EMBA/ MBAElective: Operations Management (Part - 1) Question 1- Explain the 5 major responsibilities in operations decisions. Give examples. Answer- In the proposed framework, operations has responsibility for five major decision areas: quality, process, capacity, inventory, and work force. 1. Quality- The operations function is typically responsible for the quality of goods and services produced. Quality is an important operations responsibility which requires total organisational support. Quality decisions must ensure that quality is built into the product in all stages of operations. 2. Process- Decisions in this category determine the physical process or facility used to produce the product or service. The decisions include the type of equipment and technology, process flows, layout of the facility, and all other aspects of the physical plant or service facility. Many of these process decisions are long-range in nature and cannot be easily reversed, particularly when heavy capital investment is needed. 3. Capacity- Capacity decisions are aimed at providing the right amount of capacity at the right place at the right time. Long-range capacity is determined by the size of the physical facilities which are built. In the short run, capacity can sometimes be augmented by subcontracting, extra shifts, or rental of space. 4. Inventory- Inventory decisions in operations determine what to order, how much to order, and when to order. Inventory control systems are used to manage materials from purchasing through raw materials, work in process, and finished goods inventories. Inventory managers decide how much to spend on inventory, where to locate the materials, and a host of related decisions. 5. Work force- Managing people is the most important decision area in operations because nothing is done without the people who make the product or service. Work-force decisions include selection, hiring, firing, training, supervision, and compensation. These decisions are made by the line managers in operations, often with the assistance of the personnel or human resources office. EXAMPLE To illustrate the use of the decision framework, a company will be described in terms of the five decision categories. The example is a simplified description of Pizza U.S.A., Inc., a company which produces and markets firing workers.S. It consists of 85 company-owned and franchised outlets (each called a store) in the United States.pizza pies on a national basis. Work Force. faces a series of decisions related to the maximum level of output. etc. sausage. the amount of raw materials used in relation to standards. when the initial location and process decisions are made.A. to order and when to place orders. they employ part-time help. training. They must decide on exact job . The major operations decisions made by Pizza U. and daily fluctuations in service capacity within the available physical facility. can be described as follows: Quality. Individual store managers then plan for annual. tomato paste. and so on. First. In the short run. Store managers are responsible for hiring. each store manager must carefully monitor quality to make sure that it meets company standards. and.. most of the process decisions are made by the corporate staff. individual personnel must be scheduled in shifts to meet demand during store hours. During peak periods. The operations management function in this company exists at two levels: the corporate level and the level of the individual store. The location of facilities is based on a mathematical model which is used to project revenues and costs for particular sites. Each potential site must have an adequate projected return on investment before construction can begin. Store operators must carefully integrate purchasing and inventory decisions to control the flow of materials in relation to capacity.A. Since uniformity across different stores is desired. if necessary.S.” Process. They select their own suppliers and decide how much flour. special care is taken to make the layout attractive and convenient for the customers. Inventory. the corporate staff fixes the physical capacity of each facility. The standard facility incorporates a limited menu with high-volume equipment. Capacfty.S. Each employee is responsible for quality in their job in order to ensure that quality is “produced at the source. They have developed a standard facility which is simply sized to fit a particular location. Pizza U.. and advertising is used in an attempt to raise demand during slack periods. Because this is a service facility. These standards include procedures to maintain service quality and to ensure the quality of the pizzas served.A. While service quality is difficult to measure. the quality of the pizzas can be more easily specified by using criteria such as temperature at serving time. The individual store managers buy the ingredients required to prepare the recipes provided by corporate staff. this provides entertainment for both children and adults as they wait for their order to be filled. supervising. In Pizza U. As pizzas are made. monthly. They do not want to run out of food during peak periods or waste food when demand is low. customers can watch the process through a glass window. The corporate staff has set certain standards for quality which all stores must follow. The two forms of planning must be integrated. It is a way of thinking and a guide to action. and should govern the behavior of everybody concerned. asking questions like Do we need to change our mission? Have the needs of our target community changed? Should we abandon much-loved programs that have outlived their usefulness. Question 2. Management of the work force is one of the most important daily responsibilities of the store manager. It enables organisations to think through and document what they are doing.responsibilities and on the number of people needed to operate the store. The term "strategic planning" is now used to express the analytic and comprehensive elements of this type of planning. for whom they are doing it. They also advertise job openings. including what it's not doing