10 DECISIONS OF MANAGEMENT OPERATIONAL

1. Product and Service Design

The objective of the product decision is to develop and implement a product strategy thet
meets the demand of the marketplace with a competitive advantage. Product strategy may
focus on developing a competitive advantage via differentiation, low cost, rapid response, or a
combination of these. To maximize the potential for success, top companies focus on only a few
product and then concentrate on those product. Example, Gojek focus on service transportation
public in Indonesia. However, because most product have a limited and even predictable life
cycle, companies must constantly be looking for new products to design, develop, and take to
market.
2. Managing Quality
The operations manager’s objective is to build a total quality management system that identifies
and satisfies customer needs. Managing quality helps build successful strategies of
differentiation, low cost, and response.

Two Ways Quality Improves

Profitability
Sales Gain via
- Improved response
-Flexible pricing
-Improved reputation
Improved Quality Increases Profits
Reduced Cost via
-Increased productivity
-Lower rework and scrap costs
-Lower warranty costs
Source: Operations Management-Jay Heizer and Barry Render (9th edition) pages 168

Quality may be in the eyes of the beholder, but to create a good or a service, operations
managers must define what the beholder (the consumer) expects. Example Gojek Indonesia
Improves service the conventional ojek become to professional public transportation with high
standard operasional.
3. Process and Capacity Design
When analyzing and designing processes to transform resources into goods and services, we ask
questions such as the following:
 Is the process designes to achieve competitive advantage in terms of differentiation,
response, or low cost ?
 Does the process elimate steps that do not add value ?
 Does the process maximize customer value as perceived by the customer ?
  Will the process win orders ?

A number of tools help us understand the complexities of process design and redesign. They are
simply ways of making sense of what happens of must happen in a process. Example

Source: http://cem.com/en/natural-cheese-production-process

Capacity is the “throughput” or number of units a facility can hold, receive, store, or produce in
a period of time. After selection of production process, we need to determine capacity. The
capacity often determines capital requirement and therefore a large portion of fixed cost.
Capacity also determines if demand will be satisfied or if facilities will be idle. The questions to
be asked are:

 Will these invesments eventually win customers ?

 What competitive advantage (such as process flexibility, speed of delivery, improved
quality, and so on) do we obtain ?
4. Location Strategies
Companies make location decisions relatively infrequently, ussualy because demand has out
grown the current plant’s capacity or because of changes in labor productivity, exchange rates,
costs, or local attitudes. Location options include:
1. Expanding an existing facility instead of moving
 2. Mainltaining current sites while adding another facility elsewhere
3. Closing the existing facility and moving to another location

The location decision often depends on type of business. For industrial location decisions, the
strategy is usually minimizing costs, although innovation and creativity may also be critical. For
retail and professional service organizations, the stratey focuses on maximizing revenue.
Warehouse location strategy, however, may be driven by combination of cost and speed of
delivery. The objective of location strategy is to maximize the benefit of location to the firm.

5. Layout Design
Layout has numerous strategic implications because it establishes an organization’s competitive
priorities in regard to capacity, processes, flexibility, and cost, as well as quality of work life,
customer contact, and image. An effective layout can help an organization achieve a stratey that
supports differentiation, low cost, or response. The objective of layout strategy is to develop an
effective and efficient layout that will meet the firm’s competitive requirements.
In all cases, layout design must consider how to achieve the following:
a. Higher utilization of space, equipment, and people
b. Improved flow of information, materials, or people
c. Improved employee morale and safer working conditions
d. Improved customer/client interaction
e. Flexibility

GOJEK Headquarter at Pasaraya Blok M

Source: https://www.arsitag.com/project/gojek-headquarter-at-pasaraya-blok-m

6. Human Resource and Job design

 The objective of a human resource strategy is to manage labor and design jobs so people
areeffectively and efficiently utilized. As we focus on human resources strategy, we want to
ensure that people:
1. Are efficiently utilized within the constraints of other operations management decisions.
2. Have a reasonable quality of work life in an atmosphere of mutual commitment and trust.

Mutual commitment means that both management and employee strive to meet common
objectives. Mutual trust is reflected in reasonable, document and employment policies that are
honestly and equitably implemented to the satisfaction of both management and employee.
When management has a genuine respect for its employees and thei contributions to the firm,
establishing a reasonable quality of work life and mutual trust is not particularly difficult.

Job Design

Specifies the tasks that constitute a job for an individual or a group. We examine five
components of job design:

1. Job specialization
2. Job expansion
3. Psychological component
4. Self directed teams
5. Motivation and incentive systems.

7. Supply Chain’s
Supply chain management is the integration of the activities that procure materials and services,
transform them into intermediate goods and final products, and deliver them to customers.
These activities includes determining:
1. Transportation vendors
2. Creadit and cash transfers
3. Suppliers
4. Distibutors
5. Accounts payable and receivable
6. Warehousing and inventory
7. Order fulfillment
8. Sharing customer, forcasting, and production information.

The objective is to build achain of suppliers that focuses on maximizing value to the ultimate
customer.

8. Just In Time (JIT)

Just in time (JIT) is an approach of continuous and forced problem solving via a focus on
throughput and reduced inventory. With JIT, materials arrive where they are needed only when
they are needed. By driving out waste and delay in this manner. JIT reduces costs associated
with excess inventory, cuts variability and waste, and improves throughput.
9. Short-term scheduling
Efficient scheduling is how companies meet due dates promised to customer and face time-
based competition. The strategic importance of scheduling is clear:
 Effective scheduling means faster movement of goods and sevices through a facility. This
means greater use of assets and hence greater capacity.
 Added capacity, faster throughput, and the related flexibility mean better customer
service through faster delivery.
 Good scheduling also contributes to realistic commitments and hence dependable
delivery.
10. Maintenance
The objective of maintenance and reliability is to maintain the capability of the system. Good
maintenance removes variability. Systems must be designed and maintained to reach expected
performance and quality standars. Maintenance includes all activities involved in keeping
system’s equipment in working order. Reliability is the probability that a machine part or
product will fuction properly for a specified ti e under stated conditions.

There are two of maintenance: preventive maintenance and breakdown maintenance.

Preventive maintenante involves performing routine inspections and servicing and keeping
facilities in good repair. And breakdown maintenance occurs when equipment fails and must be
repaired on an emergency or priority basis.