Project is based on manufacture

1. 1
PROJECT REPORT
“A STUDY ON OPERATION MANAGEMENT”
At
HCL INFOSYSTEMS LTD.
NOIDA
Submitted towards partial fulfillment of the
Requirements for the award of the
PGDM Programme Approved by AICTE
(Equivalent to MBA)
ACADEMIC SESSION
Logo
Submitted to :- Submitted by:-

2. 2
Table of Contents
Acknowledgment ........................................................................................................... 5
1. INTRODUCTION....................................................................................................... 7
1.1. HCL an overview ................................................................................................. 7
1.2. HCL DNA: ............................................................................................................ 12
1.3. Employer spotlight:.......................................................................................... 13
HCL in India:.................................................................................................................. 14
1.4. About HCL........................................................................................................... 15
1.6. VISION STATEMENT ........................................................................................ 16
1.7. MISSION STATEMENT..................................................................................... 16
1.8. QUALITY POLICY STATEMENT .................................................................... 16
1.9. OUR OBJECTIVE............................................................................................... 17
OUR MANAGEMENT OBJECTIVE............................................................................ 17
OUR PEOPLE OBJECTIVE ........................................................................................ 17
1.10. CORE VALUES............................................................................................... 17
1.11. A SNAPSHOT OF HCL Infosystems Ltd.................................................. 18
FRONTLINE DIVISION................................................................................................. 19
2. Literature Review.................................................................................................. 20
Four Types of Focus Dimensions Used in Operations Management............ 20
Finance.......................................................................................................................... 20
Customers ..................................................................................................................... 20
Internal Processes.......................................................................................................... 21
Learning and Innovation............................................................................................... 21
2.1. An Introduction of Operation Management ............................................... 45
2.1.1. What is Operation management? ............................................................. 45
2.1.2. Why is it important? ..................................................................................... 45
2.1.3. Critical factors for success ........................................................................ 46
2.1.4. Who is involved?........................................................................................... 46
2.1.5. Principles......................................................................................................... 46
2.1.6. Managing for results .................................................................................... 47
2.2. Levels of Operation management ................................................................ 47
2.3. Value for money ................................................................................................ 48

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2.4. Measures and metrics ..................................................................................... 49
2.4.1. Business processes can be distinguished by: ..................................... 49
2.5. Processes............................................................................................................ 50
2.6. Objectives of a Operation Management System ...................................... 54
2.7. Overall Goal and Focus of Operation Management ................................ 55
2.8. Operation Improvement of the Organization or a Subsystem is an
Integrated Process....................................................................................................... 55
2.9. Ongoing Activities of Operation Management.......................................... 55
2.10. Basic Steps ..................................................................................................... 56
2.11. Operation management mainly include following things: ................. 58
2.11.1. Planning ....................................................................................................... 59
2.11.2. Monitoring.................................................................................................... 60
2.11.3. Developing Employees ........................................................................... 60
2.11.4. Rating............................................................................................................ 61
2.11.5. Rewarding.................................................................................................... 61
2.12. Managing Operation Effectively................................................................ 62
2.13. Features of a Good Operation Management System .......................... 62
2.13.1. Competency-Based................................................................................... 63
2.13.2. A Continuous Process ............................................................................. 64
2.13.3. Operation planning.................................................................................... 65
2.13.4. Continuous coaching and development ............................................. 65
2.13.5. Interim review ............................................................................................. 66
2.13.6. Operation appraisal................................................................................... 67
2.13.7. To maintain an open system .................................................................. 67
3. PROJECT ................................................................................................................ 69
3.1. Objective of the Project – Introduction of the Problem.......................... 69
3.1.1. Secondary objective..................................................................................... 69
3.2. Significance of the Project ............................................................................. 69
3.3. Definition - A Theoretical Perspective......................................................... 70
3.4. Preparation and Planning for Operation management........................... 71
3.5. Operation Management and Development................................................. 71
3.6. Operation Assessment and Development Plan In HCL INFOSYSTEMS
LTD. 72
3.6.1. Prior to filling the form please read carefully Instructions to the
Appraiser........................................................................................................................ 72

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3.6.2. Operation appraisal guidelines ................................................................. 72
3.6.2.1. Appraisal procedure ................................................................................. 72
3.6.2.2. The Form And Its Contents..................................................................... 73
4. RESEARCH METHODOLOGY............................................................................ 76
Introduction.......................................................................................................................... 77
What approach should I take - qualitative or quantitative? .......................................... 77
Can my dissertation be entirely literature-based? ......................................................... 79
What is case study research?........................................................................................... 80
What's an empirical study? ............................................................................................... 80
What is secondary analysis? ............................................................................................ 81
Where do I find existing research data?.......................................................................... 81
Collecting you own data - primary research ................................................................... 81
Will my research be inductive or deductive? .................................................................. 85
What's all this about research design?............................................................................ 85
Summary.............................................................................................................................. 86
Key Questions..................................................................................................................... 87
4.1. Research Design............................................................................................... 89
4.2. Data Collection Method................................................................................... 90
4.3. Analysis of PMS – Processes & Components .......................................... 91
4.3.1. Planning........................................................................................................... 91
4.3.2. Monitoring ....................................................................................................... 92
4.3.3. Developing Employees................................................................................ 93
4.3.4. Rating ............................................................................................................... 94
4.3.5. Action Based Operation .............................................................................. 95
4.3.6. Analysis ........................................................................................................... 96
4.3.7. Effectiveness.................................................................................................. 96
5. RECOMMENDATIONS ......................................................................................... 98
5.1. Recommendations............................................................................................ 98
6. CONCLUSION ........................................................................................................ 99
7. BIBLIOGRAPHY................................................................................................... 100

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Acknowledgment
The project of this nature is arduous task stretching over a period of time, completing a
project like this one takes the effort and cooperation of many people.
Although this project report is being brought in my name, it bears an imprint of guidance
and cooperation of many individuals. Several persons with whom I integrated have
contributed significantly to the successful completion of the project study. In the
successful & trouble free completion of my final term project titled “OPERATION
MANAGEMENT”, I am graceful to Institute of Management and Technology,
Ghaziabad for helping us towards the completion of the project.
I extend my deepest and sincere thanks to my project guide, Mr. Ram Krishn and other
HR Executives HCL Info systems Ltd. for the unflinching support and guidance
throughout the project
I would also like to thank all the executives who shared their precious time and
experience with me.
Last but not the least, I extend my sincere thanks to all the staff members of HCL
Infosystems Ltd. for their cooperation.

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Executive summary
Operation management is the process of bringing people in to the organization making
very sure that new entrants have the potential and willingness to contribute to
organizational success. In today’s scenario without effective Operation management the
organization will meet the considerable resistance when introducing change. Without
organizational change and development survival become very uncertain so in order to
make the industry survive it is very important to adopt the different Operation
management practices in all organizations so as to understand the employees or workers
need and satisfy them. There should be effective people utilization in every industry. All
these practices in an organization will make the organization to grow at a faster speed.
The study will be empirical and primary research will be done by using the questionnaire
which will administer to sales, service and support function employee. The date will be
collected and assimilated by using statistical tool like median and date will be analyzed
by using Bar Chart. The analysis will be to find the effectiveness of current PMS.

