"

IF WE
BOOST PRODUCTIVITY,
WE CAN IMPROVE
ECONOMIC
GROWTH."
TONY ABBOTT

2018 73rd
2022 59th among 132 economies
GROUP 5: OPERATIONS AND PRODUCTIVITY

OPERATIONS
MANAGEMENT
Dumandan, Jessa May E.
De Vera, Maxene Keona C.
Abanico, Jedelyn Maica D.
Padilla, Allyssa Gwyneth
Santiago, Unah Kyla SJ.
Siodena, Camille U.
 WHAT IS...
Operations?
Responsible for
producing goods or
Operations
services.
Management?
OM is the set of activities
that create value in the
form of goods and
Management? services by transforming
A process of getting inputs into outputs.
things done through

people to achieve goals

effectively and efficiently.
 OPERATIONS
MANAGEMENT

OPERATIONS
PERFORMANCE

OPERATIONS
STRATEGY
 All organizations have
operations that produce mix of
services and products.

WHY IS OPERATIONS
Every organization has an
MANAGEMENT IMPORTANT operations function because
every organization creates some
IN ALL TYPES OF types of services and/or
ORGANIZATION? products.

Operations managers are the

people who have particular
responsibility for managing some
or all of the resources that make
up the operations function.

WHAT IS THE INPUT–

TRANSFORMATION–OUTPUT
PROCESS?
ONE SET OF INPUTS TO ANY
OPERATIONS PROCESSES IS
TRANSFORMED RESOURCES
THESE ARE THE RESOURCES
THAT ARE TREATED
TRANSFORMED OR CONVERTED
IN THE PROCESS.

WHAT IS THE
PROCESS
HIERARCHY?
 It is the intentional
arrangement from core
business functions and
processes to the task level.

It is a hierarchy of business
processes that explains the
details of how many business
processes your whole business
has or a particular department.
 High-level Processes

THREE LEVELS OF
Mid-level Processes
PROCESS HIERARCHY

Tasks and Procedures

 01
HIGH-LEVEL PROCESSES
It is usually related with
architecture issues or
coordination challenges
between departments and
functional units.
 02
MID-LEVEL PROCESSES

It is related to issues within a

single department. It could
also span to issue within a
few department.
 03
TASK AND PROCEDURES

Issues usually involve

individuals or software
systems.
 PROCESS
HIERARCHY
DIAGRAM
EXAMPLE OF PROCESS HIERARCHY High-level Processes:
The restaurant owner discovers that
the inflation is high. She wants to
reduce the amount of serving of their
dish.

Business Scenario:
Manifesto restaurants need Mid-level Processes:

to keep their best-selling The manager of the restaurant identifies the

ingredients that have inflation on its price.
dish at a low price despite of (Here, each department will identify and
changes the amount of ingredients they will
the inflation in the price of put in the dish.)
their ingredients.

Task and Procedures:

The individuals who will do the task will
be identified and they will start to do
the process to maintain the low price of
their best-selling dish.
 BENEFITS

OF HAVING A PROCESS HIERARCHY

Provides knowledge on how tasks flow in the
company.
It acts as the documentation structure for process
management.
It prevents a mismatch of stakeholder expectations.
Helps organizations deploy resources more
effectively.
Increases the speed and efficiency of the employee.
It's a systematic improvement approach that
identifies current and potential processes and how
they link together within the organization.
 HOW DO
OPERATIONS AND
PROCESSES
DIFFER?
 Operation is the part of a
business organization that
is responsible for producing
goods or services.

Process is a sequence of
operations for the design,
manufacture, and delivery
of a product or service.
 DIFFERENCES

PROCESSES OPERATIONS

It involves smart use of resources and data to reach goals It refers to the processes, tools and resources necessary
while keeping costs down. to support an organization’s full workflow.

In manufacturing, it is a set of procedures used to produce In manufacturing, The method or practice by which
a product, most commonly in the food and chemical actions are done.
industries.

Operations is a multitude of processes and controls to

A process is a component of actions for a defined activity. ensure the delivery of something.

 WHAT DO
OPERATIONS
MANAGER DO?
ROLES OF THE OPERATIONS MANAGER:

The Operations Function consists of all activities directly

related to producing goods or providing services.

