Business Optimization
Block 8
BOOM – Business Optimization
Week Subjects
Week 1 – In Control o Business Planning
o Logistics in Aviation
o 3-Flow-Model
o System Diagram
o Lean; Intro and VOC-VOB
o Lean; SIPOC
o In Control
o Balanced Score Card (BSC)
Week 2 – Strategy - Lean and DMAIC
and Lean Define - Thinking Lean 5-steps
Phase - Lean Wastes
- Lean tools introduction
- Strategy
- Critical Success Factors
Week 3 – KPI and o Measure Phase
Measuring o Measure Phase – Measuring
Performance o Lean and Six Sigma
Week 4 – Valuation - Analysis Phase
and Analysis Phase - Valuation
Week 5 – Cashflow o Cash Flow Statement
statement and o Improve Phase
improve phase o Shareholder Value
Week 6 – Control - Agile and Scrum
Phase / Agile and - Control Phase
Scrum - OCAP
Week 7 – Change o Resistance to change
Management o How to deal with resistance.
Week 8 – - No new content
1
, Business Optimization
Block 8
Week 1 – In Control
Business Planning
Six questions businesses need to ask themselves:
1. Where do we want to be?
2. Where are we now?
3. How do we get there? (Formulation and evaluation of
options).
4. Strategic choice.
5. Set out on the chosen route (implementation).
6. What progress are we making?
And overall: How will the competitors react?
Questions 2 and 6 are connected by using KPIs to measure the performance.
How to make profits:
Avoid Competitors, how to do that:
o Enter attractive industry, then build entry barriers. For example, making the
initial investment really high.
o Find attractive niche, develop isolating mechanisms. For example, create
something that is dependent on you as a business and cannot be copied.
o Join attractive strategic group, and build barriers against similar new entrants
to avoid internal competition. For example, make alliances.
Be better than competitors, examples:
o Cost advantage, this is what LCC do.
o Differentiation advantage. For example, providing a better service on specific
products.
Your business planning will always be a balance between the costs and profits (supply and
demand) of your assets (outputs).
However, starting a business, there are multiple risks present. For example:
Input Risk Financial Risk Product Market Risk
Input prices increase, Capital costs change, Customer loss,
Labor strikes, Exchange rate Product obsolescence,
Key employees changes, Competition
leave, Inflation, increases,
Supplier fails. Covenant violation, Product demand
Default on debt. decreases.
2
, Business Optimization
Block 8
Tax Risk Regulatory Risk Operational Risk
Income tax Environmental laws Machinery breaks
increases, change, down,
Industrial revenue Stricter antitrust Product defects
bonds end, enforcement, increase,
Sales tax increases. Price supports end, Weather destroys
Import protection plant,
ceases. Inventory obsolesces.
Legal Risk
Product liability,
Restraint of trade
charges,
Shareholders
lawsuits, Employee
discrimination
lawsuits.
When the risks are made, there will be multiple plans to choose from. These plans will be
compared in a ‘Risk/Reward Plans and Scenarios’ table.
This is used to compare different plans, and seeing the risks and rewards of each plan. It is
scored with the following: H = High, M = Medium, L = Low. The overall scores may be
based on sum of a weighted individual score for a number of rational criteria.
Example.
Risk Reward
Scenario 1 Scenario 2 Scenario 3 Scenario 1 Scenario 2 Scenario 3
Plan 1
Plan 2
Plan 3
Plan 4
Etc.
When a plan is chosen, KPIs need to be set up. This is done to support the business and
measuring if you are going in the right direction.
- Consider a wider perspective than just financial performance, the ‘balanced scorecard’
approach:
- Financial,
- External customer,
- Internal processes,
- Innovation and learning.
- Balancing
- The financial and the non-financial,
- The internal and the external,
- Current performances and future performances.
Logistics in Aviation
Logistics in aviation involves passengers or cargo. Their ability to quickly and reliably move
valuable resources over great distances improves the quality of life and standard of living of
people across the globe. It is continuously balancing between demand and supply.