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1. INTRODUCTION
1.1. HCL an overview
Born in 1976, HCL has a 3-decade rich history of inventions and innovations. In 1978,
HCL developed the first indigenous microcomputer at the same time as Apple and 3
years before IBM's PC. During this period, India was a black box to the world and the
world was a black box to India. This microcomputer virtually gave birth to the Indian
computer industry. The 80's saw HCL developing know-how in many other technologies.
HCL's in-depth knowledge of Unix led to the development of a fine grained multi-
processor Unix in 1988, three years ahead of Sun and HP.
HCL's R&D was spun off as HCL Technologies in 1997 to mark their advent into the
software services arena. During the last eight years, HCL has strengthened its processes
and applied its know-how, developed over 30 years into multiple practices - semi-
conductor, operating systems, automobile, avionics, bio-medical engine HCL's R&D was
spun off as HCL Technologies in 1997 to mark their advent into the software services
arena. During the last eight years, HCL has strengthened its processes and applied its
know-how, developed over 30 years into multiple practices - semi-conductor, operating
systems, automobile, avionics, bio-medical engineering, wireless, telecom technologies,
and many more.
Today, HCL sells more PCs in India than any other brand, runs Northern Ireland's largest
BPO operation, and manages the network for Asia's largest stock exchange network apart
from designing zero visibility landing systems to land the world's most popular airplane.

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.
1976 Hindustan Computers Limited (HCL) born.
1977 Distribution alliance formed with Toshiba for copiers.
1978 HCL successfully ships in-house designed microcomputer at the same time as
Apple. The Indian computer industry is born.
1980 HCL introduces bit sliced, 16-bit processor based microcomputer.
1983 Indigenously develops an RDBMS, a Networking OS a Client Server architecture,
at the same time as global IT peers.
1986 HCL becomes the largest IT Company in India.
1988 HCL introduces fine-grained multi-processor Unix-3 years ahead of “Sun” and
“HP”.

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1990 Data Quest marks HCL No.1 amongst top ten computer giants.
1991 HCL Ltd. and Hewlett Packard, USA, partner to form HCL-Hewlett Packard Ltd.
JV develops multi-processor Unix for HP-heralds HCL’s entry into contract
1994 Distribution alliances formed with Ericsson Switches and Nokia Cell phones.
1997 HCL Info systems are formed. HCL's R&D spun-off as HCL Technologies-
marks advent into software services. JV with Perot Systems, stake divested in 2003.
1999 Initial Public Offering made by HCL Technologies Ltd.Formation of Global
Board of Directors.
2000 Large contracts won from Bankers Trust, KLA Tenor, Cisco, GTech, NEC among
others.
2001 JV with Deutsche Bank- DSL software formed. HCL BPO Incorporated.
Acquired British Telecom Apollo’s contact center in Belfast, Northern Ireland. HCL Info
systems become largest hardware company.
2002 Strong pursuit of nonlinear strategy to widen services portfolio; several JVs and
alliances formed. Strategic alliance forged with Jones Apparel Group, Inc. a fortune 500
company. Infrastructure services division launched to address emerging global needs.
Software businesses of HCL Info systems and HCL Technologies merged.
2003 Largest BPO order ever outsourced to an Indian BPO firm, won from British
Telecom. Landmark deals signed with Airbus and AMD. HCL manpower crosses the
20,000 mark..
2004 Accorded leader status by Meta Group in Offshore Outsourcing. HCL is India’s
No.1 PC 4th year in a row.

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2005
 HCL signs Software Development Agreement with Boeing for the 787 Dream
liner program.
 JV with NEC, Japan
 HCL sets up first Power PC architecture design center outside of IBM.
 Completes buy-out of JVs with Deutsche Bank and British Telecom Apollo
Contact Center.
 HCL integrates all group employees under HCL in domain.
 Sets up a dedicated Offshore Design Center for leading Tier-1 Aerospace
supplier, Hamilton Sundstrand.
 HCL Info systems launches sub Rs.10, 000 PC. Joins hands with AMD, Microsoft
to bridge the digital divide.
2006
 75,000+ machines produced in a single month.
 HCL Info systems in partnership with Toshiba expand its retail presence in India
by unveiling 'shop Toshiba'.
 HCL Info systems & Nokia announce a long-term distribution strategy.
 HCL the leader in Desktops PCs unveils India's first segment specific range of
notebooks brand - 'HCL Laptops'.
 HCL Info systems showcase Computer Solutions for the Rural Markets in India.
 HCL Support wins the DQ Channels-2006 GOLD Award for Best After Sales
Service on a nationwide customer satisfaction survey conducted by IDC.
 HCL AND ZEE - Dish TV team up to take DTH TV to its next level of growth in
India
 HCL Info systems First in India to Launch the New Generation of High Operation
Server Platforms Powered by Intel Dual - Core Xenon 5000 Processor.

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 HCL Forms a Strategic Partnership with APPLE to provide Sales & Service
Support for iPods in India.
HCL is one of the leading global Technology and IT enterprises with annual revenues of
US$ 4 billion. The HCL Enterprise comprises two companies listed in India, HCL
Technologies (http://www.hcltech.com/) and HCL Info systems
(http://www.hclinfosystems.in/)
The 30 year old enterprise, founded in 1976, is one of India's original IT garage start ups.
Its range of offerings span R&D and Technology Services, Enterprise and Applications
Consulting, Remote Infrastructure Management, BPO services, IT Hardware, Systems
Integration and Distribution of Technology and Telecom products in India. The HCL
team comprises 45,000 professionals of diverse nationalities, operating across 17
countries including 360 points of presence in India. HCL has global partnerships with
several leading Fortune 1000 firms, including several IT and Technology major.

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1.2. HCL DNA:
Fueled by the entrepreneurial zeal of its founders, HCL developed the first indigenous
microcomputer in 1978, at the same time as Apple. Since then, HCL has had a 3-decade
rich history of inventions and innovations. Entrepreneur is the term that best describes the
HCL employees. The TIME magazine has referred to HCL as an "intellectual clean room
where its employees could imagine endless possibilities."
Ever since HCL entered into an alliance in 1970s, partnerships and HCL have been
inseparable. Bonds have been forged with partners to co-create value. Strong inorganic
growth is a testimony to the spirit of partnerships.
This entrepreneurial and win-win relationship driven culture continues to guide HCL in
all its endeavors.

