1. Introduction to Business Management
A multi-Lecture Presentation for Air University (BE-TE)
This presentation can be used freely for non commercial purposes.
Students MUST note that lecture slides are for reference only and the exam will rely
mostly on class discussions rather than slides.

2. What Do Operations Managers Do?
What is Operations?
a function or system that transforms inputs into outputs of greater value
What is a Transformation Process?
a series of activities along a value chain extending from supplier to customer
activities that do not add value are superfluous and should be eliminated
What is Operations Management?
design, operation, and improvement of productive systems

3. Transformation Process
Physical: as in manufacturing operations
Locational: as in transportation operations
Exchange: as in retail operations
Physiological: as in health care
Psychological: as in entertainment
Informational: as in communication

4. Operations as a Transformation Process
INPUT
Material
Machines
Labor
Management
Capital
OUTPUT
Goods
Services
TRANSFORMATION
PROCESS
Feedback

5. Operations Function Operations Marketing Finance and Accounting
Human Resources
Outside Suppliers

6. What is a Business Process?
The Process View
Any organization entity or business can be characterized as a process or a network of processes
Based on the simple transformation model of a process
Has its origin in the areas of manufacturing and quality
The transformation model of a process
Inputs
Outputs
Process

7. What is a Business Process?
A more comprehensive process definition
A business process is a network of connected activities and buffers with well defined boundaries and precedence relationships, which utilize resources to transform inputs into outputs with the purpose of satisfying customer requirements
Process
Customers
Suppliers
Resources
Inputs
Outputs

8. Process Types and Hierarchies
Individual processes
Carried out by a single individual
Make up
2. Vertical or Functional processes
Contained within one functional unit or department
Make up
3. Horizontal or Cross Functional processes
Spans several functional units, departments or companies

9. Illustration: Process Types and Hierarchies
CEO
Marketing
Operations
Accounting
Buying a TV commercial
Order Fulfilled
Order Request
Production planning
Individual process
Vertical process
Horizontal process

10. Process Improvement Techniques

11. Benchmarking
A technique in which a company measures its performance against that of best in class companies, determines how those companies achieved their performance levels and uses the information to improve its own performance.

12. Balanced Scorecard
A management system that provides feedback on both internal business processes and external outcomes to continuously improve strategic performance and results.

13. Business Process Reengineering (BPR)
Involves significant changes in design and production of an organization’s product/services; focusing on processes rather than traditional functions.
The key to BPR is for organizations to look at their business processes from a "clean slate" perspective and determine how they can best construct these processes to improve how they conduct business.
Business process reengineering is also known as BPR, Business Process Redesign, Business Transformation, or Business Process Change Management.

14. Corporate Social Responsibility (CSR)
Through CSR, a company considers the interests of society by taking responsibility for the impact of their activities on customers, suppliers, employees, shareholders, communities and other stakeholders, as well as the environment.
This obligation is seen to extend beyond the statutory obligation to comply with legislation and sees organizations voluntarily taking further steps to improve the quality of life for employees and their families as well as for the local community and society at large.

15. Customer Surveys
Collecting data from customers about the performance and possible improvements in ones business.

16. Employee Suggestion Scheme
A formal mechanism through which employees can give their suggestions and ideas.
In its simplest form, a suggestion scheme will elicit suggestions from employees, classify them, and dispatch them to “experts” for evaluation. After this, the suggestion might be adopted, in which case the suggester may well be rewarded. But even if a suggestion is rejected, the suggester may still be rewarded with a token gift.

17. Improvement Teams
Teams constituted to address specific performance issues in a business.
Types of Process Improvement Teams
There are three types of teams. Kaizen teams, Lean (or Process Improvement) teams, and Six Sigma teams. All three focus on performance and
process improvement. They each bring a different perspective to the world of improvement.

18. Kaizen teams tend to address the physical processes that lend themselves to the use of visual analytical tools. If the team can observe what is being done to find improvement opportunities, this is a good team approach.
Lean/Process Improvement teams tend to focus on cross-functional projects, with requirements that are not clearly understood or agreed upon between the different functional players (departments), or by the people working the process. They take a horizontal focus across the process to understand requirements and eliminate waste. Waste is anything done that does not contribute to meeting requirements.
Six Sigma teams take a vertical approach to process analysis and go deep inside the process where the root cause of the problem is not easily understood. They are more analytical than a Lean team. Six Sigma teams use sophisticated tools to discover the “root cause” of problems, eliminate variation, stabilize processes, and sometimes even design a new process.