A primary function of the operations manager is to

guide the system by decision making.
System Design Decisions
System Operation Decisions
 SYSTEM DESIGN
DECISIONS:
Capacity
Facility location
Facility layout
Product and service planning
Acquisition and placement of equipment

These are typically strategic decisions that:

Usually require long-term commitment of resources
Determine parameters of system operation
SYSTEM OPERATION DECISIONS:

These are generally tactical and operational decisions:

Management of personnel
Inventory Management and control
Scheduling
Project Management
Quality assurance

Operation managers spend more time on system

operation decision than any other decision area but
they still have a vital stake in system design .
 OPERATION
MANAGEMENT
DECISION MAKING
Typical operation decision includes the:
What: What resources are needed, and in what amounts?
When: When will each resource be needed? When should the
work be scheduled? When should materials and other
supplies be ordered?
Where: Where will the work be done?
How: How will the product or service be designed? How will
the work be done? How will be resources be allocated?
Who: Who will do the work?
 OPERATIONS
PERFORMANCE
 WHY IS
OPERATIONS
PERFORMANCE
VITAL IN ANY
ORGANIZATION?
 Operations
In most businesses it
management an either
represents the bulk of its
make or break any
assets.
business.

When things go wrong

in operations, the
reputational damage
can last for years.
UNDERSTANDING THE IMPORTANCE
OF OPERANTIONS MANAGEMENT

01 02 03
Operational Failures 'Difficult to imitate' Process
Obvious and damage
Continual learning Process = Outcome
company's reputation
PERFORMANCE AT THREE LEVELS
1. The broad, societal level, using the idea of the triple
bottom line.
2. The strategic level of how an operation can contribute to
the organization's overall strategy.
3. The operational level, using the five operations
performance objectives.
HOW IS OPERATIONS PERFORMANCE
JUDGED AT A SOCIETAL LEVEL?

Operations decisions affect a variety of stakeholders. Stakeholders are the

people and groups who have a legitimate interest in the Operations
Activities.
This idea that operations should take into account the impact on a broad
mix of stakeholders is termed 'Corporate Social Responsibility'
Performance at the Societal Level often uses the idea of the Triple Bottom
Line (TBL or 3BL, also known as People, Planet and Profit). It includes the
Social Bottom Line, the environmental Bottom Line and the Economic
Bottom Line.
HOW IS OPERATIONS PERFORMANCE
JUDGED AT A SOCIETAL LEVEL?

The Social Bottom Line incorporates the idea that businesses should
accept that the bear some responsibility for the impact they have on
society and balance the external 'Societal' consequences of their actions
with the more direct internal consequences, such as profit.
The Environmental Bottom Line incorporates the idea that operations
should accept that they bear some responsibility for the impact they have
on the natural environment.
The Economic Bottom Line Incorporates the conventional financial
measures of performance derived from using the operation's resources
effectively.
HOW IS OPERATIONS PERFORMANCE
JUDGED AT A STRATEGIC LEVEL?

The Type of Decisions and activities that operations managers carry out
can have a significant strategic impact.
In particular, Operations can affect economic performance in five ways:

1. It can reduce the costs.

2. It can achieve customer satisfaction through service.
3. It can reduce the risk of Operational Failure.
4. It can reduce the amount of investment that is necessary.
5. It can provide the basis for future innovation.
HOW IS OPERATIONS PERFORMANCE
JUDGED AT A OPERATIONAL LEVEL?

It can be judged based on the Five 'Performance Objectives' that are used
to assess the performance of operations at an Operational Level are
Quality, Speed, Dependability, Flexibility and Cost.
 HOW CAN
OPERATIONS
PERFORMANCE
BE MEASURED?
PERFORMANCE
MEASUREMENT
Process of quantifying action

Measurement means the process of quantification

and the performance of the operation is assumed to
derive from actions taken by its management.

Some kind of performance measurement is a

prerequisite for judging whether performance
measurement an operation is good, bad or indifferent.
THREE GENERIC ISSUES
IN PERFORMANCE
MEASUREMENT
What factors to include Which are the most
as performance important performance
measures? measures?