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1.3. Employer spotlight:
HCL is one of India’s leading global IT Services companies, providing software-led IT
solutions, remote infrastructure management services and BPO. Having made a foray into
the global IT landscape in 1999 after its IPO, focuses on Transformational Outsourcing,
working with clients in areas that impact and re-define the core of their business. The
company leverages an extensive global offshore infrastructure and its global network of
offices in 16 countries to deliver solutions across select verticals including Financial
Services, Retail & Consumer, Life Sciences Aerospace, Automotive, Semiconductors,
Telecom and MPE (Media Publishing & Entertainment)

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HCL in India:
HCL has evolved from a dream of eight youngsters in 1977 to the country's top IT group
today. Our well-balanced portfolio of turnkey solutions across equipments, software and
services make our offerings end-to-end for all IT needs of the Indian customers. Our
recognitions speak of our dominant position in India. V&D100 2005, No. 1 Security
service provider in India by DQ Annual 2004, No.1 Infra service provider by CMP 2005,
and No.1 PC Brand recognize us as No.1 Network Management service provider in India
for the last 5 years in India.
HCL is known to be the harbinger of technology in the country. Our partnerships with
technology leaders like JDA, Oracle, SAP, KANA, Intel, and Microsoft go back to the
time when India was being recognized as a growing and strategic market. Along with
global capability, HCL has leveraged such relationships to create value for Indian
customers - the comprehensive integrated market surveillance solution for SEBI being
one such example.
Our services are backed by an extensive direct support infrastructure spread across 170
locations nationwide, which offer 24-x7 support offering for critical sites. With more than
70 SAP implementations till date, HCL has been rendering service to key Indian players
in Banking, Retail and Government.
We are committed to the Indian Market and will continue to invest more to further enrich
our end-to end IT offerings for this market. Our flexible engagement models, rich
heritage of technology solutions and over 29 years of leadership across service areas give
us a strategic advantage to meet the nation's IT needs.

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1.4. About HCL
HCL Enterprise is a leading Global Technology and IT enterprise that comprises two
companies listed in India - HCL Technologies & HCL Info systems. The 3-decade-old
enterprise, founded in 1976, is one of India’s original IT garage start-ups. Its range of
offerings span Product Engineering, Technology and Application Services, BPO,
Infrastructure Services, IT Hardware, Systems Integration, and distribution of ICT
products. The HCL team comprises approximately 42,000 professionals of diverse
nationalities, who operate from 16 countries including 300 points of presence in India.
HCL has global partnerships with several leading Fortune 1000 firms, including leading
IT and Technology firms. HCL Technologies is one of India’s leading global IT Services
companies, providing software-led IT solutions, remote infrastructure management
services and BPO. Having made a foray into the global IT landscape in 1999 after its
IPO, HCL Technologies focuses on Transformational Outsourcing, working with clients
in areas that impact and re-define the core of their business. The company leverages an
extensive global offshore infrastructure and its global network of offices in 16 countries
to deliver solutions across select verticals including Financial Services, Retail &
Consumer, Life Sciences Aerospace, Automotive, Semiconductors, Telecom and MPE
(Media Publishing & Entertainment). For the quarter ending 31st December 2006, HCL
Technologies, along with its subsidiaries had revenue (TTM) of US $ 1.155 billion (Rs.
5220 crore) and employed 38,317 professionals.

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1.5. Strong SAP Capabilities:
HCL Technologies is one of the largest global SAP service providers in India, providing
a spectrum of SAP services. HCL Technologies has developed strong capabilities on the
SAP Net Weaver platform and drives market demand in the SAP world through unique
market propositions and upgrade offerings to my SAP ERP. HCL is a value added
reseller and services partner across multiple geographies. With a track record of
successful engagement in this space, HCL has received prestigious awards from SAP -
distinguished partner award 2005, best my SAP HCM implementation award 2005, Sap’s
"outstanding partner” award for implementation/upgrade project 2004, and more.
Forrester has lauded HCL Technologies is one of a number of firms in this space and is a
viable candidate for multinational firms that are contemplating global outsourcing and are
interested in SAP implementation and maintenance services.
1.6. VISION STATEMENT
 Together we create enterprises of tomorrow.
1.7. MISSION STATEMENT
 To provide world class information technology solution and services to enable our
customers to serve their customer better’.
1.8. QUALITY POLICY STATEMENT
 “We will deliver defect-free products, service and solutions to meet the requirements
of our external and internal customers the fist time, every time.’

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1.9. OUR OBJECTIVE
OUR MANAGEMENT OBJECTIVE
 To fuel initiative and foster active by allowing individuals freedom of action and
innovation in attaining defined objectives.
OUR PEOPLE OBJECTIVE
 To help HCL Infosystem people share in the company’s success, which they make
possible to provide job security based on their Operation; to recognize their individual
achievements and to help them gain a sense of satisfaction and accomplishment from
their work.
1.10. CORE VALUES
 We shall uphold the dignity of individual
 We shall honor all commitments.
 We shall be committed to Quality. Innovation and growth in every endeavor.
 We shall be responsible Corporate Citizens.

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1.11. A SNAPSHOT OF HCL Infosystems Ltd.
 India’s leading IT company
HCL In say is India’s largest information technology (IT), transnational conglomerate.
With its-depth expertise in developing solution spanning diverse technologies.
 HCL Insys aims to propel its course on to the high growth Path total Technology
Integration. Towards capturing two Ends of market spectrum - enterprise solution and
PCs.
HCL Insys has made significant strategic infrastructure investments in the professional
services Organization (PSO), the Support Services Organization (SSO) and its
manufacturing plant at Pondicherry. Thus it is the manufacturer of general purpose
computer and provides services in the areas of IT Consultancy, system integration,
Software Development and Training.
 It makes true technology integration possible across multiple platforms, this was
possible because of the in-depth expertise in developing state-of-the-art indigenous
hardware solution; thorough understanding of networking technology.
 As a part of this plan to market more and more technology integration services world-
wide, HCL in sys has already taken a step in the direction of export by localizing its
service comprising software, hardware design and development, value added support
service networking abs repair services and overseas integration projects to meet the
demands of the global clients.
Company’s continuous and consistent anticipation of the requirement of the IT Industry
has led it to undertake the acquisition of the business of HCL Info solutions limited (now
known as Frontline Division), HCL Peripherals Limited (now known the acquisition of
Customer Support Organization (CSO) activities of HCL Office Automation Limited
(now know as office Automation Division)

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FRONTLINE DIVISION
Frontline Division, formerly HCL Info solution Ltd. (HCL Insol) started with the aim of
increasing market penetration by handing segments not covered by HCL Insys and
creating new niches. Today it specializes.