but should be doing. strategic planning determines the entire direction of your organisation. The strategic plan aims to focus an organisation's vision and priorities in response to a changing environment and to ensure that members of the organisation are working toward the same goals. Strategic Planning This used to be called "long-range planning". interview candidates. They must measure the amount of work required in relation to production and also evaluate the performance of each individual.Strategic determination process and planning in operation. and why. screen applications. and make the hiring decisions. Strategic management is a task for the whole organisation all the time. but must not be confused.Explain the strategy determination process in operations. The planning process encourages organisations to re-examine their established directions and strategies for contemporary relevance and practical results. Answer . Strategic management harnesses the full potential of an organisation by integrating daily operational decisions into the strategic process. and concentrate our resources somewhere else? Do our current staff and management have the capacity and commitment achieve our goals? . Operational planning is the day-by-day and month by month planning for what your organisation is doing. The Strategic Planning Process 1. social and economic environment. or outcome statements) On the basis of the mission statement. Draw up guiding principles that will provide guidance and inspiration to staff and to the Board. The Mission Statement Review your Mission Statement (the reasons why your organisation exists). A successful strategic planning process will be genuinely inclusive. Resources There are resource implications in embarking on strategic planning. obstacles and opposition.paid and volunteer staff. It's going to take time. . there will be no outcome -which may explain why a recent study found that only 31 per cent of not-forprofits had a strategic plan at all (though the study also found that the organisations that did were more effective than the ones that didn't). clients. 4. funders. choose your specific priorities. political. challenges.the continuing commitment to pushing the process on through difficulties. and attention away from your day-to-day operations. Identify needs. opportunities and threats. measurable. involving all its stakeholders -. staff. Plotting Direction On the basis of your environmental scan. If your Board isn't prepared to commit resources to the project then you're better off not attempting it (which is perhaps why recent studies show that larger organisations are more likely to have a strategic plan). The whole process requires someone to be designated as coordinator and to be responsible for keeping the process moving against the timelines. The Goals (or objectives. Strategies Action Plans These are the strategies or activities that have been prioritised and selected to help the organisation achieve its goals. 3. 2. Environmental scan Review your organisation's current local.Leadership Above all. an activity that identifies the organisation's current strengths. Without a strong commitment. They clearly reflect and respond . and the community. and realistic. and opportunities. Consultation After this comes the ability to recruit. weaknesses. What are the things that need to be accomplished for the organisation to achieve its mission? Goals or objectives should be designed and worded as much as possible to be specific. identify the strategic decisions involved and decide what you need to do to respond to the major issues and opportunities you face. consult and persuade members and stakeholders. the strategic planning process needs drive -. board. How are you placed to deal with all these? Run a SWOT analysis. for human resources. Finally. In reality this will normally mean changing the activities that have previously been selected to achieve the organisation's mission in the light of new opportunities or challenges. How a job is designed has a major impact on employee . for example. not a monument The important thing to remember is that an organisation's strategic plan is not a monument. and anticipate the environment in which the organisation will be working in the future. or who needs to do what and by when. Action planning also includes specifying responsibilities and timelines with each objective. Budgets Usually budgets are included in the strategic and annual plan.Importance of Job Design Many of us assume the most important motivator at work is pay.to the findings of the research documented in the environmental scan with a number of broad activities matched to each strategic goal. Yet. which includes documenting how the organisation will know who has done what. Budgets specify the money needed to developments.Explain the behavioural dimensions of Job Design. The process is helpful only if it assists organisations to honestly test old assumptions in the light of new information about the present. to whom and by when. studies point to a different factor as the major influence over worker motivation— job design. Answer . equipment. Evaluation This should also include methods to honestly monitor and evaluate the plan and its results. etc. and with work plans. and call these work plans. Larger organisations will develop plans for each major function. materials.a process..implement the annual plan. Strategic planning -. but rather a means of achieving its purpose. Question No. division department. the process is about building commitment and embracing public accountability through engaging key stakeholders in the regular process of identifying priorities and evaluating strategies in the pursuit of changing people's lives for the better. It is also common for organisations to develop separate operational plans that include staff workplans for the coming year. Budgets also describe the main items of expenditure. an end in itself.3. as was the custom at the time. utilizes job rotation so that maids cleaning the kitchen in one house would clean the bedroom in a different one. . He also believed that scientific