Cover Note Assigment

STUDENT’S NAME : MOHD KHAILEL BIN AHMAD

I/C NO : 821003-02-5245

PROGRAMME : EXECUTIVE MASTER IN SAFETY , HEALTH &

ENVIRONMENT

CLASS DATE : 17 OCTOBER 2015 & 18 OCTOBER 2015

INTAKE DATE : 4TH BATCH

MODULE : INNOVATIVE DEVELOPMENT IN OPERATION

MANAGEMENT

TRAINER’S NAME : EN. EZUDDEN

CENTRE : PASIR GUDANG

OVERALL MARK
(Fill up by Trainer)

QUESTION MARK

1
2
3
4
5

TOTAL

FINAL MARK
(60%)
Table of Contents

Index Topics Pages

1.0 Question 1 3
2.0 Question 2 4
3.0 Introduction Operation Management 5-8
4.0 10 Critical Decision of Operation Management 9-13
5.0 Checklist 10 Critical Decision of Operation Management 14
6.0 Conclusion 16
7.0 References 17

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1.0 QUESTION 1
Define 10 company or organization on its process design either its product focus or process focus and
explain why?
1. Ten (10) company or organization on its process design is a ‘product focus’:
NO COMPANY REASON WHY
1. GIANT Bicycle Factory High volume of product with low variety
2. SONY Electric Factory High volume of product with low variety
3. PERODUA Car Factory High volume of product with low variety
4. INTEL Computer Factory High volume of product with low variety
5. B BRAUN Medical Factory High volume of product with low variety
6. SAMSUNG Air-conditioning Factory High volume of product with low variety
7. MASSIMO Bread Factory High volume of product with low variety
8. PHARMANIAGA Pharmacy Factory High volume of product with low variety
9. ICI DULUX Paint Factory High volume of product with low variety
10. CONTINENTAL Tyre Factory High volume of product with low variety

2. Ten (10) company or organization on its process design is a ‘process focus’:

NO COMPANY REASON WHY
1. Medical Centre Low volume of product with High variety
2. Bank Low volume of product with High variety
3. Consultancy Services Low volume of product with High variety
4. Insurance Low volume of product with High variety
5. Advertising Agency Low volume of product with High variety
6. Interior Designer Low volume of product with High variety
7. Barber Shop Low volume of product with High variety
8. Architecture Low volume of product with High variety
9. Fashion Designer Low volume of product with High variety
10. Security and Safety services Low volume of product with High variety

2.0 QUESTION 2
You, as an Operations Manager approach by your Marketing Department, assuring they have

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Created demand upon a product. Now, by taking into consideration of the ten (10) critical
Descission of Operation Management (OM), evaluate the proposal and give decision whether
it is a “Yes” or “No”

3.0 Operation Management

Operations Management is about how organization produce or deliver the goods and services
that provide the reason for their existence. Operations can be seen as one of many functions (e.g.
marketing, finance, personnel) within the organization. The operations function can be described
as that part of the organization devoted to the production or delivery of goods and services. This
means all organizations undertake operations activities because every organization produces
goods and/or services.
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Organizations can be classified in two broad categories as either manufacturing or service.
Manufacturing organizations produce physical, tangible items which can be stored as inventory
before delivery to the customer. Service organizations produce intangible items that cannot be
produced ahead of time. One of the key developments in operations is the increasing importance
of service operations as service industry accounts for an increasing proportion of the output of
industrialized economies. Some of the main implications for these differences for operations
management are now discussed. Because a service cannot be stored its production and
consumption will occur at the same time that implies that the producer of the service will come
into contact with the customer. In fact the customer will be involved to a greater or lesser extent
in the actual delivery of the operation. For instance a supermarket requires the customer to
choose and transport the goods around the store and queue at an appropriate checkout till.
However it should not be assumed that all employees in a service operation have to deal directly
with a customer. For the supermarket example, the checkout till is an example of high customer
contact, but stores personnel may not have to deal directly with the customer at all. This
distinction in services is denoted by ‘back office’ tasks which add value to the inputs of the
service operation (e.g. stocktaking) and ‘front office’ tasks which deal with the customer both as
an input and output of the operation.
Because services are intangible then it follows that they cannot have a store of finished goods.
Manufacturing operations will often compensate for fluctuations in demand by fulfilling demand
from finished goods inventory produced during a slack period. This option is not open to service
operations and they must focus on trying to alter the demand pattern to meet capacity by such
strategies as discounting the price of the service during periods of low demand. Because the
output of a service is intangible it is more difficult to assess performance by such measures as
productivity or output. For example a manufacturer can simply count the volume of output of its
product range, but an administration service for example will have more difficulty in measuring
the productivity of their employees.