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2. Literature Review
Operations management is an area of management concerned with overseeing,
designing, and controlling the process of production and redesigning business
operations in the production of goods or services.
Four Types of Focus Dimensions Used in Operations Management
Every business operates along four basic focus dimensions: finance, customers, internal
processes, and learning and innovation. These theoretical divisions of operations
management come from the research of Robert S. Kaplan and David P. Norton. The
dimensions aren’t mutually exclusive. For example, employees who become more
competent through learning can improve the functioning of internal processes, according
to “Management Principles: A Contemporary Edition for Africa,” by P. J. Smit.
Finance
The heart of the financial dimension for most businesses is profit, though short-term
financial goals might entail sacrificing current profits to increase future capacity. For
example, a company might decide to reinvest all its profits into new and better machinery
to increase production capacity and efficiency, but the ultimate goal remains greater
profit. Managers must control the flow of money through the organization to ensure
short-term goals align with long-term goals.
Customers
Customers are the foundation of your business. Without the flow of their money through
your organization, everything grinds to a halt. Managers aim to maximize the flow of
customer money, but that doesn’t always mean securing as many customers as possible.
A boutique hotel, for example, might focus on serving relatively few high-paying
customers, while a chain hotel focuses on the wide swath of people who are unwilling to

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pay high prices. Though each business targets customers who have different needs,
meeting those needs is equally vital to their profitability.
Internal Processes
Optimization of internal processes leads to greater profitability and customer satisfaction.
For example, a manager might focus on developing efficient communications within an
organization to ensure orders travel quickly from the customer service department to the
production line. The manager further expedites the order by ensuring the production
department syncs with the shipping department to get the order to the customer quickly.
Fine-tuning the process to make it maximally efficient keeps operating costs low and
pleases customers, leading to greater profits.
Learning and Innovation
Technology progresses and so must businesses. An invention that improves a
manufacturing process, for example, might be a game changer that forces factories to
upgrade their processes or lag behind competitors. A good manager stays abreast of
technological shifts; a great manager anticipates and initiates change by encouraging her
organization to focus on learning and innovation. Practically, this can mean anything
from having a well-funded research-and-development team to paying for continuing
education for employees. An organization that surmounts cognitive limitations stays one
step ahead of its competitors.
Understanding operations management Consider the ingredients of your breakfast this
morning. Unless you live on a farm and produced them yourself, they passed through a
number of different processing steps between the farmer and your table.
Every organization has an operations function, whether or not it is called ‘operations’.
The goal or purpose of most organizations involves the production of goods and/or
services. Operations in some form has been around as long as human Endeavour itself
but, in modern manufacturing and service industry at least, it has changed dramatically
over time.

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To some (especially those professionally involved in operations management!) operations
management involves everything an organization does. In this sense, every manager is an
operations manager.
Operations management definitions
There are many differing definitions of operations management; we have picked a range
for you to look at below. Depending on your specific area of operations management,
some may suit your role or understanding better, but overall they all make a similar point.
· The efficient and effective implementation of the policies and tasks necessary to
satisfy an organization’s customers, employees, and management (and
stockholders, if a publicly owned company)
· The management of systems or processes that create goods and/or provide
services
"The on-going activities of designing, reviewing and using the operating system, to
achieve service outputs as determined by the organization for customers" (Wright, 1999)
· Management of main business activity: the organizing and controlling of the
fundamental business activity of providing goods and services to customers
· Operations management deals with the design and management of products, processes,
services and supply chains. It considers the acquisition, development, and utilisation of
resources that firms need to deliver the goods and services their clients want.
· The purvey of operations management ranges from strategic to tactical and operational
levels. Representative strategic issues include determining the size and location of
manufacturing plants, deciding the structure of service or telecommunications networks,
and designing technology supply chains.
· Tactical issues include plant layout and structure, project management methods, and
equipment selection and replacement. Operational issues include production scheduling
and control, inventory management, quality control and inspection, traffic and materials
handling, and equipment maintenance policies.
· Operations management is an area of management concerned with overseeing,
designing, controlling the process of production and redesigning business operations in
the production of goods and/or services. It involves the responsibility of ensuring that

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business operations are efficient in terms of using as few resources as needed, and
effective in terms of meeting customer requirements. It is concerned with managing the
process that converts inputs (in the form of materials, labor and energy) into outputs (in
the form of goods and/or services).
IOM would like to thank Derek Thomason FIOM, Unipart Expert Practices, for
sharing examples and information contained in this section for the benefit of IOM
members and those interested in learning more about what operations management
is.
So what does it means?
What exactly does this mean in real terms? What kinds of tasks, roles and responsibilities
do people working in operations management have?
Forecast demand
– Market product
– Adapt to comply with customer demand
– Understand what the customer wants
– Understand how much the customer wants
– Set targets (timescales)
– Know product demand
– Measuring standards
– Produce sales invoices / solve customer disputes
– Measure outputs
– Plan production and timescales
Sourcing and procurement
– Order materials
– Negotiate price
– Check delivery with order
– Reconcile invoice with correct supplier statement
– Pay on time
– Buy supplies
– Order materials
– Stock control

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– Buying resources and allocating
– Inventory / stock control
– Schedule suppliers
– Managing stock (getting it in the right place at the right time)
– Locating and procuring supplies
– Pay suppliers
Creation of output
– Managing budgets
– Cost implications
– Buy cost effective materials
– Replenish inventories
– Arrange for necessary equipment
– Schedule material / staff / equipment to produce goods and services
– Plan ‘work order’
– Produce product
– Produce goods
– Converting supplied materials (adding value)
– Quality control
– Measure conformance / quality
Delivery
– Customer satisfaction
– Deliver finished products
– Consider logistics / delivery
– Arrange delivery to customer
– Dispatching the goods or service to the customer
– Arrange packaging / presentation
Managing people <sub heading>
– Employ people
– Train people
– Implementing and timescales
– Outsource

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– Delegation
– Managing people
– Recruit and train staff
– Schedule labour
Brief history of operations management
Pre 18th century
Agriculture was the predominant industry in every country
Industrial Revolution 1770–1830
– Economy based on manual labour was replaced by one dominated by industry and the
manufacture of machinery
– The development of all-metal machine tools in the first two decades of the 19th century
facilitated the manufacture of more production machines powered by steam or wate
(James Watt, 1785)
Second Industrial Revolution (around 1850)
– Development of steam-powered ships, railways, and later in the nineteenth century with
the internal combustion engine and electrical power generation
– Introduction of Frederick W. Taylor's systematic approach to scientific management at
the beginning of the twentieth century (1911)
– Henry Ford, father of the moving assembly line, brought the world into an age centred
around the mass production of goods (1920)
Post WWII
– Leverage of management science techniques that were developed in the war
– Growth in power of computers
– Japanese Toyota Production System (TPS) based on three principles:
1. Quality
2. Continual Improvement
3. Elimination of waste
Late 1950s and early 1960s
– Move from industrial engineering and operations research into production
management

