week_4.pptxWeek 4
Develop plans for own area of responsibility to implement operational plan
Assessment Criteria
2.3 Implement appropriate system to achieve objectives in the most efficient way, on time, to budget and meeting organisational standard of quality.
2.4 carry out work activities meeting the operational plan through effective monitoring and control.
Operational Plan
Operations Management
Organisational constrains
Internal environment
Limited Resources
Product Development
Operational Plan
Coordination
Converting resources – the value added chain
Meeting objectives- quantity, quality, time and cost
Improving coordination
1. Operations Management
Importance of operations: One of the major area in any organisation is production and operations management. The objectives, premises and strategies determine the search for and the selection of the product or service.
Operations management as a system: The production function plans, organises, directs and controls the necessary activities to provide products and service.
Relationships with other functions: Longer-term decisions, particularly relating to design and the innovation of improved products, cannot be taken by the production department alone, its activities must be integrated with other function in the firm.
Standards and procedures: Assist the manager with the planning and control of work. Policies are general guidelines for management decision-making. Procedures are a logical sequence of required actions for performing a certain task. Procedures exists at all level of management.
2. Product development- is the process of creating a new product to be sold by an enterprise to its customer
Design and development: Design refers to those activities involved in creating the styling, look and feel of the product, deciding in the product’s mechanical architecture, selecting material and process, and engineering the various components necessary to make the product work.
Development refers collectively to the entire process of identifying a market opportunity, creating a product to appeal to the identified market, and finally, testing, modifying and refining the product until it is ready for production.
Establishing specifications: identify customer needs, analyse competitive products, Establish target market and final specifications.
3. Converting Resources – The value-added chain
Production – can be defined as the activity of transforming raw materials or components into finished products.
Value-added chains – the value added chain model of corporate activities, developed by Michael Porter, provides a bird’s-eye view of an organisation’s operations. Competitive advantage, sys Porter, arises out of the way in which firms organise and perform activities; that is how an organisation uses its inputs and transforms them into outputs for which customers are prepared to pay.
Porter analysed the various activities of an organisation into a value chain – ‘The sequence of business activities by which, in the perspective of the end user, value is added to the products or services produced by an organisation’
Value Chain
Firm Infrastructure
Human Resource Management
Technology Development
Procurement
Inbound Operations Outbound Marketing Service
Logistics Logistics & Sales
Converting Resources
Value system: A company’s value chain is not bounded by a company’s borders. It is connected to what Porter describes as a value system.
Supplier value chain
Distributor/retailer
Value chain
Organisation’s Customer
Value chain Value chain
Purchasing and inbound logistics: Purchasing is generally taken to mean the procurement of the supplies for the enterprise. The byer will study commodities, sources of supply, systems and procedures, inventory problems and market trends, methods of delivery, whether maximum discounts are being earned and the amount and use of waste materials. The purchasing mix includes quantity, quality, price and delivery. The right materials should be in the right place at the right time and at the right price.
Stocks levels: Most business, whatever their size, will be concerned with the problem of which items to have in stock, and how much of each item should be kept.
Just-in-time: This technique, where the supplier delivers the components and parts to the production line ‘just in time’ to be assembled, has revolutionised the acquisition of resources, with a restaurant reduction in costs( of stock) or improvement in led times.
4. Meeting objectives – Quality, quantity, time and cost
Operating and controlling the system: operating the system requires setting up an organisation structure, staffing the positions and training the people. Managers are needed who can provide the leadership to carry out the activities necessary to produce the desired products or services.
Controlling operation requires setting performance criteria, measuring performance against them and taking action to correct unwanted deviations. Control covers production, product quality, reliability, inventory levels and workforce performance.
Balancing the objectives: There are likely to be many objectives for the operation, which include completing the required output within a timescale and within budget; maintaining a high level of technical quality; conforming to all applicable legislation and codes; reflecting the customer’s scope, standards and other requirements; incorporating applicable professional standards and practice; being responsive; maintaining an excellent working relationship with members of the value chai and others involved in the production; and continuously striving for technical excellence.
Quantity objectives: Output performance objective set for some individuals, teams and departments are relatively easy to measure. They may be sales revenue, manufacturing output, or the number of deliveries made.
Cost objectives: The cost-effectiveness or efficiency objective associated with the output objective is often easy to express, although again the measurement may be done in many different ways.
Time objective: Schedule performance measures- refer to the timely completion of the output of an operation as compared to a baseline schedule define in the manufacturing/production plan.
Quality objectives: The most difficult measure to express in numerical term is usually quality. Functional quality, technical quality, Issue management performance.
Quality control: quality control is the process of ensuring that goods and services are produced in accordance with specifications. The major objective of quality control is to see that the organisation lives up to the standards it has set for itself.
Statistical process control: Statistical process control ( SPC) is the continuous monitoring and chatting of a process while it is operating, to warn when the process is away form predetermine limits.
5. Coordination
Organisation: Coordination is one of the major functions of management. Each department will have its own procedures an its own priorities. It is the job of the manager to get all of these to mesh together harmoniously and move in the direction of the common purpose.
Formal and informal type of coordinator: Many organisations endeavour to set up formal systems of coordination to ensure that individuals, groups and functions work effectively with each other and that the parts, although existing individually, operate in harmony.
The importance of coordination: Organisations purpose is to control performance to achieve collective goals. This is in essence, what coordination involves. Coordination is important because:
-To unify the goals and interest of each individual in the organisation and direct them towards common goal.