The quality of a service will be judged by the process of delivering that service as well as the
quality of any tangible goods that are involved. This leads to the problem that it is more difficult
to measure the quality of service delivery than the quality of manufactured goods. In reality most
operations systems produce a mixture of goods and services. Most goods have some supporting
service element (e.g. a maintenance facility), called a facilitating service, while many services
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will have supporting goods (e.g. a management consultancy report), termed a facilitating good.
A system is a group of interrelated items in which no item studied in isolation will act in the same
way as it would in the system. A system is divided into a series of parts or subsystems, and any
system is a part of a larger system. The system’s boundary defines what is inside the system and
what is outside. A system’s environment is everything outside the system boundary that may have
an impact on the behavior of the system. A system’s inputs are the physical objects of information
that enter it from the environment and its outputs are the same which leave it for the environment.
The activities in an operations system can be classified as input, transformation process and
output. The input activity involves two categories of resources. Transforming resources are the
elements that act on, or carry out, the transformation process on other elements. These include
such elements as labor, equipment/plant and energy. The nature and mix of these resources will
differ between operations. The transformed resources are the elements which give the operations
system its purpose or goal. The operations system is concerned with converting the transformed
resources from inputs into outputs in the form of goods and services. There are three main types
of transformed resource of materials which can be transformed either physically (e.g.
manufacturing), by location (e.g. transportation), by ownership (e.g. retail) or by storage (e.g.
warehousing), information which can be transformed by property (e.g. accountants), by
possession (e.g. market research), by storage (e.g. libraries), or by location (e.g.
telecommunications) and customers they can be transformed either physically (hairdresser), by
storage (e.g. hotels), by location (e.g. airlines), by physiological state (e.g. hospitals), or by
psychological state (e.g. entertainment). Two types of transforming resources are facilities (e.g.
building and equipment) and staff (all the people involved in the operations process).
The sub-systems of a firm related to specific business disciplines are termed the functional areas of a
business. The three main functional areas in a business are the operations, marketing and finance
functions. The marketing function works to find and create demand for the company’s goods and
services by understanding customer needs and developing new markets. The need for marketing and
operations to work closely together is particularly important as the marketing function will provide
the forecast of demand from which operations can plan sufficient capacity in order to deliver goods
and services on time. The finance function is responsible for the obtaining and controlling of funds
and covering decisions such as investment in equipment and price-volume decisions. Other functions
which play a supporting role in the organization include the personnel function which will play a role
on the recruitment and labor relations, the research and development function which generates and
investigates the potential of new ideas and the information technology department which supplies and
co-ordinates the computer-based information needs of the organization.
Recently there has been a move away from considering business as a set of discrete functional
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areas towards a view of the organization as consisting of sets of processes which link together in
order to meet customer needs. Processes can be related in one functional area (e.g. production),
but could relate to cross-functional activities (e.g. fulfilling customer orders or even occur in all
functional areas (e.g. planning activities).
In functional terms the processes would be situated in areas such as operations, marketing and finance,
but from the customer’s view the value they gain is dependent on the performance if the set of linked
processes involved in the delivery of the product/service. The term ‘value added’ is used to denote the
amount of value a process creates for its internal or external customer. The set of processes used to
create value for a customer is often called the value chain. The value chain includes primary processes
that directly create the value the customer perceives and support processes that assist the primary
process in adding value. The key issue is that the configuration of the value chain should be aligned
with the particular way the organization provides value to the customer.
Strategic decisions can be classified as those decisions which make major long term changes to
the resource base of the organization in response to external factors such as markets, customers and
competitors. Thus strategic decisions occur as a result of an evaluation of the external and internal
environment. The external evaluation may reveal market opportunities or threats from competitors.
The evaluation of the internal environment may reveal limitations in capabilities relative to
competitors. Strategy is seen as complex in nature due to a high degree of uncertainty in future
consequences arriving from decisions, integration is required of all aspects and functional areas of
business and major change may have to be implemented as a consequence of strategic choices made.
Operations should focus on specific capabilities that give it a competitive edge which may be
termed competitive priorities. Four operations priorities or measures of these capabilities can be
termed cost, time, quality and flexibility.
 Cost
If an organization is competing on price then it is essential that it keeps its cost base lower than
the competition. Then it will either make more profit than rivals, if price is equal, or gain market
share if price is lower. Cost is also important for a strategy of providing a product to a market
niche, which competitors cannot provide. Thus cost proximity (i.e. to ensure costs are close to the
market average) is important to maximize profits and deter competitors from entering the market.
The major categories of cost are staff, facilities (including overheads) and material with the
greatest scope for cost reduction lies with reduction of the cost of materials. A relatively small
proportion of costs are usually assigned to direct labor.