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– Production management becomes a professional field as well as an academic
discipline
– Major world economies evolving into the service arena:
o service jobs outnumber manufacturing jobs
o productivity increases much more difficult to achieve
– Operations techniques begin to be incorporated into services -the term
production/operations management comes into use
Today
– Environmental and social awareness
Types of operations management
Every organisation has an operations function, whether or not it is called ‘operations’.
The goal or purpose of most organisations involves the production of goods and/or
services. These pages provide you with an idea of the sorts of tasks and processes that
relate to operations management within each of the following industry types.
– Manufacturing products
– Providing insurance cover
– Providing healthcare
– Government
– Armed Forces – peace keeping
– OXFAM – bringing relief
Manufacturing products
Managing operations
– Receiving requirements
– Procuring raw materials
– Recruiting and retaining staff
– Budgeting and cash management
– Meeting Health, Safety and Legal requirements
– Planning resources
– Improving quality, cost and delivery
– Procuring / managing assets
– Defining policies and procedures

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– Making products
– Storing and distributing products
– Negotiations
– Provide training
– Plan raw materials
– Process raw materials
– Make intermediates
– Process copy (for Control)
– Printing
– Quality control
– Recycling / rework
Providing insurance cover
Managing operations
– Receiving requests for cover
– Assessing / reassess risk
– Answering customer enquiries
– Undertaking competitor reviews
– Processing claims
– Making payments
– Recruiting and retaining staff
– Budgeting and cash-flow management
– Meeting Health, Safety and Legal requirements
– Planning resources
– Improving quality, cost and delivery
– Customer care process
– Accredit repairers
– Forecast demand
– Process applications
– Process renewals
– Calculate no claims bonuses
– Arrange repairs

28. 28
– Send out certificates / reminders
– Send out claims forms
Providing healthcare
Managing operations
– Obtaining finance
– Project / programme Management
– Recruiting and retaining staff
– Sourcing and procuring supplies
– Responding to emergencies
– Scheduling patient operations
– Controlling infection
– Providing post operative care
– Capacity planning (bed / theatre management)
– Quality control / track and trace
– Dispatch ambulance
– Inform hospital of arrival
– Inform stakeholders
– Contact theatre team
– Provide interim care – stabilise patient
– Prepare resource (theatre)
– Kitting for operations
– Resource planning (ITU / ward)
– Plan diagnostics resources
– Liaise with other department
– Deploy ambulance
Government
Managing operations
– HMRC
o Process tax forms
o Investigate errors
o Prosecute offenders

29. 29
o Labour planning
– Social Services
o Assessing risk
o Providing support services
– Emergency Services
o Capacity planning
o Resource deployment
– Central Government
o Generate new laws
o Influence people
o Process claimants
o Allocate resources according to need
o Educate and train people
Armed Forces
Managing operations
– Training and development
– Contingency planning
– Capital investment and programme management
– Logistics (soldiers and materials)
– Supply chain management
– Returns management
– Deployment
– Measurement and control
– Manage budgets and costs
– Stakeholder management
– Manage people
– Manage resources (equipment and materials)
– Management of maintenance
OXFAM
Managing operations
– Generate funds

30. 30
– Contingency planning
– Material and labour planning
– Forecast demand
– Source and procure non-perishables
– Response time management
– What-if and scenario planning
– Deploying aid (people and materials)
– Transport to site of disaster
– Enabling sustainability
– Distribute to people in need
– Plan for short term and longer term sustainability
– Conduct risk assessment
– Skills assessment / training
– Manage shops
– Run collections / donations
– Receive goods and price in shops

31. 31
What do operations managers do?
Strategic (long term) Level
– Responsible for, and decisions about:
o What to make (product development)
o How to make it (process and layout decisions) – or should we buy it?
o Where to make it (site location)
o How much is needed (high level capacity decisions)
Tactical Level (intermediate term)
– Address material and labour resourcing within strategy constraints, for example:
o How many workers are needed and when (labour planning)
o What level of stock is required and when should it be delivered
(inventory and replenishment planning)
o How many shifts to work. Whether overtime or subcontractors are
required (detailed capacity planning)
Operational Level
– Detailed lower-level (daily/weekly/monthly) planning, execution and control
decisions, for example:
o What to process and when (scheduling)
o The order to process requirements (sequencing)
o How work is put on resources (loading)
o Who does the work (assignments)

32. 32
What skills do operations managers need?
Have knowledge of:
– advanced operations technology and technical knowledge relevant to his/her industry
– interpersonal skills and knowledge of other functional areas
– the ability to communicate effectively, motivate other people, manage projects, and
work on multidisciplinary teams
Multi-disciplinary working, for example:
– Supply chains – management of all aspects of providing goods to a consumer from
extraction of raw materials to end-of-life disposal
– The interface with marketing – determining what customers' value prior to
product/service development
– Operations management/finance interface – capital equipment and inventories comprise
a sizable portion of many firms' assets in addition to normal operating costs
– Service operations – coping with inherent service characteristics such as simultaneous
delivery/consumption, performance measurements, etc
– Operations strategy – consistent and aligned with other strategies and legal
requirements
– Process design and improvements – managing the innovation process

33. 33
Issues facing operations managers
Major issues are:
– Environmental sustainability, recycling , reuse
– Counter terrorism / risk management
– Globalisation of supply and demand
– Reducing time to market
– Achieving and sustaining high quality while controlling cost
– Integrating new technologies and control systems into existing processes
– Obtaining, training, and keeping qualified workers and managers
– Working effectively with other functions to accomplish the goals
– Integrating production and service activities at multiple sites in decentralized
organisations
– Working effectively with suppliers and customers
– Strategic alliances
All these are critical issues. Operations management is at the very core of most
organisations. We can no longer focus on isolated tasks and processes but must be
one of the architects of the overall business operating model.

34. 34
Another language???
There are lots of words and terms used in operations management, many of which are
explained in full in the IOM’s Knowledge Bank. Members can login to the members’
area to find out what these terms mean in full.
– World class
– S&OP (Sales and Operations Planning)
– Six Sigma
– Lean vs agile
– KPIs
– Master scheduling
– MRP
– Processes
– TPS (Toyota Production System)
– Theory of constraints
– Balanced scorecard
– DRP
– Kaizen
– TPM
– Change management
– Continuous improvement
– Planning and scheduling
– ERP systems

35. 35
Operations management is an area of management concerned with overseeing,
designing, and controlling the process of production and redesigning business
operations in the production of goods or services. It involves the responsibility of
ensuring that business operations are efficient in terms of using as few resources as
needed, and effective in terms of meeting customer requirements. It is concerned with
managing the process that converts inputs (in the forms of raw materials, labor,
and energy) into outputs (in the form of goods and/or services).[1]
The relationship of
operations management to senior management in commercial contexts can be compared
to the relationship of line officersto highest-level senior officers in military science. The
highest-level officers shape the strategy and revise it over time, while the line officers
make tactical decisions in support of carrying out the strategy. In business as in military
affairs, the boundaries between levels are not always distinct; tactical information
dynamically informs strategy, and individual people often move between roles over time.
Ford Motor car assembly line: the classical example of a manufacturing production
system.
Post office queue. Operations management studies both manufacturing and services.
According to the United States Department of Education, operations management is the
field concerned with managing and directing the physical and/or technical functions of
a firm or organization, particularly those relating to development, production, and
manufacturing. Operations management programs typically include instruction in
principles of general management, manufacturing and production
systems, factory management, equipment maintenance management, production control,
industrial labor relations and skilled trades supervision, strategic manufacturing
policy, systems analysis, productivity analysis and cost control, and materials
planning.[2][3]
Management, including operations management, is like engineering in that
it blends art with applied science. People skills, creativity, rational analysis, and
knowledge of technology are all required for success.

