Week 3: Operational management
What are business processes? And what are related topics?
Business processes (= a set of organized human activities relating to the production of goods and/or
services)
- Example: purchasing, production, administration, marketing, and sales
-
- Types
o Primary processes (= all activities that contribute directly to the making of the
product)
Example: purchasing, producing, selling, and furnishing
o Secondary or supporting processes (= all activities that support the primary process)
Example: management of personnel, finances and data systems
o Administrative processes (= all activities that direct the primary and secondary
processes and help to reach the organization’s goal)
Tasks
Selection of strategy: During this process, a vision of the future is
agreed upon and a strategy is chosen. Strategies need some
flexibility and should anticipate fluctuations in demand for products
and services to avoid saturation of the market
Planning: To reach the goals set by the organization, primary and
secondary processes need to be coordinated. Planning the tasks
carried out by staff members, the means of production and how time
is scheduled increases control over the processes
Structure: This is the setting up of a system within an organization
enabling people and resources to be utilized
Process control: Processes can be executed in an appropriate and
purposeful way by planning, measuring, comparing and adapting the
business
Management of business processes (= leading the organization towards the goals that have been set)
- Conditions needed
o The targets should be unambiguously formulated, and ideally, formulated
quantitatively
Example: the development of a particular product under defined quality
standards, produced within a certain time span and at a fixed price
o The targets should be feasible
Example: sufficient manpower and means must be available
o It must be possible to influence the business process
Example: to accelerate development by putting in extra manpower and
resources
- Control activities
o Planning: There must be a plan for managing the processes. Such a plan should be
based on production norms and work standards
, o Measuring and comparing: This pertains to measuring of the business process and
comparing this with the norms and standards of the plan
o Adjustment: This pertains no steps that need to be taken if limitations are exceeded,
but if there is some deviation from the planned standards, intervention is necessary
Things that could be adjusted
The objectives
The strategy
The plans
The structure
The primary process
The secondary process
- Business re-engineering/business processes re-engineering (= the organizational process is
seen as a collection of core business processes that are related to each other)
o Core business process (= a number of linked activities that give extra value to the
buyer)
o Aim: to offer more added value to the buyer via a process orientation
o Basic principles that organizations need to uphold
The customer is the center of attention
Business re-engineering can be applied to all business processes
The improving of processes is a domestic affair
Business re-engineering must yield clear market results
Business re-engineering is a phased process
Business processes and added value
- Porter: a competitive advantage is obtained by lowering the costs of production or by
creating added value for products which the customers will pay extra for
o Based on the value chain (= all activities needed to offer a product to the market. The
value chain indicates the amount of value added by the various parts of the
organization to the whole)
Primary activities (= activities that add value directly to products)
Example: inbound logistics, operations (production), outbound
logistics, marketing and sales, and service
Support activities (= activities that create conditions required by the primary
processes, thus contributing indirectly to the value of the products)
Example: procurement, technological development, human
resources, and administrative infrastructure management
o Competitive advantage can be obtained in three ways
The first strategy is to run your operations against the lowest costs
The second strategy is based on product differentiation
Both the low cost and the differentiation strategy can be combined with a
segmentation strategy
Marcus & van Dam. Organization and management: an international approach. Chapter 8.
What is control and how does it work in organizations? And what is its function in management?
Control (= regulation of activities and behaviors within organizations; adjustment or conformity to
specifications or objectives)
- Basic elements
o Establish standards
Issues
How specific should they be?
Who should set them?
How difficult should they be to reach?
What are business processes? And what are related topics?
Business processes (= a set of organized human activities relating to the production of goods and/or
services)
- Example: purchasing, production, administration, marketing, and sales
-
- Types
o Primary processes (= all activities that contribute directly to the making of the
product)
Example: purchasing, producing, selling, and furnishing
o Secondary or supporting processes (= all activities that support the primary process)
Example: management of personnel, finances and data systems
o Administrative processes (= all activities that direct the primary and secondary
processes and help to reach the organization’s goal)
Tasks
Selection of strategy: During this process, a vision of the future is
agreed upon and a strategy is chosen. Strategies need some
flexibility and should anticipate fluctuations in demand for products
and services to avoid saturation of the market
Planning: To reach the goals set by the organization, primary and
secondary processes need to be coordinated. Planning the tasks
carried out by staff members, the means of production and how time
is scheduled increases control over the processes
Structure: This is the setting up of a system within an organization
enabling people and resources to be utilized
Process control: Processes can be executed in an appropriate and
purposeful way by planning, measuring, comparing and adapting the
business
Management of business processes (= leading the organization towards the goals that have been set)
- Conditions needed
o The targets should be unambiguously formulated, and ideally, formulated
quantitatively
Example: the development of a particular product under defined quality
standards, produced within a certain time span and at a fixed price
o The targets should be feasible
Example: sufficient manpower and means must be available
o It must be possible to influence the business process
Example: to accelerate development by putting in extra manpower and
resources
- Control activities
o Planning: There must be a plan for managing the processes. Such a plan should be
based on production norms and work standards
, o Measuring and comparing: This pertains to measuring of the business process and
comparing this with the norms and standards of the plan
o Adjustment: This pertains no steps that need to be taken if limitations are exceeded,
but if there is some deviation from the planned standards, intervention is necessary
Things that could be adjusted
The objectives
The strategy
The plans
The structure
The primary process
The secondary process
- Business re-engineering/business processes re-engineering (= the organizational process is
seen as a collection of core business processes that are related to each other)
o Core business process (= a number of linked activities that give extra value to the
buyer)
o Aim: to offer more added value to the buyer via a process orientation
o Basic principles that organizations need to uphold
The customer is the center of attention
Business re-engineering can be applied to all business processes
The improving of processes is a domestic affair
Business re-engineering must yield clear market results
Business re-engineering is a phased process
Business processes and added value
- Porter: a competitive advantage is obtained by lowering the costs of production or by
creating added value for products which the customers will pay extra for
o Based on the value chain (= all activities needed to offer a product to the market. The
value chain indicates the amount of value added by the various parts of the
organization to the whole)
Primary activities (= activities that add value directly to products)
Example: inbound logistics, operations (production), outbound
logistics, marketing and sales, and service
Support activities (= activities that create conditions required by the primary
processes, thus contributing indirectly to the value of the products)
Example: procurement, technological development, human
resources, and administrative infrastructure management
o Competitive advantage can be obtained in three ways
The first strategy is to run your operations against the lowest costs
The second strategy is based on product differentiation
Both the low cost and the differentiation strategy can be combined with a
segmentation strategy
Marcus & van Dam. Organization and management: an international approach. Chapter 8.
What is control and how does it work in organizations? And what is its function in management?
Control (= regulation of activities and behaviors within organizations; adjustment or conformity to
specifications or objectives)
- Basic elements
o Establish standards
Issues
How specific should they be?
Who should set them?
How difficult should they be to reach?