methods could be used to increase productivity. employees’ stress levels were reduced. As a result of the rotation. by providing training and specific instructions. the ideas presented had a major influence over how work was organized in the following years. Principles of Scientific Management. with only workers in charge. Job rotation involves moving employees from job to job at regular intervals. He saw the inefficiencies inherent in employees’ production methods and argued that a manager’s job was to carefully plan the work to be performed by employees. resulting in work-related outcomes. and turnover. the company is able to reduce its turnover level. Proposed by Hackman and Oldham. job satisfaction. Taylor found that instead of allowing workers to use their own shovels. In a supermarket study. Taylor’s book is among the most influential books of the 20th century. absenteeism. Maids International Inc. Job Enlargement. As an example. providing specially designed shovels increased productivity. Moreover. Scientific Management and Job Specialization Perhaps the earliest attempt to design jobs came during the era of scientific management. the model describes five core job dimensions leading to three critical psychological states.. He saw work being done haphazardly. The question of how to properly design jobs so that employees are more productive and more satisfied has received attention from managers and researchers since the beginning of the 20th century. he was able to dramatically reduce the number of laborers required to handle each job. as measured by their blood pressure. among others. they experienced less pain in their neck and shoulders Job Characteristics Model The job characteristics model is one of the most influential attempts to design jobs with increased motivational properties. When employees periodically move to different jobs. Further. Taylor was a mechanical engineer in the manufacturing industry. We will review major approaches to job design starting from its early history. a company that provides cleaning services to households and businesses.motivation. Rotation. Scientific management is a philosophy based on the ideas of Frederick Taylor as presented in his 1911 book. the monotonous aspects of job specialization can be relieved. and Enrichment One of the early alternatives to job specialization was job rotation. For example. Using this technique. commitment to an organization. cashiers were rotated to work in different departments. Feedback at work may come from other people. janitors cleaning the floors at a hospital may see their role as essential in helping patients get better. because autonomous employees are free to choose how to do their jobs and therefore can be more effective. The Web master who designs an entire Web site will have high task identity. has low autonomy. A Web designer who designs parts of a Web site will have low task identity. For example. or well-being. and their feelings of self-worth are boosted. such as supervisors. covering a given list of topics using a specified list of classroom activities. thinking it is not a very important job. in the end it will be hard for any one person to claim responsibility for the final output. The consequence of this resourcefulness can be higher company performance. whereas a car wash employee who acts as a cashier. and manages the inventory of chemicals demonstrates high skill variety. A salesperson who gives presentations to potential clients but is . design the course content. However. health. Gucci’s CEO Robert Polet points to the level of autonomy he was given while working at Unilever PLC as a key to his development of leadership talents. and leadership style. but it also has other benefits. Giving employees autonomy is also a great way to train them on the job. a Cornell University study shows that small businesses that gave employees autonomy grew four times more than those that did not. Autonomy is the degree to which a person has the freedom to decide how to perform his or her tasks. and use any relevant materials when delivering lectures has higher levels of autonomy. because the work blends in with other Web designers’ work.Skill variety refers to the extent to which the job requires a person to utilize multiple high-level skills. When they feel that their tasks are significant. organizational climate. Autonomy increases motivation at work. Task significance refers to whether a person’s job substantially affects other people’s work. an instructor who is free to choose the textbook. For example. company structure. peers. Autonomy can arise from workplace features. As an example. employees tend to feel that they are making an impact on their environment. such as telecommuting. and customers. They are also less likely to adopt a “this is not my job” approach to their work environment and instead be proactive (do what needs to be done without waiting to be told what to do) and creative. On the other hand. Task identity refers to the degree to which a person is in charge of completing an identifiable piece of work from start to finish. Feedback refers to the degree to which people learn how effective they are being at work. or it may come from the job itself. A car wash employee whose job consists of directing customers into the automated car wash demonstrates low levels of skill variety. Giving employees autonomy at work is a key to individual as well as company success. A janitor who cleans the floors at an office building may find the job low in significance. subordinates. maintains carwash equipment. an instructor who is required to follow a predetermined textbook. 