36. 36
History
The history of production and operation systems began around 5000 B.C.
when Sumerian priests developed the ancient system of recording inventories, loans,
taxes, and business transactions. The next major historical application of operation
systems occurred in 4000 B.C. It was during this time that the Egyptians started
using planning, organization, and control in large projects such as the construction of the
pyramids. By 1100 B.C., labor was being specialized in China; by about 370
B.C., Xenophon described the advantages of dividing the various operations necessary
for the production of shoes among different individuals in ancient Greece .
In the Middle Ages, kings and queens ruled over large areas of land. Loyal noblemen
maintained large sections of the monarch’s territory. This hierarchical organization in
which people were divided into classes based on social position and wealth became
known as the feudal system. In the feudal system, servants produced for themselves and
people of higher classes by using the ruler’s land and resources. Although a large part of
labor was employed in agriculture, artisans contributed to economic output and
formed guilds. The guild system, operating mainly between 1100 and 1500, consisted of
two types: merchant guilds, who bought and sold goods, and craft guilds, which made
goods. Although guilds were regulated as to the quality of work performed, the resulting
system was rather rigid, shoemakers, for example, were prohibited from tannin hides.
The industrial revolution was facilitated by two elements: interchangeability of parts and
division of labor. Division of labor has always been a feature from the beginning
of civilization, the extent to which the division is carried out varied considerably
depending on period and location. Compared to the Middle Ages, the Renaissance and
the Age of Discovery was characterized by a greater specialization in labor, one of
characteristics of growing European cities and trade. It was in the late eighteenth century
when Eli Whitney popularized the concept of interchangeability when he manufactured
10,000 muskets. Up to this point in history of manufacturing, each product (e.g. each
gun) was considered a special order, meaning that parts of a given gun were fitted only
for that particular gun and could not be used in other guns. Interchangeability of parts

37. 37
allowed the mass production of parts independent of the final products in which they will
be used.
In 1883, Frederick W. Taylor introduced the stopwatch method for accurately measuring
the time to perform each single task of a complicated job. He developed the scientific
study of productivity and identifying how to coordinate different tasks to eliminate
wasting of time and increase the quality of work. The next generation of scientific study
occurred with the development of work sampling and predetermined motion time
systems (PMTS). Work sampling is used to measure the random variable associated with
the time of each task. PMTS allows the use of standard predetermined tables of the
smallest body movements (e.g. turning the left wrist by 90°), and integrating them to
predict the time needed to perform a simple task. PMTS has gained substantial
importance due to the fact that it can predict work measurements without actually
observing the actual work. The foundation of PMTS was laid out by the research and
development of Frank B. and Lillian M. Gilbreth around 1912. The Gilbreths took
advantage of taking motion pictures at known time intervals while operators were
performing the given task.
The idea of the production line has been used multiple times in history prior to Henry
Ford: the Venetian Arsenal (1104), Smith pin manufacturing in the Wealth of
Nations (1776) or Brunel's Portsmouth Block Mills (1802). Ransom Olds was the first to
manufacture cars using the assembly line system, but Henry Ford developed the first auto
assembly system where a car chassis was moved through the assembly line by a conveyor
belt while workers added components to it until the car was completed. During World
War II, the growth of computing power led to further development of efficient
manufacturing methods and the use of advanced mathematical and statistical tools. This
was supported by the development of academic programs in industrial and systems
engineering disciplines, as well as fields of operations research and management science
(as multi-disciplinary fields of problem solving). While systems engineering concentrated
on the broad characteristics of the relationships between inputs and outputs of generic
systems, operations researchers concentrated on solving specific and focused problems.
The synergy of operations research and systems engineering allowed for the realization of
solving large scale and complex problems in the modern era. Recently, the development

38. 38
of faster and smaller computers, intelligent systems, and the World Wide Web has
opened new opportunities for operations, manufacturing, production, and service
systems.
Malakooti (2013) states that production and operation systems can be divided into five
phases:[6]
1. Empiricism (learning from experience)
2. Analysis (scientific management)
3. Synthesis (development of mathematical problem solving tools)
4. Isolated Systems with Single Objective (use of Integrated and Intelligent Systems,
and WWW)
5. Integrated Complex Systems with Multiple Objectives (development of
ecologically sound systems, environmentally sustainable systems, considering
individual preferences)

39. 39
Industrial Revolution
Before the First industrial revolution work was mainly done through two
systems: domestic system and craft guilds. In the domestic system merchants took
materials to homes where artisans performed the necessary work, craft guilds on the other
hand were associations of artisans which passed work from one shop to another, for
example: leather was tanned by a tanner, passed to curriers, and finally arrived
at shoemakers and saddlers.
The beginning of the industrial revolution is usually associated with 18th century
English textile industry, with the invention of shuttle by John Kay in 1733, the spinning
jenny by James Hargreaves in 1765, the water frame by Richard Arkwright in 1769 and
the steam engine by James Watt in 1765. In 1851 at the Crystal Palace Exhibition the
term American system of manufacturing was used to describe the new approach that was
evolving in the United States of America which was based on two central
features: interchangeable parts and extensive use of mechanization to produce them.
Henry Ford was 39 years old when he founded the Ford Motor Company in 1903, with
$28,000 capital from twelve’s investors. The model T car was introduced in 1908,
however it was not until Ford implemented the assembly line concept, that his vision of
making a popular car affordable by every middle-class American citizen would be
realized. The first factory in which Henry Ford used the concept of the assembly
line was Highland Park (1913), he characterized the system as follows:
"The thing is to keep everything in motion and take the work to the man and not the man
to the work. That is the real principle of our production, and conveyors are only one of
many means to an end"
This became one the central ideas that led to mass production, one of the main elements
of the Second Industrial Revolution, along with emergence of the electrical industry and
petroleum.

