Chapter 2 & 3
Chapter 2 & 3
Lesson 1
Regularly reviewing and refining business processes helps identify redundancies and
inefficiencies, allowing organizations to cut unnecessary costs. Streamlined operations
translate into direct financial benefits, such as reduced overhead and better resource
allocation.
Scalability
Effective business processes provide a framework for managing information and data
consistently, enabling better decision-making based on accurate, timely data. This
structured approach is vital for operational resilience and sustainable growth.
• Product development
• Order fulfillment
• Customer service
Supporting processes enable and assist the core operational processes. While
they do not directly generate revenue, they create an environment that allows the
organization to function efficiently. Supporting processes include:
• Administration
3. Management Processes
• Quality management
Productivity and efficiency are two distinct yet interrelated concepts often used
in business and performance contexts. Understanding their differences is crucial for
optimizing work processes and achieving organizational goals.
Definitions
Productivity
Efficiency, on the other hand, emphasizes the quality of the output and the
optimal use of resources to achieve that output. It is about doing things "right"—
achieving the same results with fewer resources or time. For instance, if two workers
complete the same task but one does so with significantly less time or fewer errors,
the latter is considered more efficient. Efficiency is concerned with maximizing
outcomes while minimizing waste.
Key Differences
1. Focus:
Productivity Measurement
Operations management is responsible for managing the transformation process
of all inputs into outputs (goods and services). Productivity is a measure of how
efficiently inputs are being converted to outputs, in other words productivity is a
measure of how well resources are used (Reid & Sanders, 2012, p. 44).
As a manager, many measures of productivity may be used. For example, the
manager can measure the value of output by what the customers pay or simply by the
amount of the products or customers served. The value of inputs is measured by cost or
by the number of hours worked (Krajewski, Ritzman, & Malhotra, 2015, p.37).
Productivity measures can be based on a single input (partial productivity), more
than one input (multifactor productivity), or on all inputs (total productivity)
(Stevenson, 2014, p. 57).
The measurement of partial, multifactor, and total productivity examples are at
the below.
Total Productivity
When we calculate productivity for all
inputs such as labor, machines, and capital, it
means we are measuring total productivity. For
example, let’s say that the weekly dollar value of a
company’s output is $10,200, and the value of all
inputs such as labor, materials, and capital is
$8,600 then the total productivity of the company
is computed as follows (Reid & Sanders, 2012, pp.
44-45).
Partial Productivity
Partial productivity is called as single factor productivity. The main aim of measuring
the productivity of a single input is identifying how efficient this factor is being used.
Partial productivity is called according to the single factor that is calculated. Following
are examples of the partial productivity calculations:
1. If a bakery oven produces 346 pastries in 4 hours, machine productivity is calculated
as:
2. Two workers are painting tables in a furniture shop. They are painting 22 tables in
8 hours. What will be the productivity? (Reid & Sanders, 2012, p. 45).
Multifactor Productivity
2. Define Scope: Clearly outline the specific processes you will analyze. This
could include production, customer service, supply chain management, or
any other relevant area.
Part 2: Research and Data Collection
1. Gather Information: Collect data related to the selected business processes.
This may involve:
• Introduction
• Findings
• Conclusion
• Recommendations
Submission Guidelines
SCENARIO NO. 1
SCENARIO NO. 2
Ninfa Spa and Wellness Center is a luxury wellness facility located in a bustling
urban area. The spa offers a range of services, including massages, facials, and
wellness treatments. With a capacity of 15 treatment rooms and a staff of 25 licensed
therapists, Ninfa Spa has gained a loyal clientele. However, the spa has been
experiencing challenges in managing customer flow, leading to long wait times and
dissatisfied clients. The customer journey includes appointment scheduling, check-in,
service delivery, and payment processing. The spa uses a manual scheduling system,
and therapists often face delays due to overlapping appointments and inadequate
time management. The management team has identified challenges such as long wait
times for clients during peak hours, inefficient use of staff resources, difficulty in
managing customer feedback, and limited marketing efforts. The management team
has decided to evaluate the current processes to enhance the customer experience,
optimize resource utilization, and improve overall satisfaction.
