of distribution of
peoples responses to the most important problem for executing proper operations

management in the service and manufacturing organizations, Table 2 shows that the
chi-square value is significant (P < 0.05). Table 3 reveals that Infrastructural problem is
the most selected factor among the ten factors. In addition, the respondents selected
two other factors (Poor Organizational Leadership Quality and Political Instability) more
frequently than expected. In other words, a large proportion of respondents believe
these three factors are bigger barriers to proper operations management in the service
and manufacturing organizations than other seven factors.
Table 2. Test Statistics
The greatest
management

barrier

to

proper

operations

Chi52.789a
Square
df
9
Asymp.
.000
Sig.
a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell
frequency is 38.0.
Table 3. The greatest barrier to proper operations management
Observed N
Expected N
Infrastructural problem
65
Poor
Organizational 57
Leadership Quality
Faulty Value Chain system
31
Political Instability
46
Incapability to solve Systematic 19
Risk factors
Incapability
to
solve 28
unsystematic Risk factors
Lengthy time to solve the 37
problems and faulty system to
solve the problem
Lack of corporate Environment 22
Rent seeking
31
Global and Domestic Warming 44
Total
380

Residual

38.0
38.0

27.0
19.0

38.0
38.0
38.0

-7.0
8.0
-19.0

38.0

-10.0

38.0

-1.0

38.0
38.0
38.0

-16.0
-7.0
6.0

Meanwhile, form the appendix we observe that the regression equation has adjusted R 2
which is 94.63%.T stat. of dependent and intercept is significant and dependent
variable indicates negative relationships. F stat. is also significant.

Overall Observations
Some new techniques of operations management should be introduced in the business
world in Bangladesh. At first all the important factors which are working as an obstacle
to create congenial atmosphere for operations management should be removed. Publicprivate partnership can be developed through attaining business process reengineering,
product design and specification, strategic capacity planning for products and services,
aggregate planning, improving supply chain management through introducing just in
time services ,improving waiting line and bringing efficiency in inventory management as
well as project management.
Basically aforesaid process involves new ways of avoiding traditional methods of work
and encouraging taking decision based on situations. New techniques makes the work
deliberate and focuses effort aimed at developing radically new approaches which
overcome constraints, instead of making incremental changes in the older ways of
working. New techniques encourage managers to take decisions according to the
circumstances where traditional ways of working leads us to follow the routine work or
planned direction. In the modern world of drastic changes, we have to realize that the
conventional approaches are not effective any more. We could not make solutions,
based on the past systems.

Conclusion and Policy Implications

New techniques in operations management help to identify the real issues to be
addressed such as how to avoid information overload, how to break free of
conventional thinking, how to resolve conflict and how to avoid setbacks during the
implementation of an idea. It is a time tested tool to accomplish major projects in less
time with more effective results. The country should overcome its infrastructural
problem. Bringing political discipline is very much needed. Other factors associated
with business environment should also be solved. In this aspect Dess et al.s(2007)
observation should be considered or developing a proper business environment of the
country which will help to bring operational efficiency and effectiveness through
ensuring competitive advantages.
To be successful it is very important for organizations to do every operation in a very
systematic and creative way. Business process reengineering should be done in a
proper manner. Total quality management of the organization should be improved.
Brown et al.(2001)s argument for implementing strategic operations management for
the betterment of the business organizations will in turn help the economy to boost up.
New techniques in operations management must focus on doing the things in a
creative way and it allows us to think out of the box. Thus it helps an organization to
solve the problems in a quicker and efficient way and helps to reduce costs and gives
importance on profit maximizations taking all these into consideration, it could be said
that the importance of implementing effective and efficient techniques in Strategic

Operations Management in different organizations as per their needs has been very
much important to achieve success in Bangladesh.

References
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operations management: past, present and future, Management Research News, Vol.
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Brown, Steve et al.(2001). Strategic Operations Management ,Butterwoth-Hunimann,
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.
10

Appendix:
SUMMARY OUTPUT
Regression Statistics
Multiple R
0.975884
R Square
0.952349
Adjusted R
Square
0.946393
Standard Error
3.456658
Observations
10
ANOVA
df
1
8
9

SS
1910.412
95.58788
2006

Coefficients
64.46667
-4.81212

Standard
Error
2.361347
0.380566

Regression
Residual
Total

Intercept
X Variable 1

MS
1910.412
11.94848

F
159.8874

Significance
F
1.44E-06

t Stat
27.3008
-12.6447

P-value
3.49E-09
1.44E-06

Lower 95%
59.02139
-5.68971

RESIDUAL OUTPUT

Observation
1
2
3
4
5
6
7
8
9
10

Predicted Y
59.65455
54.84242
50.0303
45.21818
40.40606
35.59394
30.78182
25.9697
21.15758
16.34545

Upper 95%
69.91195
-3.93453

PROBABILITY OUTPUT

Residuals
5.345455
2.157576
-4.0303
-1.21818
-3.40606
-4.59394
0.218182
2.030303
0.842424
2.654545

Standard
Residuals
1.640229
0.662043
-1.23668
-0.37379
-1.04513
-1.40963
0.066948
0.622989
0.258494
0.814535

Percentile
5
15
25
35
45
55
65
75
85
95

Y
19
22
28
31
31
37
44
46
57
65

11

Lower
95.0%
59.02139
-5.68971

Residuals

X Variable 1 Residual Plot

10
0
-10

10

12

X Variable 1

X Variable 1 Line Fit Plot

100
50

0
0

10

15

Predicted Y

X Variable 1

Normal Probability Plot

100
50
0
0

20

40

60

80

100

Sample Percentile

12