19. Knowledge Management Integral components of KM
The process of systematically and actively managing and leveraging the knowledge in an organization.
Integral components of KM
Generating new knowledge
Accessing valuable knowledge from outside sources
Using accessible knowledge in decision making
Embedding knowledge in processes, products, and/or services
Representing knowledge in documents, databases, and software
Facilitating knowledge growth through culture and incentives
Transferring existing knowledge into other parts of the organization
Measuring the value of knowledge assets and/or impact of knowledge management 

20. Lean
Process of improvement focusing on reducing all types of wastes in a business.
The seven types of wastes are:
Overproduction (production ahead of demand)
Transportation (moving products that is not actually required to perform the processing)
Waiting (waiting for the next production step)
Inventory (all components, work-in-progress and finished product not being processed)
Motion (people or equipment moving or walking more than is required to perform the processing)
Over Processing (due to poor tool or product design creating activity)
Defects (the effort involved in inspecting for and fixing defects)

21. Class Exercise
Identify Wastes in your university/class.

22. Mission and Vision Statements
Brief statements describing the purpose and vision of a business, intended to keep the employees aware of the organization’s intended direction.
The following elements can be included in a mission statement. Their sequence can be different. It is important, however, that some elements supporting the accomplishment of the mission be present and not just the mission as a "wish".
Purpose and values of the organization
Which business the organization wants to be in (products or services, market) or who are the organization's primary "clients" (stakeholders)
What are the responsibilities of the organization towards these "clients"
What are the main objectives supporting the company in accomplishing its mission

23. Examples of Mission Statements
"Provide society with superior products and services by developing innovations and solutions that improve the quality of life and satisfy customer needs, and to provide employees with meaningful work and advancement opportunities, and investors with a superior rate of return."—Merck
"To enable people and businesses throughout the world to realize their full potential."—Microsoft
"Organize the world's information and make it universally accessible and useful."—Google

24. Class Exercise Make a mission statement of your University.
Make a mission statement of a new business (choose your business).

25. Plan-Do-Check-Act (PDCA)
A four-step process for continuous quality improvement.

26. The PDCA (or PDSA) Cycle was originally conceived by Walter Shewhart in 1930's, and later adopted by W. Edwards Deming. The model provides a framework for the improvement of a process or system. It can be used to guide the entire improvement project, or to develop specific projects once target improvement areas have been identified.
The PDCA cycle is designed to be used as a dynamic model. The completion of one turn of the cycle flows into the beginning of the next. Following in the spirit of continuous quality improvement, the process can always be reanalyzed and a new test of change can begin. This continual cycle of change is represented in the ramp of improvement. Using what we learn in one PDCA trial, we can begin another, more complex trial.

27. Example: The Student with Poor Grades
Isabel is a first-year medical student who has just taken her first set of examinations and is very unhappy with the results.
What is she trying to accomplish? Isabel knows that she needs to improve her studying skills in order to gain a better understanding of the material.
How will she know that a change is an improvement? Isabel considers the most important measure of her study skills to be her exam grades. However, she does not want to risk another exam period just to find out that her skills are still not good. She decides that a better way to measure improvement is by taking old exams.
What changes can she make that will result in improvement? Isabel thinks that she has spent too little time studying. She feels that the best way to improve her study skills is by putting in more hours.
Contd..

28. Cycle 1
Plan: Isabel decides to add an additional thirty hours per week to her already busy schedule. She resolves that she must socialize less, get up earlier, and stay up later. At the end of the week she will take an old exam to see how she is progressing. Do: By the end of the week, Isabel finds that she was able to add only fifteen hours of studying. When she takes the exam she is dismayed to find that she does no better. Check: The fifteen extra hours of studying has made Isabel feel fatigued. In addition, she finds that her ability to concentrate during those hours is rather limited. She has not exercised all week and has not seen any of her friends. This forced isolation is discouraging her. Act: Isabel knows that there must be another way. She needs to design a better, more efficient way to study that will allow her time to exercise and socialize.
Contd..