What detailed
measures to use?
 What factors to include as
performance measures?
SOCIETAL STRATEGIC OPERATIONAL

LEVEL LEVEL LEVEL

Social Risk Quality
Environmental Capital Speed
Economic Innovation Capability Dependability
Issues Flexibility
Profitability Cost
 Which are the most
important performance
measures?

Achieve balance between having few key

measures and many detailed measures

Compromise by ensuring a clear link

between the operation’s overall strategy and
the bundle of detailed measures that are
used to ‘flesh out’ each key performance
indicator.
 What detailed measures
to use?
FIVE
Individually gives a
PERFORMANCE
partial view of the
OBJECTIVES
operation’s cost
QUALITY performance

SPEED Each of them gives a

DEPENDABILITY perspective on the cost
performance of an
FLEXIBILITY
operation.
COST
 Best known performance
measurement approach
devised by Kaplan and
Norton

Translating an

BALANCED organization's strategic

goals into a set of
organizational
performance objectives
SCORECARD Provide the important
information that is

APPROACH required to allow the

overall strategy of an
organization

Measures the factors

behind financial
performance
 How do we look to our
shareholders?

BALANCED What must we excel at?

SCORECARD
How do our customers

APPROACH see us?

How can we continue to

improve and build
capabilities?
 Brings together elements
that reflect a business's
strategic position

BALANCED Avoids unmanageable

performance reporting

SCORECARD Presents overall picture of

APPROACH organization's
performance

Takes interest of the

whole organization
 HOW DO
OPERATIONS
PERFORMANCE
OBJECTIVES TRADE
OFF AGAINST EACH
OTHER?
 TRADE-OFFS

EXAMPLE TWO VIEWS OF TRADE-OFFS

Improving cost 'Repositioning Increasing
efficiencies by performance 'effectiveness' of
reducing variety objectives operation
of products or
services offered
to customers
Trade-offs and
Efficient Frontier
Trade-offs are the extent to which improvements in one
performance objective can be achieved by sacrificing performance
in others.

Efficient frontier concept is a useful approach to articulating trade-

offs and distinguishes between repositioning performance on the
efficient frontier and improving performance by overcoming trade-
offs.
Strategy has a crucial role in
making one’s company or
organization successful. As it
serves as a roadmap,
organizational strategy plan
specifically how your
business will allocate
resources (e.g., money, labor,
and inventory) to support
infrastructure, production,
marketing, inventory, and
other business activities.
 Corporate Level Strategy

STRATEGY Business Level Strategy

Functional Level Strategy

CORPORATE LEVEL
STRATEGY

IS THE MAIN PURPOSE OF YOUR

BUSINESS — IT’S THE DESTINATION
TOWARD WHICH YOUR BUSINESS IS
MOVING.
FUNCTIONAL LEVEL
STRATEGY

ARE THE SPECIFIC ACTIONS AND

BENCHMARKS YOU ASSIGN TO
DEPARTMENTS AND INDIVIDUALS THAT
MOVE YOUR BUSINESS TOWARD THE
GOALS CREATED BY YOUR CORPORATE
LEVEL STRATEGY.
BUSINESS LEVEL
STRATEGY

IS THE BRIDGE BETWEEN CORPORATE

LEVEL STRATEGY AND MUCH OF THE
“BOOTS-ON-THE-GROUND” ACTIVITY
THAT OCCURS IN FUNCTIONAL LEVEL
STRATEGY.
OPERATION STRATEGY
“Operations strategy is the total pattern of
decisions which shape the long-term
capabilities of any type of operations and their
contribution to the overall strategy.”

“An operations strategy should guide the

structural decisions and the evolution of
operational capabilities needed to achieve the
desired competitive position of the company as
a whole.”
 FOUR PERSPECTIVES
OF OPERATIONS STRATEGY:
Operations strategy
Operations strategy is a
involves translating
top-down reflection of
market requirements
what the whole group or
into operations decisions
business wants to do.
(outside-in perspective).

