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Operational management

Solichul H. A. Bakri. Operational management. Operational Management. OPERATIONAL MANAGEMENT. Operational Management is a term used to try to expand the comprehension of production process

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Operational management

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  1. Solichul H. A. Bakri Operational management

  2. Operational Management

  3. OPERATIONAL MANAGEMENT • Operational Management is a term used to try to expand the comprehension of production process • Production process in question doesn’t only constitute production of goods and profit generation, but also the process in which these goods are manufactured and the profit generated.

  4. IMPORTANCE OF OPERATIONAL MANAGEMENT • Most of the assets owned by the company are generally embedded in operating / production activities, especially inventory • Most of human resources employed also partake in the operations/production process of the company • Operational activities of the company are the main activities of the company

  5. PRODUCTION PROCESS- TRANSFORMATION • Production/operational activities are a series of activities to bring inputs into outputs. • Once the production process and company’s going concern are going well, company would need to focus on maintaining the level in which it operates.

  6. TRANSFORMATION PROCESS Fig 1. Small Quantity Value Added Transformation INPUT PROCESS OUTPUT Feedback Fig 2. Big Quantity Value Added + After Sales Supplier Transformation INPUT PROCESS OUTPUT Feedback Value the Customer Source: MunjiatiMunawaroh, etc 2004

  7. Operation Management System Fig 3. Operational Management System Source: Krajewski & Ritzman, 2002

  8. DECISION MAKING PROCESS

  9. SOURCES OF IDEAS/PRODUCT DEVELOPMENTInternal Sources • Research & Development Department. Tasked with developing products while innovating to produce new product ideas. • Marketing Consultants. Hired by companies to get input on new ideas related to the product to be produced.

  10. SOURCES OF IDEAS/PRODUCT DEVELOPMENTInternal Sources • Salesperson. Salespeople are known to have direct relations with consumers, hence their inputs would be beneficial especially in regards to customers’ need/desire that would be essential in development of new product • The active role of all parties in the company. Every part of the company should have a role in giving ideas and input about the products that will be produced by the company.

  11. SOURCES OF IDEAS/PRODUCT DEVELOPMENTExternal Sources • Market trends. Companies need to consider current market trends in producing & developing their products as it could be an additional opportunity (untapped market) • Competitors’ products. ‘Copying’ competitors’ products probably is the easiest product development action that could be done. Company doesn't need to collect & choose ideas, instead they only need to copy competitors’ products. However, this option has a risk of the verdict on piracy or the decline in the company's value.

  12. SOURCES OF IDEAS/PRODUCT DEVELOPMENTExternal Sources • Feedback / complaints from customers. Often in product packaging, companies include customer complaint numbers (Customer service centers). This is intended so that companies can hear firsthand how consumers respond to products produced and consumed by consumers, as well as what consumer input will be on it. • Forecasting Results. Utilizing the company's past data could be done to get input for product development. Although the results are very relative and influenced by the availability of funds and forecasting methods used, but this method could be quite helpful to the company.

  13. Human Resources

  14. Human ResourcesSTRATEGY

  15. CONCLUSION • Main target of company is to achieve efficient employment of human resources within the scope of the operation it does. • It is important to have a work design that is effective and safe while at the same time providing high quality work environment for the employees that is respectful and conducive. • Designing a system that attracts workforce with high quality • Realistic strategies • It is required to have both regional and international collaboration

  16. INVENTORY MANAGEMENT INVENTORY • Quantity of products that is reserved to meet company’s needs in supplying the market under a certain conditions GOAL OF INVENTORY MANAGEMENT • To plan and control the level of inventory in such that it can serve the requests/needs from time to time while minimizing the total cost of the company (especially the cost incurred if provision of products could not be done in time).

  17. INVENTORY MANAGEMENT FUNCTION OF INVENTORY MANAGEMENT • To be able to meet demands that could arise at anytime from customers • To match production with distribution • To gain profit from discounted amount (of raw materials) • To hedge against inflation and price changes • To avoid stock shortages due to weather, supply, quality and inadequate shipping factors • To ensure the going concern of the operation

  18. INVENTORY MANAGEMENT TYPES OF INVENTORY • Purchased raw materials & components • Work in Progress (WIP) • Supplies used in maintenance, repairs & operations • Finished goods

  19. OPERATIONAL STRATEGICS ISSUES 1. Continuous monitoring of company's operational capabilities and customers’ needs by examining factors such as: • High quality product (compared to competitors) • High capacity utilization • High operating effectiveness • Low investment • Low direct cost per unit

  20. OPERATIONAL STRATEGICS ISSUES 2. To identify preconditions required to develop effective operational management strategies, consisting of variables such as: • Environment at current state • Competitive demand • Competition strategy • Product life cycle

  21. Thank You

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