29. Cycle 2
Plan: Isabel contacts all her medical school friends who she knows are doing well yet still have time for outside lives. Many of these friends have similar advice that Isabel thinks she can use. Based on her findings, she decides to always attend lectures, to rewrite her class notes in a format she can understand and based on what the professor has emphasized, and to use the assigned text only as a reference. Do: Isabel returns to her original schedule of studying. However, instead of spending a majority of her time poring over the text, she rewrites and studies her notes. She goes to the text only when she does not understand her notes. When Isabel takes one of the old exams, she finds that she has done better, but she still sees room for improvement. Check: Isabel now realizes that she had been spending too much time reading unimportant information in the required text. She knows that her new approach works much better, yet she still feels that she needs more studying time. She is unsure what to do, because she doesn't want to take away from her social and physically active life. Act: Isabel decides to continue with her new studying approach while attempting to find time in her busy day to study more.
Contd..

30. Cycle 3
Plan: In her search for more time to study, Isabel realizes that there are many places that she can combine exercising and socializing with studying. First, she decides to study her rewritten notes while she is exercising on the Stairmaster. Next, she intends to spend part of her socializing time studying with her friends. Do: Isabel's friends are excited about studying together, and their sessions turn into a fun and helpful use of everyone's time. Isabel has found that she enjoys studying while she exercises. In fact, she discovers that she remains on the Stairmaster longer when she's reading over her notes. When Isabel takes her exams this week, she is happy to find that her grades are significantly higher. Check: Isabel now knows that studying does not mean being locked up in her room reading hundreds of pages of text. She realizes that she can gain a lot by studying in different environments while focusing on the most important points. Act: Isabel chooses to continue with the changes she has made in her studying habits. What Isabel initially thought would be an improvement turned out to only discourage her further. Many people who are in Isabel's place do not take the time to study their changes and continue them even though they lead down a disheartening path. By using the PDCA cycle, Isabel was able to see that her initial change did not work and that she had to find one that would better suit her. With perseverance and the willingness to learn, Isabel was able to turn a negative outcome into a positive improvement experience.

31. Class Exercise
Architect a PDCA cycle of a man/woman trying to loose 30 pounds of weight.

32. Quality Function Deployment (QFD)
A Japanese method for systematically translating true customer needs into product/service technical requirements for design, development, implementation, and delivery of a product.

33. "Time was when a man could order a pair of shoes directly from the cobbler. By measuring the foot himself and personally handling all aspects of manufacturing, the cobbler could assure the customer would be satisfied," lamented Dr. Yoji Akao, one of the founders of QFD, in his private lectures.
Quality Function Deployment (QFD) was developed to bring this personal interface to modern manufacturing and business. In today's industrial society, where the growing distance between producers and users is a concern, QFD links the needs of the customer (end user) with design, development, engineering, manufacturing, and service functions.

34. QFD is: Understanding Customer Requirements
Quality Systems Thinking + Psychology + Knowledge/Epistemology
Maximizing Positive Quality That Adds Value
Comprehensive Quality System for Customer Satisfaction
Strategy to Stay Ahead of The Game

35. As a quality system that implements elements of Systems Thinking with elements of Psychology and Epistemology (knowledge), QFD provides a system of comprehensive development process for:
Understanding customer needs
What 'value' means to the customer
Understanding how customers or end users become interested, choose, and are satisfied
Analyzing how do we know the needs of the customer
Deciding what features to include
Determining what level of performance to deliver
Intelligently linking the needs of the customer with design, development, engineering, manufacturing, and service functions
Intelligently linking Design for Six Sigma (DFSS) with the front end Voice of Customer analysis and the entire design system

36. QFD helps organizations seek out both spoken and unspoken needs, translate these into actions and designs, and focus various business functions toward achieving this common goal, empowering organizations to exceed normal expectations and provide a level of unanticipated excitement that generates value.
The QFD methodology can be used for both tangible products and non-tangible services, including manufactured goods, service industry, software products, IT projects, business process development, government, healthcare, environmental initiatives, and many other applications.