Operations strategy is a Operations strategy

bottom-up activity involves exploiting the
where operations capabilities of operations
improvements resources in chosen
cumulatively build markets (inside-out
strategy. perspective)
 HOW THEY
REINFORCE EACH
OTHER?
The top-down approach to management is when company-wide
decisions are made solely by leadership at the top, while the
bottom-up approach gives all teams a voice in these types of
decisions. The top-down approach sets the overall direction and
objection for operations and in order to implement the top-down
strategy, the day to day activities must be known with the
strategy.


How can operations

strategy form the
basis for operations
improvement?

An operations strategy is not just about checking that a business's

resources and processes are consistent with its overall strategy.
Foundation for Improvement.

TWO MODELS
The 'line of fit' between A Strategic View of
Market Requirments and Operations Improvement
operation Cpabilities Priorities

 Achieving
'alignment'

THE LINE OF FIT

BETWEEN MARKET
Achieving 'sustainable'
REQUIRMENTS AND alignment

OPERATION CPABILITIES

Improving overall
performance
ACHIEVING 'ALIGNMENT ACHIEVING
This means achieving an 'SUSTAINABLE'
approximate balance between
'required market performance' and
'actual operations performance'
ALIGNMENT
It is not enough to achieve some degree
EX. When the the required market of alignment to a single point in time. '
performance is to produce this
numbers of product for this number
EX. The company will be able to
of target market and of course the
maintained and produce a product for
actual operations performance is
their market even in new market
how many product they will produce,
if they reach the total number for conditiond.
their market, they will give better
service in the market
Improving overall
performance
The more demanding the level
of market requirements, the
greater will have to be the level
of operations capabilities
 A STRATEGIC VIEW OF
OPERATIONS IMPROVEMENT
PRIORITIES

The intention is to
Competitors 1. Judging
gain an
understanding of are the points importance to
the relative of comparison
customers
importance to against which
customers of the the operation

various competitive can judge its

factors. performance.
2. Judging

performance
against
competitors

How can an
operations strategy
be put together?
Identify the three roles of the operations function.
Relate the role of the operations function to the
contribution which operations makes to the
competitiveness of the business.
Identify the five sets of ‘stakeholders’ which any
operation has to consider.
Understand the external and internal affects of the
five operations performance objectives – quality,
speed, dependability, flexibility and cost.
 THE PROCESS OF
OPERATIONS STRATEGY

Operations strategy Operations strategy

formulation control

Operations strategy Operations strategy
Implementation monitoring

 Operations strategy Operations strategy

formulation Implementation

Formulation of operations strategy is the Operations strategy implementation is the

process of clarifying the various objectives and way that strategies are operation to be
decisions that make up the strategy, and the executed. It means attempting to make
links between them. sure that intended strategic achieved
Example: Example:
Some firms will have a regular (for example, The company goal to be known in public
annual) planning cycle and operations market so they implement strategy to be
strategy consideration may form part of this, popular to public market
but the extent of any changes made in each
annual cycle is likely to be limited

A. IS OPERATIONS STRATEGY
COMPREHENSIVE?
A. CLARITY OF STRATEGIC
B. IS OPERATIONS STRATEGY COHERENT?
DECISIONS
C. DOES OPERATIONS STRATEGY HAVE
CORRESPONDENCE? B. MOTIVATIONAL LEADERSHIP
D. DOES OPERATIONS STRATEGY IDENTIFY C. PROJECT MANAGEMENT-
CRITICAL ISSUES?
 Operations strategy Operations strategy
monitoring control

Monitoring should be capable of providing early Strategic control involves the evaluation of
indications (or a 'warning bell' as some call it) by

the results from monitoring the

diagnosing data and triggering appropriate Implementation. Activities, plans and
changes in how the operations strategy is being performance are assessed with the
implemented. intention of correcting future action if that
is required.
Having created a plan for the implementation,
each part of it has to be monitored to ensure ▸ At a strategic level, control can be difficult
that planned activities are indeed happening. because strategic objectives are not
always clear and unambiguous,
Example:
in times when things are changing rapidly, as Example:
during strategic change, organizations often the more uncertain the environment, the
want to track ongoing performance to make more an operation needs to emphasize this
sure that the changes are proceeding as form of strategic flexibility and develop its
planned. ability to learn from events.
THANK
YOU!
BE A LEADER.