ACCA Strategic Business Planning

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ACCA Strategic Business Planning Development

• Lecture 12
• Operations

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Learning Outcomes check

• At the end of this lecture you will
• Understand the importance of operations planning
• Have a knowledge of Business Process
  Re-engineering (BPR)
• Be able to apply the principles of benchmarking
• Understand the importance of quality

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Operations Planning

• The link between the strategy and the customer
• Link to mission
• Link to HRM
• Plans made for marketing, production,
  distribution and finance
• Links between aspects of operational activities
  (design, procurement and manufacturing)
• Can be problems with trying to produce an optimal
  plan

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Business Process Re-Engineering (BPR)

• Definition
• The fundamental rethinking and radical redesign
  of business processes to achieve dramatic
  improvements in critical contemporary measures of
  performance, such as cost, quality, service and
  speed
• (Hammer Champy)

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Principles of BPR (1)

• Processes should be designed from a clean sheet
  position
• Designs made to achieve a desired outcome
• People who use the output from a process should
  perform the process re-design
• Parallel activities should be linked rather than
  integrated

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Principles of BPR (2)

• Geographically dispersed resources should be
  treated as if they are centralised
• Empowerment of doers - allowed to self-manage
  their work
• Information processing should be included in the
  work that produces information
• Information should be captured once -at source

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Benchmarking

• Seeking to improve performance by emulating other
  firms
• The establishment, through data gathering, of
  targets and comparators through whose use
  relative levels of performance (and particularly
  areas of underperformance) can be identified. By
  the adoption of best practices it is hoped that
  performance will improve

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Types of Benchmarking (1)

• Competitive benchmarking information is
  gathered about direct competitors, through
  techniques such as reverse engineering
• Strategic benchmarking a type of competitive
  benchmarking aimed at strategic action and
  organisational change. The focus is on the
  performance of competing firms in the same
  industry

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Types of Benchmarking (2)

• Process benchmarking involves the exchange of
  data between two firms which are not in
  competition, but have similar processes
• Internal benchmarking compares one operating
  unit or function with another within the same
  industry
• Functional benchmarking internal functions are
  compared with those of the best external
  practitioners, regardless of the industry they
  are in (also known as Operational or Generic
  benchmarking)

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Advantages of Benchmarking

• The audit can asses a firms existing position
• Managers and employees cannot complain that best
  practice targets are unachievable - because other
  companies have achieved them
• Learning from the best performers and the best
  processes
• Focuses on improving key areas
• Can reduce competitive advantage

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Disadvantages of Benchmarking

• Must compare like with like
• Copying other firms (catching up!) may be a
  substitute for innovation (doing things in a
  different way)
• May represent yesterdays solution to tomorrows
  problem
• It depends on accurate information
• It implies there is one best way

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Steps in the Benchmarking Process

• Identify items to be benchmarked
• Identify suitable organisations for comparison
• Collect data by an appropriate method
• Determine the current performance gap
• Project future performance levels
• Tell people about the benchmark findings
• Establish goals for each business function
• Develop action plans
• Implement action plans
• Re-set benchmarks to a higher level to encourage
  continuous improvement

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Questions for Discussion

• Is your organisation involved in benchmarking?
• If so, how? What are the benefits?
• If not, can you suggest how it might improve
  performance through benchmarking?

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Production

• Obtain inputs add value create outputs
• Long and short term decisions
• Relationships with other functions
• Product design RD
• Job design HR
• Quantities to be produced Sales
• Managing workforce HR
• Resources for new equipment - Finance

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World Class Manufacturing(WCM)

• International manufacturing excellence using
• JIT Just in time manufacturing or
  pull-through
• Cellular layout multi-skilled staffing
• Advanced Manufacturing Technology (AMT)
• CAD Computer aided design
• CAM Computer aided manufacturing
• Zero defects a new approach to quality
• Continuous improvement

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Service Operations

• Service quality - vital element in businesses and
  public services
• Service Characteristics
• Intangibility
• Inseparability
• Perishability
• Variability
• Ownership

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Dimensions of Service Operations

• Tangibles,
• Reliability
• Responsiveness
• Communication
• Credibility
• Security

• Competence
• Courtesy
• Understanding customers needs
• Access

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Quality

• The totality of features and characteristics of a
  product or service which bears on its ability to
  meet stated or implied needs
• Fitness for use
• Important source of competitive advantage
• Traditionally monitored by inspection of finished
  output

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Developments in Quality

• Fitness for use - quality of design and quality
  of conformance
• Zero defect/right first time - concept of no
  defects in a finished product or service
• Design of systems and products
• Quality circles - Ishikawa proposed groups of
  selected workers to analyse the task and come up
  with ideas for improving it
• Quality Assurance - supplier guarantees of
  quality of goods or service. Now set in ISO, BS
  or Quality Award standards.

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Other Quality Concepts

• Total quality management (TQM) a culture aimed
  at continually improving performance in all
  functions of a company
• Statistical process control (SPC)
• Quality function deployment (QFD)
• Translate the voice of the customer
• Obey the customers voice
• Internal customers

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Introducing TQM

• Giving employees a say
• Greater discipline
• New relationships with suppliers
• Work standardisation
• Commitment over the long term
• All the organisation

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Purchasing and Material Management

• Importance of purchasing cost, quality and
  strategy
• Purchasing managers responsibilities
• Inputs for production
• Inputs for administration
• Cost control
• Liaison with RD
• Supplier management
• Obtaining information
• Maintain stock levels

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The Purchasing Mix

• Quantity
• Quality
• Price
• Delivery

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Supply Strategy

• Sources of supply
• Spread of supply
• Cost of supplies
• The outsourcing decision
• The suitability of the existing supplier
• The image or reputation of the supplier
• Building supplier relationships