37. House of Quality

38. Example – QFD of a Car Door

39. Class Exercise
Draw a House of Quality for a ball point pen.

40. Quality Management System (QMS)
A formalized system that documents the structure, responsibilities and procedures required to achieve effective quality management.
Complete Lecture for QMS will follow

41. Six Sigma
A rigorous and disciplined methodology that utilizes data and statistical analysis to measure and improve a company’s operational performance, practices and systems.

42. Supplier Development
Formal system intended at developing the capacity and performance of ones suppliers with a target to have improved input from them.

43. To achieve a high level of supplier development, the partnership idea has to be fully accepted both by the subcontractors and by the procuring (or contracting) enterprises, and it is thus necessary for enterprises to operate in a climate of equity and mutual trust, with a knowledge of and respect for each other’s rights and obligations.
Supplier development is a broad concept aimed at strengthening the performance of subcontracting firms not only by enabling them to acquire the skills and capacities required of them by the main contracting (or client) enterprise but also by raising their awareness and assisting them in reducing their costs.
Contracting enterprises offer work to subcontractors, thus enabling them to conclude contracts with them and, in the case of long-term contracts, to guarantee them a certain economic continuity. If such enterprises want their suppliers to meet their requirements to the greatest possible extent, they will need to support them in their development and they will in this way achieve benefits since, by assisting them, they will be better able to serve the end customer.

44. Supplier Evaluation
Formal system to evaluate the performance of the suppliers of a business.

45. SWOT Analysis
An assessment tool for identifying the overall strategic situation in an organization by listing its Strengths, Weaknesses, Opportunities and Threats (SWOT).

46. Wal-Mart SWOT Analysis.
Strengths - Wal-Mart is a powerful retail brand. It has a reputation for value for money, convenience and a wide range of products all in one store.
Weaknesses - Wal-Mart is the World's largest grocery retailer and control of its empire, despite its IT advantages, could leave it weak in some areas due to the huge span of control.
Opportunities - To take over, merge with, or form strategic alliances with other global retailers, focusing on specific markets such as Europe or the Greater China Region.
Threats - Being number one means that you are the target of competition, locally and globally.

47. Strengths patents strong brand names good reputation among customers
cost advantages from proprietary know-how
exclusive access to high grade natural resources
favorable access to distribution networks
More Possible Strengths
Advantages of proposition?, Capabilities? Competitive advantages? USP's (unique selling points)?
Resources, Assets, People? Experience, knowledge, data? Financial reserves, likely returns? Marketing - reach, distribution, awareness? Innovative aspects? Location and geographical?
Price, value, quality? Accreditations, qualifications, certifications? Processes, systems, IT, communications? Cultural, attitudinal, behavioural? Management cover, succession?

48. Weaknesses
The absence of certain strengths may be viewed as a weakness. For example, each of the following may be considered weaknesses:
lack of patent protection
a weak brand name
poor reputation among customers
high cost structure
lack of access to the best natural resources
lack of access to key distribution channels
Weakness may be the flip side of strength. Take the case in which a firm has a large amount of manufacturing capacity. While this capacity may be considered a strength that competitors do not share, it also may be a considered a weakness if the large investment in manufacturing capacity prevents the firm from reacting quickly to changes in the strategic environment.
Disadvantages of proposition? Gaps in capabilities? Lack of competitive strength? Reputation, presence and reach? Financials? Own known vulnerabilities? Timescales, deadlines and pressures? Cashflow, start-up cash-drain? Continuity, supply chain robustness? Effects on core activities, distraction? Reliability of data, plan predictability? Morale, commitment, leadership? Accreditations, etc? Processes and systems, etc? Management cover, succession?

49. Opportunities
The external environmental analysis may reveal certain new opportunities for profit and growth. Some examples of such opportunities include:
an unfulfilled customer need
arrival of new technologies
loosening of regulations
removal of international trade barriers
Market developments? Competitors' vulnerabilities? Industry or lifestyle trends? Technology development and innovation? Global influences? New markets, vertical, horizontal? Niche target markets? Geographical, export, import? New USP's? Tactics - surprise, major contracts, etc? Business and product development? Information and research? Partnerships, agencies, distribution? Volumes, production, economies? Seasonal, weather, fashion influences?