3
Block 8
BOOM – Business Optimization
Week Subjects
Week 1 – In Control o Business Planning
o Logistics in Aviation
o 3-Flow-Model
o System Diagram
o Lean; Intro and VOC-VOB
o Lean; SIPOC
o In Control
o Balanced Score Card (BSC)
Week 2 – Strategy - Lean and DMAIC
and Lean Define - Thinking Lean 5-steps
Phase - Lean Wastes
- Lean tools introduction
- Strategy
- Critical Success Factors
Week 3 – KPI and o Measure Phase
Measuring o Measure Phase – Measuring
Performance o Lean and Six Sigma
Week 4 – Valuation - Analysis Phase
and Analysis Phase - Valuation
Week 5 – Cashflow o Cash Flow Statement
statement and o Improve Phase
improve phase o Shareholder Value
Week 6 – Control - Agile and Scrum
Phase / Agile and - Control Phase
Scrum - OCAP
Week 7 – Change o Resistance to change
Management o How to deal with resistance.
Week 8 – - No new content
1
, Business Optimization
Block 8
Week 1 – In Control
Business Planning
Six questions businesses need to ask themselves:
1. Where do we want to be?
2. Where are we now?
3. How do we get there? (Formulation and evaluation of
options).
4. Strategic choice.
5. Set out on the chosen route (implementation).
6. What progress are we making?
And overall: How will the competitors react?
Questions 2 and 6 are connected by using KPIs to measure the performance.
How to make profits:
Avoid Competitors, how to do that:
o Enter attractive industry, then build entry barriers. For example, making the
initial investment really high.
o Find attractive niche, develop isolating mechanisms. For example, create
something that is dependent on you as a business and cannot be copied.
o Join attractive strategic group, and build barriers against similar new entrants
to avoid internal competition. For example, make alliances.
Be better than competitors, examples:
o Cost advantage, this is what LCC do.
o Differentiation advantage. For example, providing a better service on specific
products.
Your business planning will always be a balance between the costs and profits (supply and
demand) of your assets (outputs).
However, starting a business, there are multiple risks present. For example:
Input Risk Financial Risk Product Market Risk
Input prices increase, Capital costs change, Customer loss,
Labor strikes, Exchange rate Product obsolescence,
Key employees changes, Competition
leave, Inflation, increases,
Supplier fails. Covenant violation, Product demand
Default on debt. decreases.
2
, Business Optimization
Block 8
Tax Risk Regulatory Risk Operational Risk
Income tax Environmental laws Machinery breaks
increases, change, down,
Industrial revenue Stricter antitrust Product defects
bonds end, enforcement, increase,
Sales tax increases. Price supports end, Weather destroys
Import protection plant,
ceases. Inventory obsolesces.
Legal Risk
Product liability,
Restraint of trade
charges,
Shareholders
lawsuits, Employee
discrimination
lawsuits.
When the risks are made, there will be multiple plans to choose from. These plans will be
compared in a ‘Risk/Reward Plans and Scenarios’ table.
This is used to compare different plans, and seeing the risks and rewards of each plan. It is
scored with the following: H = High, M = Medium, L = Low. The overall scores may be
based on sum of a weighted individual score for a number of rational criteria.
Example.
Risk Reward
Scenario 1 Scenario 2 Scenario 3 Scenario 1 Scenario 2 Scenario 3
Plan 1
Plan 2
Plan 3
Plan 4
Etc.
When a plan is chosen, KPIs need to be set up. This is done to support the business and
measuring if you are going in the right direction.
- Consider a wider perspective than just financial performance, the ‘balanced scorecard’
approach:
- Financial,
- External customer,
- Internal processes,
- Innovation and learning.
- Balancing
- The financial and the non-financial,
- The internal and the external,
- Current performances and future performances.
Logistics in Aviation
Logistics in aviation involves passengers or cargo. Their ability to quickly and reliably move
valuable resources over great distances improves the quality of life and standard of living of
people across the globe. It is continuously balancing between demand and supply.
3