 Time
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 The time delay or speed of operation can be measured as the time between a customer request for
a product/service and then receiving that product/service. Speed is an important factor to the customer in
making a choice about which organization to use. The concept of P:D ratios compares the demand time
D (from customer request to receipt of goods/services) to the total throughput time P of the purchase,
make and delivery stages. Thus in a make-to-stock system D is basically the delivery time, but for a
customer-to-order system the customer demand time is equal to the purchase, make and delivery stages
(P). In this case the speed of the internal processes of purchase and make will directly effect the delivery
time experienced by the customer. Thus the advantage of speed is that it can either be used to reduce the
amount of speculative activity and keep the delivery time constant or for the same amount of speculative
activity it can reduce overall delivery lead time. Thus in competitive terms speed can be used to both
reduce costs (making to inaccurate forecasts) and reduce delivery time (better customer service).
 Quality
Quality covers both the quality of the product/service itself and the quality of the process that
delivers the product/service. Quality can be measured by the ‘cost of quality’ model were costs are
categorized as either the cost of achieving good quality (the cost of quality assurance) or the cost of poor
quality products (the costs of not conforming to specifications). The advantages of good quality on
competitiveness include increased dependability, reduced costs and improved customer service.
 Flexibility
There are a number of areas in which flexibility can be demonstrated. For example it can mean
the ability to offer a wide variety of products/services to the customer and to be able to change these
products/services quickly. Flexibility is needed so the organization can adapt to changing customer
needs in terms of product range and varying demand and to cope with capacity shortfalls due to
equipment breakdown or component shortage. Types of flexibility include product flexibility which
is the ability to be able to quickly act in response to changing customer needs with new
product/service designs and volume flexibility which is the ability to be able to decrease or increase
output in response to changes in demand. Volume flexibility may be needed for seasonal changes in
demand as services may have to react to demand changes minute by minute.