-organisation’s activities involve a variety of tasks, people, resources and technologies. All of these will have to at the right place at the right time, working in the right way, if smooth operation are to be maintained
Interrelationship of different activities have to take into account because some activities will depend on successful and timely completion of other activities.
It need to ensure that there is an overall balance between urgent/high-priority activities and routine activities, on which the organisation nevertheless depends
Resources are limited and scare, so there has to be a balance their demand and organisation's priorities to ensure that overall, resources are used efficiently and effectively in pursuit of the organisation’s goals.
Symptoms of poor coordination:
-complaints from clients, customers and other external parties.
-production problem
-persistent conflict within and between departments
-lack of communication between units of the organisation
-appeals to rules and red tape in an attempt to give the appearance fo integrated activity.
Causes of poor coordination:
-poor communication
-inadequate planning and control
-weak organisation structure
-Interpersonal and/or interdepartmental conflict
-differences between cultural and tasks of different units.
6. Improve coordination
Management Strategies:
Maintaining and improving communication
Planning
Controlling conflict
Direct supervision
Structure and mechanisms: As well as using the coordinating function of managers, an organisation can aid coordination through its structures and various formal mechanisms
-organisational structure
-standardisation
7. Organisational Constraints
Constraints on management
External stakeholders includes-
-its owners or shareholders
-its customers
-the community or society as a whole
In relation to external stakeholders, an organisation has obligation and responsibilities, boundaries or constrains on its managers’ freedom to act as they see fit.
Society as a whole protects its own interests formally, via laws and regulations, designed to ensure that organisations behave morally (or ethically) and responsibly.
Regulatory control
Regulatory control involves the guidance, monitoring and control of organisational practices through formal mechanisms such as laws, regulations, ‘watchdog’ bodies and agreed codes of practice. These act as constraints on managerial discretion
PEST Factors: A useful acronym, widely used in the UK to describe the external environment of organisations, is PEST: Political-legal, Economic, Socio-cultural and technological factors.
Political-legal environment: it includes-
-law and regulation
-the power of government
-political event at home and abroad
-Government economic policy
-government industrial policy
-Government social and foreign policy
The economic environment
An organisation is affected by overall economic conditions, as these influence:
-the demand of the product
-the cost of its supplies.
The socio-culture environment:
Demography can affect the availability of labour of the age and skills, the demand for its products and services in particular area.
Culture is the belief and values, attitudes, customs, language and tastes of a given society or social group. Organisation need to adapt their product, marketing approaches and corporate image to the values of a given people.
Technological environment
Technology is not just tools and machines, but also technique and organisation. Technological change is extremely rapid, and organisations must consistently adapt to it. Technology can affect the management of organisations by:
-presenting opportunities and threat in the market for the organisation’s goods and services
-changing the possibilities for how products are made
-changing the way in which labour is utilised
The competitive environment: the need to compete may constrain managers to:
-maintain or improve the quality of product/services
-control the price charged for products/service
-pay more to secure a reliable supply of high-quality materials from suppliers
-pay more for selling, advertising, promotion, sponsorship and so on
-pay higher wages, salaries, and benefits
-implement attractive human resource practice to attract skilled labour: welfare, training, workplace crèche or whatever.
8. Internal environment
Internal stakeholders: internal stakeholders of an organisation are its members or employees
Organisation: the freedom of individual managers to make decisions as they see fit will be constrained by organisational factors such as:
-the scope and amount of authority delegated to them
-plans, programmes, procedures, rules and so on
-the existing organisational structure
-the demand for coordination
-organisation culture
9.Limited resources
Money: Money and the infinite variety of things it represent, is always limited and tightly controlled in organisations. Money allocated to different units represents cost to the organisation, whose financial objectives are to be profitability, return on investment and so on; in other words, to maximise earnings and minimise costs.
Limited financial resources therefore constrain managerial decision-making because:
-a limited budget can only be stretched so far, and the manager may not be able to obtain or retain all the other resources
-a manager may be tempted to spend up to the allocated budget, even though it is not required, so as not to reduced next time round.
Time
Time is a limited resource.
-there are only so many working hours available. If these are not sufficient to accomplish everything a manager wishes, he will be constrained to –
Find extra labour or machine capacity, to cover the excess workload in the time available
Eliminate, or simplify, tasks or ‘cut corners’ in order to get high-priority work done with the existing workforce
Allow work to run late, and adjust the work plan for the knock-on effect
Deadline may be imposed by customfer requirements or internal coordination.
Time for information-gathering and decision-making is also limited. This may also constrain managers to make decisions which seem riskier or less informed than they might be.
Information
Information is a limited resource for several reasons
-Time and money for gathering it may be limited
-there is a limit to how much a person can take in and use effectively
-some information is simply not obtainable with any certainty.
-’information is power’ and individuals and units in organisations tend to hoard it if they think it will give them extra influence or a competitive edge over others
Limited information constrains the management activities because:
-decision have to be taken on the basis of what is known: the full range of possible options can never be known, and a certain degree of uncertainty and inaccuracy remains
-it is not possible to predict the outcome of all decision and actions, nor the contingencies that might affect them. Changes on the PEST, competitive or physical environment of an organisation cannot always be foreseen and planned for.
If management information is not made available to a manager, then the ability of the manager to make effective decision will clearly be impaired.