50. Threats
Changes in the external environmental also may present threats to the firm. Some examples of such threats include:
shifts in consumer tastes away from the firm's products
emergence of substitute products
new regulations
increased trade barriers
Political effects? Legislative effects? Environmental effects? IT developments? Competitor intentions - various? Market demand? New technologies, services, ideas? Vital contracts and partners? Sustaining internal capabilities? Obstacles faced? Insurmountable weaknesses? Loss of key staff? Sustainable financial backing? Economy - home, abroad? Seasonality, weather effects?

51. The SWOT/TOWS Matrix STRENGTHS WEAKNESSES OPPORTUNITIES THREATS
SO Strategies
WO Strategies
THREATS
ST Strategies
WT Strategies

52. Example – Wal-Mart TOWS Matrix
powerful retail brand
reputation for value for money
reputation for Convenience
wide ranging products in one store.
World's largest grocery retailer
Control of its empire weak
To take over, merge with, or
form strategic alliances with
other global retailers
focusing on specific markets
such as Europe or China
SO Strategies
WO Strategies
Being number one means that
you are the target of
competition, locally and
globally.
ST Strategies
WT Strategies

53. The SWOT/TOWS Matrix powerful retail brand
reputation for value for money
reputation for Convenience
wide ranging products in one store.
World's largest grocery retailer
Control of its empire weak
To take over, merge with, or
form strategic alliances with
other global retailers
focusing on specific markets
such as Europe or China
Take over one of the
Chinese retailers
New Branding for greater China
Merge with an IT giant for
Instituting stronger control
More research to investigate
competitors
Being number one means that
you are the target of
competition, locally and
globally.
Periodical reviews of branding strategies
Strengthen IT for reduction
In reporting time.

54. World’s Top 20 Retailers

55. Class Exercise/Home Work
Q-1. Choose (think of) any business. Perform its SWOT analysis.
When doing it, you must have, or collect, relevant data about market positioning of the business, its strengths and weaknesses.
Q-2. Draw a House of Quality for a ball point pen.
Complete sections 1,3,4 and 5. Make VALID assumptions where required.
Q-3. What are different types of processes in businesses? Give 3 examples each of all the types.
Q-4. Identify wastes in your daily routine. Keep the 7 types of wastes in mind while doing it.
Q-5. Make a mission statement of following:
Your life
The business you choose in Q1.

56. TQM
An approach to quality that uses management practices and quality tools to improve quality continuously to customers.
Complete Lecture for QMS will follow

57. 5S
A housekeeping methodology for increasing the efficiency of a workplace.

58. The 5S's are:
Seiri: Sorting. Refers to the practice of going through all the tools, materials, etc., in the work area and keeping only essential items. Everything else is stored or discarded. This leads to fewer hazards and less clutter to interfere with productive work.
Seiton: Set in Order. Focuses on the need for an orderly workplace. "Orderly" in this sense means arranging the tools and equipment in an order that promotes work flow. Tools and equipment should be kept where they will be used, and the process should be ordered in a manner that eliminates extra motion.
Seisō: Sweeping, Systematic Cleaning, or Shining. Indicates the need to keep the workplace clean as well as neat. Cleaning in Japanese companies is a daily activity. At the end of each shift, the work area is cleaned up and everything is restored to its place, making it easy to know what goes where and to know when everything is where it should be are essential here. The key point is that maintaining cleanliness should be part of the daily work - not an occasional activity initiated when things get too messy.

59. Seiketsu: Standardizing. This refers to standardized work practices
Seiketsu: Standardizing. This refers to standardized work practices. It refers to more than standardized cleanliness (otherwise this would mean essentially the same as "systemized cleanliness"). This means operating in a consistent and standardized fashion. Everyone knows exactly what his or her responsibilities are. In part this follows from Seiton where the order of a workplace should reflect the process of work, these imply standardised work practice and workstation layout.
Shitsuke: Sustaining. Refers to maintaining and reviewing standards. Once the previous 4S's have been established they become the new way to operate. Maintain the focus on this new way of operating, and do not allow a gradual decline back to the old ways of operating. However, when an issue arises such as a suggested improvement or a new way of working, or a new tool, or a new output requirement then a review of the first 4S's is appropriate.