4.0 10 Critical Decision of Operation Management

1. QUALITY
Quality Control may be defined as ‘a system that is used to maintain a desired level of quality in a
product or service’. It is a systematic control of various factors that affect the quality of the product.
Quality Control aims at prevention of defects at the source, relies on effective feedback system and
corrective action procedure.
Quality Control can also be defined as ‘that Industrial Management technique by means of
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which product of uniform acceptable quality is manufactured’. It is the entire collection of activities,
which ensures that the operation will produce the optimum quality products at minimum cost.
The main objectives of Quality Control are:
1. To improve the companies income by making the production more acceptable to the customers
i.e. by providing long life, greater usefulness, maintainability, etc.
2. To reduce companies cost through reduction of losses due to defects.
3. To achieve interchangeability of manufacture in large-scale production.
4. To produce optimal quality at reduced price.
5. To ensure satisfaction of customers with productions or services or high quality level, to build
customer good will, confidence and reputation of manufacturer.
6. To make inspection prompt to ensure quality control.
7. To check the variation during manufacturing.
ISO 9000 provides guidelines for the use of the following four standards in the series.
ISO 9001 applies when the supplier is responsible for the development, design, production,
installation, and servicing of the product.
ISO 9002 applies when the supplier is responsible for production and installation.
ISO 9003 applies to final inspection and testing of products.
ISO 9004 provides guidelines for managers of organizations to help them to develop their
quality systems. It gives suggestions to help organizations meet the requirements of the previous
four standards
2. GOOD AND SERVICES
The standard is general enough to apply to almost any good or service, but it is the specific
organization or facility that is registered or certified to the standard. To achieve certification a
facility must document its procedures for every element in the standard. These procedures are
then audited by a third party periodically. The system thus ensures that the organization is
following a documented, and thus consistent, procedure which makes errors easier to find and
correct. However the system does not improve quality in itself and has been criticized for
incurring cost in maintaining documentation while not providing guidance in quality
improvement techniques such as statistical process control.

3. LOCATION
Location of facilities for operations is a long-term capacity decision, which involves a long-term
commitment about the geographically static factors that affect a business organization. It is an
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important strategic level decision-making for an organization. It deals with the questions such as
‘where our main operations should be based?’
The selection of location is a key-decision as large investment is made in building plant and
machinery. An improper location of plant may lead to waste of all the investments made in plant and
machinery equipment. Hence, location of plant should be based on the company’s expansion plan
and policy, diversification plan for the products, changing sources of raw materials and many other
factors. The purpose of the location study is to find the optimal location that will results in the
greatest advantage to the organization.
4. PROCESS DESIGN
Design is a macroscopic decision-making of an overall process route for converting the raw
material into finished goods. These decisions encompass the selection of a process, choice of
technology, process flow analysis and layout of the facilities. Hence, the important decisions in
process design are to analyze the workflow for converting raw material into finished product and to
select the workstation for each included in the workflow. Product design deals with conversion of ideas
into reality. Every business organization have to design, develop and introduce new products as a survival
and growth strategy. Developing the new products and launching them in the market is the biggest
challenge faced by the organizations. The entire process of need identification to physical manufactures
of product involves three functions—Design and Marketing, Product, Development, and manufacturing.
Product Development translates the needs of customers given by marketing into technical specifications
and designing the various features into the product to these specifications. Manufacturing has the
responsibility of selecting the processes by which the product can be manufactured. Product design and
development provides link between marketing, customer needs and expectations and the activities
required to manufacture the product.
5. LAYOUT DESIGN
Plant layout refers to the physical arrangement of facilities. It is the configuration of departments,
work centers and equipment in the conversion process. The overall objective of the plant layout is to
design a physical arrangement that meets the required output quality and quantity most economically.
According to James More ‘Plant layout is a plan of an optimum arrangement of facilities including
personnel, operating equipment, storage space, material handling equipments and all other supporting
services along with the design of best structure to contain all these facilities’.