SCENARIO NO. 3
The PDCA cycle is a four-step iterative process used for continuous improvement. It
involves:
• Act: If successful, implement the change on a larger scale; if not, refine the
approach.
5. Kaizen
Combining Lean and Six Sigma, this methodology aims to improve process efficiency
while reducing variability. It utilizes tools from both approaches to streamline
operations and enhance quality simultaneously.
7. Theory of Constraints (TOC)
TOC focuses on identifying and addressing the most significant limiting factor
(constraint) in a process. By optimizing this constraint, organizations can improve
overall process performance. The methodology involves five steps: Identify, Exploit,
Subordinate, Elevate, and Repeat.
Activity Title: Design a workflow for a given process, utilizing process mapping tools
and efficiency methodologies
Description
Students will work in small groups (the same grouping) to analyze and
improve a specific process in an organization or system. They will use process
mapping tools, such as flowcharts (detailed diagram) and Swimlane diagrams, to
visualize the current process and identify inefficiencies or bottlenecks.
Rubric for: "Design a Workflow Using Process Mapping Tools and Efficiency
Methodologies"
Identification Identified
inefficiencies,
of delays, or
Key inefficiencies,
delays, or Inefficiencies are only Inefficiencies are not
Inefficiencies redundancies are
redundancies are partially identified, properly identified or
insightful, precise,
identified but may with limited analysis analyzed. Weak or no
and supported by
30% lack depth or or evidence. evidence provided.
clear evidence from
explanation.
the mapped
process.
Lesson 1
Introduction to Forecasting
Forecasting is a critical aspect of operations management, playing a vital role
in decision-making processes. It involves estimating future demand, sales, or other
relevant factors, which helps organizations plan effectively for resource allocation,
production schedules, and inventory management.
Types of Forecasting
Qualitative Forecasting
• Market Research: Surveys and focus groups gather consumer opinions and
trends.
Advantages: Captures insights and nuances that quantitative methods may overlook,
especially in uncertain environments.
Disadvantages: Subjective and can be influenced by biases; may lack the rigor of
numerical analysis.
Quantitative Forecasting
• Time Series Analysis: Analyzes past data to identify trends and seasonal
patterns.
• Accuracy: The degree to which the forecast aligns with actual outcomes.
These features ensure that forecasts can be relied upon for strategic planning
and operational efficiency.
• Design Capacity: This refers to the maximum output that a facility or system
can produce under ideal conditions. It represents the theoretical upper limit of
production capacity.
• Effective Capacity: This is the actual output that can be achieved, taking into
account factors such as maintenance, employee productivity, and operational
inefficiencies. Effective capacity provides a more realistic view of what can be
achieved in practice.
Capacity Planning Strategies
• Lag Strategy: This conservative approach waits until demand has increased
before expanding capacity. It is useful when there is uncertainty about future
demand, allowing organizations to avoid unnecessary costs associated with
excess capacity.
• Match Strategy: This hybrid approach combines elements of both lead and lag
strategies. Organizations gradually increase capacity in small increments to
align with actual demand fluctuations, ensuring a balance between resource
utilization and responsiveness to market changes.
Relationship with Forecasting
Activity Title:
Objective: Briefly explain what the report is about. Example: “This report provides a
forecasting and capacity planning analysis for Product/Service XYZ. The goal is to
predict future demand and ensure enough resources are available to meet that
demand.”
Lesson 3
Process Selection
1. Job Shop Processes: These are suitable for small-scale, custom production
where products are made to order, allowing for high flexibility but lower
efficiency.
Capacity planning ensures that the selected process can handle the anticipated
production volume without bottlenecks. It involves assessing current capabilities and
determining whether additional resources or changes in processes are needed to meet
future demands. This alignment between process selection, forecasting, and capacity
planning is essential for achieving operational efficiency and meeting business goals
effectively.