4. It’s simple in concept. Example: Bulldozer #224 moved 87 cubic tons of material during the five days ending September 22. You want to increase profits. but to garner meaningful and reliable data. assuming that a bulldozer. If it’s equipment. . the productivity of each person or piece of equipment is recorded. has low feedback at work.” Note: Herein we use the terms productivity and use rate synonymously. to a degree. could be used 24 hours a day.” It could also be defined as “doing a task that generates revenue or leads to generation of revenue. Employees and/or equipment are observed repeatedly. Workdays were eight hours each. It does not matter what percentage of your dollars (aka capital1) is spent on labor or equipment. Two elements drive productivity: Use rate — total time units a person or machine is in productive use. productivity increases and profits improve. through observation. If a business assesses and tracks its use rate and takes steps to increase use. over a defined period and.Profitability is driven by productivity.not informed of the clients’ decisions. the methodology must be soundly developed and executed. pump water. divided by total time units of observation time.175 cubic tons of material per hour of uptime during this week. If it’s a person. The way to assess use rate is work sampling. The focus of this article is assessment of use rate. “working productively” means “doing the task the person was hired to do. His productivity rate was 61%. at each observance. in theory. When we assess people. divided by time of work or operation. feedback will be high. Output rate — units of output produced by a person or machine. If this person receives notification that a sale was made based on the presentation. the task is the same — to maximize yield. we talk of use or usage.What is work sampling? How does it proceed? Explain. 61 times he was working productively. It lets you identify. so your task is to maximize productivity. a use rate of 15. When we assess equipment. so #224 averaged 2. Example 1: Bulldozer #224 was used 52 hours over the past 14 days. take pictures or be rented out.5% (52 divided by 336). Answer . which is basically a measure of output per dollar of capital deployed. When a company uses work sampling to assess its productivity it is referred to as a work sampling study. “working productively” depends on what the piece was acquired to do — mold parts. Question No. Example 2: Tim Tomer was observed 100 times over the past three months. we talk of productivity. the percentage of time employees and/or equipment work productively. using the restroom. was not happy with his firm’s unprofitability. Assessment of individual employee performance was not the objective. the observation should be recorded as recoverable if the observed is talking to someone on the phone about non-work matters. it may be inputting client information. Joe met with his employees to explain the initiative. writing a letter or proposal to a client. if the observed is a draftsman. playing solitaire. Work sampling is a series of instantaneous observations of work-in-progress done randomly over a specified period. he or she is drafting. supportive or recoverable. He also explained to his employees: Work sampling process. Productive: Defined as “getting the job done. He located and consulted with a work sampling expert to design the program and consult on implementation. known as samples. taking a “smoke break. taking continuing education classes or talking with his/her nurses about a patient plan. doctor or salesperson. owner of ABC Construction.” talking to co-workers about non-work matters.” . Do they work efficiently? Do they stay productive throughout the workday? He decided to make an objective assessment. Supportive: Defined as any activity that is required to maximize the time that can be spent getting the job done. If it’s a salesman. or studying competitor data. If it’s a doctor. talking to a client or taking continuing education classes. profitable company would mean more job security and higher profit distribution bonuses. For example. His efforts to identify the cause and therein fashion a remedy led him to look into his employees’ productivity. If it’s a salesman. he or she may be cleaning the drafting table. or waiting unproductively because “the computers are down. These observations. Once the plan was developed. who would do the measuring and in which situations. it’s writing notes from a call. Identification and definition of work categories. whether the observed is a draftsman. updating the software. are compiled to show the percentage of the day workers perform productive work. He explained what would be measured.” For example. Recoverable: Defined as “not adding any value at all or contributing in any way to getting the job done. Joe emphasized to the employees that this study was to improve company-wide productivity and profits and that a more productive.Work Sampling in Practice Joe Smith. If it’s a doctor. it’s working with a patient. it’s talking to a customer or prospect.” For example. Each observation or sample would be recorded in one of three major categories: productive. if the observed is a draftsman. Observers follow preplanned routes. 30 routes around his facility) and calculated the productivity rate at 7% (i. supportive or recoverable? Each employee may be viewed multiple times. and the study continues until the predetermined number of samples is collected... productive time plus supportive time). Using the table (top right column). Joe took 30 samples (i. Looking in the table below for the number of samples needed. The observer must document the activity based on the predetermined work categories as he or she proceeds through the job site tour. based on results of your preliminary sample. It is the observer’s responsibility to document what the employee is doing when the observation takes place.5% degree of error by: 1. 2.e. the allowable margin of error and the current ratio of productive to unproductive time. Each time an employee is observed is one sample. You can easily figure out how many samples you need to get results with a 95% confidence level and a low 3. How many samples are needed? It depends on the level of confidence desired.e. Employees are told they will be observed but not when. .Methodology. Was the action productive. he needs his full study to have at least 578 observations. depending on the length of the study and how many observations are needed. Taking an initial sample of 30 observations and determining the percentage of time occupied in productive use for the sample. For example.