6. SCHEDULING
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 Production planning and control can be defined as the process of planning the production in
advance, setting the exact route of each item, fixing the starting and finishing dates for each item, to give
production orders to shops and to follow-up the progress of products according to orders.
The principle of production planning and control lies in the statement ‘First Plan Your Work and
then Work on Your Plan’. Main functions of production planning and control include Planning, Routing,
Scheduling, Dispatching and Follow-up. Planning is deciding in advance what to do, how to do it, when
to do it and who is to do it. Planning bridges the gap from where we are, to where we want to go. It
makes it possible for things to occur which would not otherwise happen. Routing may be defined as the
selection of path, which each part of the product will follow, which being transformed from raw material
to finished products. Routing determines the most advantageous path to be followed for department to
department and machine to machine till raw material gets its final shape. Scheduling determines the
programed for the operations. Scheduling may be defined as 'the fixation of time and date for each
operation' as well as it determines the sequence of operations to be followed. Dispatching is concerned
with the starting the processes. It gives necessary authority so as to start a particular work, which has
been already been planned under ‘Routing’ and ‘Scheduling’. Therefore, dispatching is ‘Release of orders
and instruction for the starting of production for any item in acceptance with the Route sheet and
Schedule Charts’. The function of Follow-up is to report daily the progress of work in each shop in a
prescribed preform and to investigate the causes of deviations from the planned performance.
7. SUPPLY CHAIN
A supply chain is the series of activities that delivers a product or service to a customer.
Activities in the supply chain include sourcing materials and components, manufacturing
products, storing products in warehousing facilities and distributing products to customers. The
management of the supply chain involves the coordination of the products through this process
which will include the sharing of information between interested parties such as suppliers,
distributors and customers. An important aspect of supply chain activities is the role of procurement in
not only acquiring the materials needed by an organisation but also undertaking activities such as
selecting suppliers, approving orders and receiving goods from suppliers. The term procurement is often
associated with the term purchasing but this is taken to refer to the actual act of buying the raw materials,
parts, equipment and all the other goods and services used in operations systems. There has
recently been an enhanced focus on the procurement activity due to the increased use of process
technology, both in terms of materials and information processing. In terms of materials
processing the use of process technology such as flexible manufacturing systems has meant a
reduction in labour costs and thus a further increase in the relative cost of materials associated
with a manufactured product. This means that the control of material costs becomes a major
focus in the control of overall manufacturing costs for a product. Another issue that has increased
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the importance of procurement is that the efficient use of automated systems requires a high
quality and reliable source of materials to be available. This is also the case with the adoption of
production planning systems such as JIT which require the delivery of materials of perfect
quality, at the right time and the right quantity.
8. INVENTORY
The main concern of inventory management is the trade-off between the cost of not having an
item in stock against the cost of holding and ordering the inventory. A stock-out can either be to
an internal customer in which case a loss of production output may occur, or to an external
customer when a drop in customer service level will result. In order to achieve a balance between
inventory availability and cost the following inventory management aspects must be addressed of
volume - how much to order and timing - when to order. Normally a mix of fixed-order-interval and fixed
order quantity inventory systems are used within an organization. When there are many inventory items
involved this raises the issue of deciding which particular inventory system should be used for a
particular item. The ABC classification system sorts inventory items into groups depending on the
amount of annual expenditure they incur. This will depend on both the estimated number of items used
annually multiplied by the unit cost. To instigate a ABC system a table is produced listing the items in
expenditure order (with largest expenditure at the top), and showing the percentage of total
expenditure and cumulative percentage of the total expenditure for each item.
9. HUMAN RESOURSES and JOB DESIGN
Motion study is the study of the individual human emotions that are used in a job task. The
purpose of motion study is to try to ensure that the job does not include any unnecessary motion
or movement by the worker and to select the sequence of motions that ensure that the job is being
carried out in the most efficient manner possible. For even more detail videotapes can be used to
study individual work motions in slow motion and analyze them to find improvement - a
technique termed micro motion analysis. The principles are generally categorized according to the
efficient use of the human body, efficient arrangement of the workplace and the efficient use of
equipment and machinery. These principles can be summarized into general guidelines as follows:
Efficient Use of the Human Body
Work should be rhythmic, symmetrical and simplified. The full capabilities of the human body
should be employed. Energy should be conserved by letting machines perform tasks when
possible.
Efficient Arrangement of the Workplace
Tools, materials and controls should have a defined place and be located to minimize the motions
needed to get to them. The workplace should be comfortable and healthy.
Efficient use of Equipment
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Equipment and mechanized tools enhance worker abilities. Controls and foot-operated devices
that can relieve the hand/arms of work should be maximized. Equipment should be constructed
and arranged to fit worker use.
Motion study is seen as one of the fundamental aspects of scientific management and indeed it
was effective in the design of repetitive, simplified jobs with the task specialization which was a
feature of the mass production system. The use of motion study as declined as there as been a
movement towards greater job responsibility and a wider range of tasks within a job. However
the technique is still a useful analysis tool and particularly in the service industries, can help
improve process performance.
10. MAINTAINANCE
In modern industry, equipment and machinery are a very important part of the total productive
effort. Therefore their idleness or downtime becomes are very expensive. Hence, it is very important
that the plant machinery should be properly maintained.
The main objectives of Maintenance Management are:
1. To achieve minimum breakdown and to keep the plant in good working condition at the
lowest possible cost.
2. To keep the machines and other facilities in such a condition that permits them to be used at
their optimal capacity without interruption.
3. To ensure the availability of the machines, buildings and services required by other sections
of the factory for the performance of their functions at optimal return on investment.