40. 40
Although productivity benefited considerably from technological inventions and division
of labour, the problem of systematic measurement of performances and the calculation of
these by the use of formulas remained somewhat unexplored until Frederick Winslow
Taylor. Frederick Taylor early work focused on developing what he called a "differential
piece-rate system" and a series of experiments, measurements and formulas dealing
with cutting metals and manual labor. The differential piece-rate system consisted in
offering two different pay rates for doing a job: a higher rate for workers with high
productivity (efficiency) and who produced high quality goods (effectiveness) and a
lower rate for those who fail to achieve the standard. One of the problems Taylor
believed could be solved with this system, was the problem of soldiering: faster workers
reducing their production rate to that of the slowest worker. In 1911 Taylor published his
"The Principles of Scientific Management", in which he characterized scientific
management (also know as Taylorism) as:
1. The development of a true science;
2. The scientific selection of the worker;
3. The scientific education and development of the worker;
4. Intimate friendly cooperation between the management and the workers.
Taylor is also credited for developing stopwatch time study, this combined
with Frank and Lillian Gilbreth motion study gave way to time and motion study which is
centered on the concepts of standard method and standard time. Frank Gilbreth is also
responsible for introducing the flow process chart. Other contemporaries of Taylor worth
remembering are Morris Cooke (rural electrification in the 1920s and implementer of
Taylor's principles of scientific management in the Philadelphia's Department of Public
Works), Carl Barth(speed-and-feed-calculating slide rules ) and Henry Gantt (Gantt
chart). Also in 1910 Hugo Diemer published the first industrial engineering book:
Factory Organization and Administration.

41. 41
In 1913 Ford W. Harris published his "How Many parts to make at once" in which he
presented the idea of the economic order quantity model. He described the problem as
follows:
"Interest on capital tied up in wages, material and overhead sets a maximum limit to the
quantity of parts which can be profitably manufactured at one time; "set-up" costs on the
job fix the minimum. Experience has shown one manager a way to determine the
economical size of lots"
This paper inspired a large body of mathematical literature focusing on the problem
of production planning and inventory control.
In 1924 Walter Shewhart introduced the control chart through a technical memorandum
while working at Bell Labs, central to his method was the distinction between common
cause and special cause of variation. In 1931 Shewhart published his Economic Control
of Quality of Manufactured Product, the first systematic treatment of the subject
ofStatistical Process Control (SPC).
In the 1940s methods-time measurement (MTM) was developed by H.B. Maynard, JL
Schwab and GJ Stegemerten. MTM was the first of a series of predetermined motion
time systems, predetermined in the sense that estimates of time are not determined in loco
but are derived from an industry standard. This was explained by its originators in a book
they published in 1948 called "Method-Time Measurement".
Up to this point in history, optimization techniques were known for a very long time,
from the simple methods employed by F.W.Harris to the more elaborate techniques of
thecalculus of variations developed by Euler in 1733 or the multipliers employed
by Lagrange in 1811, and computers were slowly being developed, first as analog
computers by Sir William Thomson (1872) and James Thomson (1876) moving to the
eletromechanical computers of Konrad Zuse (1939 and 1941). During World War
II however, the development of mathematical optimization went trough a major boost
with the development of the Colossus computer, the first electronic digital computer that
was all programmable, and the possibility to computationally solve large linear
programming problems, first by Kantorovich in 1939 working for the Soviet

42. 42
government and latter on in 1947 with the simplex method of Dantzig. These methods are
known today as belonging to the field of operations research.
From this point on a curious development took place: while in the United States the
possibility of applying the computer to business operations led to the development of
management software architecture such as MRP and successive modifications, and ever
more sophisticated optimization techniques and manufacturing simulation software, in
post-war Japan a series of events at Toyota Motor led to the development of the Toyota
Production System (TPS) and Lean Manufacturing.
In 1943, in Japan, Taiichi Ohno arrived at Toyota Motor company. Toyota evolved a
unique manufacturing system centered on two complementary notions: just in
time (produce only what is needed) and autonomation (automation with a human touch).
Regarding JIT, Ohno was inspired by American supermarkets: workstations functioned
like a supermarket shelf where the customer can get products they need, at the time they
need and in the amount needed, the workstation (shelf) is then restocked. Autonomation
was developed by Toyoda Sakichi in Toyoda Spinning and Weaving: an automatically
activated loom that was also foolproof, that is automatically detected problems. In 1983
J.N Edwards published his "MRP and Kanban-American style" in which he described JIT
goals in terms of seven zeros: zero defects, zero (excess) lot size, zero setups, zero
breakdowns, zero handling, zero lead time and zero surging. This period also marks the
spread of Total Quality Management (TQM) in Japan, ideas initially developed by
American authors such as Deming, Juran and Armand V. Feigenbaum. TQM is a strategy
for implementing and managing quality improvement on an organizational basis, this
includes: participation, work culture, customer focus, supplier quality improvement and
integration of the quality system with business goals.[14]
Schnonberger[18]
identified seven
fundamentals principles essential to the Japanese approach:
1. Process control: SPC and worker responsibility over quality
2. Easy able -to-see quality: boards, gauges, meters, etc. and poka-yoke
3. Insistence on compliance: "quality first"
4. Line stop: stop the line to correct quality problems
5. Correcting one's own errors: worker fixed a defective part if he produced it

43. 43
6. The 100% check: automated inspection techniques and foolproof machines
7. Continual improvement: ideally zero defects
In 1987 the International Organization for Standardization (ISO), recognizing the
growing importance of quality, issued the ISO 9000, a family of standards related to
quality management systems. There has been some controversy thought regarding the
proper procedures to follow and the amount of paperwork involved.
Meanwhile in the sixties, a different approach was developed by George W. Plossl and
Oliver W. Wright,[19]
this approach was continued by Joseph Orlicky as a response to the
TOYOTA Manufacturing Program which led to Material Requirements Planning (MRP)
at IBM, latter gaining momentum in 1972 when the American Production and Inventory
Control Society launched the "MRP Crusade". One of the key insights of this
management system was the distinction between dependent demand and independent
demand. Independent demand is demand which originates outside of the production
system, therefore not directly controllable, and dependent demand is demand for
components of final products, therefore subject to being directly controllable by
management through the bill of materials, via product design. Orlicky wrote "Materials
Requirement Planning" in 1975,[20]
the first hard cover book on the subject.[19]
MRP
II was developed by Gene Thomas at IBM, and expanded the original MRP software to
include additional production functions. Enterprise resource planning (ERP) is the
modern software architecture, which addresses, besides production
operations, distribution, accounting, human resourcesand procurement.
Recent trends in the field revolve around concepts such as:
 Business Process Re-engineering (launched by Michael Hammer in 1993[21]
): a
business management strategy focusing on the analysis and design of workflows and
business processes within an organization. BPR seeks to help companies radically
restructure their organizations by focusing on the ground-up design of their business
processes.
 Lean Manufacturing: a systemic method for the elimination of waste ("Muda")
within a manufacturing process. Lean also takes into account waste created through

44. 44
overburden ("Muri") and waste created through unevenness in work loads ("Mura").
The term lean manufacturing was coined in the book The Machine that Changed the
World. [22]
 Six Sigma (an approach to quality developed at Motorola between 1985-1987):
Six Sigma refers to control limits placed at six (6) standard deviations from the mean
of anormal distribution, this became very famous after Jack Welch of General
Electric launched a company-wide initiative in 1995 to adopt this set of methods.
More recently, Six Sigma has included DMAIC (for improving processes)
and DFSS (for designing new products and new processes)
 Reconfigurable Manufacturing Systems: a production system designed at the
outset for rapid change in its structure, as well as its hardware and software
components, in order to quickly adjust its production capacity and functionality
within a part family in response to sudden market changes or intrinsic system change.