5.0 Checklist 10 Critical Decision of Operation Management

NO CRITICAL DECISION CHECKLIST YES NO

1. Goods and service design

 Service and product design decisions to maintain the ambiance and image.
Managers assess different attributes of target markets and make some slight √
modifications to the products and services. Still, these products and services
consistently follow the brand image.

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2. Quality
 Quality management by maintaining a specific quality assessment role for
the operations manager. The manager uses the firm’s quality standards to √
identify issues and weaknesses. Recommended changes are then applied to
ensure compliance.
3. Process and capacity design
 Process and capacity design refers to internal business processes and the
target capacity of facilities. The target capacity of facilities is based on the √
condition of the local markets. The company applies process and capacity
design decisions to maximize capacity utilization.
4. Location
 The location of its businesses based on market and industry analysis. Market
research is applied to determine if the market can support the company. √
Industry statistics are used to determine if expanding the firm through
additional locations is feasible.
5. Layout design
 The company decides on layout design by assessing the expected influx of √
customers and the nature of business operations in facilities. The company’s
operations managers apply layout design for efficient workflow in the
limited space available in these facilities.
6. Human Resources and Job Design
 Job design decisions are reached and applied through an analysis of needs
and expectations of the company and its employees. The appropriateness of
job design is evaluated based on employee feedback and company standards. √
The company’s operations management is focused on optimizing workers’
person-job fit, while making it easy for employees to do their jobs to
maximize efficiency.
7. Supply Chain Management
 Supply chain management decisions are based on market demand, variety of
suppliers, and inventory management costs, among other factors. The supply √
chain management decision is applied through the operations manager and
location manager.
8. Inventory
 The company applies inventory management decisions through inventory
management software. The operations management uses demand fluctuations
and historical records to predict changes needed in the inventory. The √
inventory is then adjusted accordingly.
9. Scheduling
 Decisions in scheduling by evaluating current operations effectiveness. The
schedules must satisfy capacity requirements. Also, operations managers
disseminate planned schedules to staff and use their feedback to make √
adjustments. The adjusted schedules are then applied to ensure flexibility and
resilience of the business.
10. Maintenance
 Maintenance decisions are made and applied based on a comparative √
evaluation of assets and the firm’s standards. For example, the company has
standards on how much equipment wear and tear is allowed before the
equipment needs repair or replacement. Company also has standards and
policies on how maintenance should be conducted involving qualified
personnel.

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6.0 CONCLUSION

The result of the analysis carried out on this both macro and micro environment indicated very
significant effects for the industry and company itself. Regardless of current trends and unpredicted
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circumstances, our company is now ready for implementation of plan. In relation to the role of operation
management decision making process of the company, it could be considered that marketing research is
undeniable one of the most important tool in starting business. Thus, its role is indispensable in the
process of business expansion especially to the case of our company where we are now ready for
international take-off of its operation and products.

7.0 REFERENCES

Brown, S., Bessant, J. R., & Lamming, R. (2013). Strategic operations management. Routledge.
Drucker, P. (1991). The New Productivity Challenge. Harvard Business Review.
Greenberg, H., & Greenberg, J. (1980). Performance. Harvard Business Review.

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Heizer, J. H., & Render, B. (2014). Principles of Operations Management: Sustainability and Supply
Chain Management. Prentice Hall.
Lewis, M., & Slack, N. (2003). Operations Management: Critical Perspectives on Business and
Management. Routledge.
Singhal, K., & Singhal, J. (2012). Imperatives of the science of operations and supply-chain
management. Journal of Operations Management, 30(3), 237-244.

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