45. 45
2.1. An Introduction of Operation Management
2.1.1. What is Operation management?
Operation management is the activity of tracking Operation against targets and
identifying opportunities for improvement - but not just looking back at past Operation.
The focus of Operation management is the future - what do you need to be able to do and
how can you do things better? Managing Operation is about managing for results.
Operation-based management at any level in the organization should demonstrate that
 You know what you are aiming for
 You know what you have to do to meet your objectives
 You know how to measure progress towards your objectives
 You can detect Operation problems and remedy them
2.1.2. Why is it important?
The Modernizing Government agenda sets challenging new Operation objectives for
organizations, from the delivery of high quality services that meet the needs of their
customers and stakeholders, to doing more within the constraints of available resources,
through to continuous improvement in how the organization itself operates. Operation
management underpins the operations and processes within a strategic change program
framework. Sound practices and targets, which are both flexible and reactive to change,
are needed to achieve Operation improvement.
The effective Operation of your organization depends on the contributions of activities at
all levels - from top management policy development through to efficiently run
operations.

46. 46
In response to the pressures and opportunities for improving organizational Operation,
you need to understand how to define and measure Operation as part of a concerted
strategy for relevant, successful and cost-effective operations.
2.1.3. Critical factors for success
 Focusing on outcomes that meet business objectives, rather than outputs
 Managing Operation by cascading down from the top and building bottom-up
 Defining and using measures that evolve over time
 Using a mix of short and long term measures, and selecting measures that link
cause and effect
 Measuring effectiveness (doing the right things) and efficiency (doing things
right) in parallel
 Relating individuals' reward and remuneration with achievement of outcomes.
2.1.4. Who is involved?
Business managers are responsible for setting targets and managing Operation against
those targets; contract managers monitor service Operation from the customer viewpoint;
service providers supply Operation information.
2.1.5. Principles
Operation management should be an integrated part of a business lifecycle helping an
organization to mature through evolving and changing Operation measures, from their
definition through to monitoring and review in addition, by including the IS/IT
component throughout this lifecycle, rather than just considering it as a 'downstream' cost

47. 47
of provision, there should be enhanced benefits from an increased and more effective
contribution from any investment made in IS/IT.
You will need to ensure that you have adopted sound practices in commissioning and
acquiring IS/IT services to achieve Operation improvement. Operation management
identifies opportunities for maximizing improvements in managing service delivery in the
future. Operation management helps you to make decisions about investment routes,
affordability and setting investment priorities in the face of competing demands for
resources.
2.1.6. Managing for results
Managing for results requires the organization to focus on the outputs of the processes
and activities undertaken by the organization at varying levels. Together these outputs
will contribute to the achievement of the outcomes desired by the organization and those
of the government as a whole.
2.2. Levels of Operation management
1. The effective Operation of your organization depends on the contribution of activities
at all levels - from top management policy development through to efficiently run
operations. There are three or four levels of Operation management in the model
framework below, some organizations may combine the strategic level with the
organization’s priorities level.
2. Organization’s priorities: at the highest level Operation management is rooted in the
organization’s long term business strategy. Measures at this level are of impact,
resource utilization and public service improvement.
3. Strategic level Operation management: at this level the management concern is from
an "outside in" as well as an internal perspective. Measures are of outcome, such as

48. 48
volume and value of service take-up, upward trends for inclusion, staff and users'
satisfaction.
4. Program level Operation management: Operation management at this level is focused
on the desired results of programs of change, to demonstrate what has been
accomplished. The measures used would include those stated in individual business
cases. Benefits management would help to determine if these are achieved.
5. Tactical or operational service level Operation management: here the management
focus is concerned with service delivery and outputs, using conventional service level
agreement approaches and related measures of aspects such as volumes and quality.
Although Operation measures and indicators may be different at each level, they will
need to be.
 Directional - to confirm that you are on track to reach the goals.
 Quantitative - to show what has been achieved and how much more is to be done.
 Worthwhile - adding more value to the business than they cost to collect and use.
2.3. Value for money
You must be able to demonstrate that you have achieved value for money in your
operations. Value for money is taken to cover three measures of Operation:
 Economy - Minimizing the cost of resources used for an activity, having regard to
appropriate quality
 Efficiency - the relationship between outputs, in terms of goods, services or other
results and the resources used to produce them
 Effectiveness - the extent to which objectives have been achieved, and the
relationship between the intended impacts and actual impacts of an activity.

49. 49
2.4. Measures and metrics
You should use these evaluation criteria for measures and metrics:
 Are you measuring the right thing?
 Do you have the right measures?
 Are the measures used in the right ways?
 Do you determine the quality of a particular Operation metric using the SMART test
(Specific, Measurable, Attainable, Relevant, Timely)?
The procedures and measures used in Operation management will depend, among other
factors, on the type of business process which is being measured. A business process is
assumed to be made up of a number of activities which transform inputs into outputs and
contribute to the realisation of outcomes. The customers for a process may be external
(for example, members of the public) or internal, within the same organisation or
elsewhere in the public sector.
2.4.1. Business processes can be distinguished by:
 The extent to which the activities involved are people-oriented as opposed to
automated
 Whether the activities are primarily 'front-office' or 'back-office' - that is, the amount
of direct contact which the staff have with the customers or recipients of the process
 Whether the process itself is the important feature of the activity - for example, in
delivering consultancy - or whether the activities are concerned primarily with the
generation of defined outputs
 The extent to which the activity is customized or tailored to the needs of each
customer, as opposed to being routine and procedural
 The amount of discretion which needs to be exercised in the activities

50. 50
 The duration of the contact with the customer.
2.5. Processes
You will need to review the effectiveness of your procedures for:
 Setting Operation targets
 Designing measures of Operation relevant to the targets
 Systematically and accurately measuring outcomes
 Assessing the Operation of external service providers
 Using results for informed decision-making
 Improving Operation.
Research shows that most organizations have the components of Operation management
in place, but they are not always used to overall advantage. A possible five-step approach
that could help organizations in improving the Operation management of the IS/IT
contribution is outlined below, with suggested techniques.
Step 1: Identify your level of maturity in Operation management
 Look at how the organization is performing in all its aspects of Operation
management - from direction setting through to review and measurable improvement.
 Do an assessment; this will help to identify your organization’s maturity and the
strengths and weaknesses.
 Establish where you are now as a series of baselines, looking at Operation
management at strategic program, tactical and operational levels.
 Bottom-up measures of economy and efficiency are likely to be reasonably strong and
have good management. This may not be so well developed for effectiveness
measures

51. 51
 Innovation, process improvement, customer satisfaction, and contribution to policy
objectives. Most organizations have a good understanding of financial measure; this
level of understanding needs to be developed for other measures.
 Techniques: Assessment; baseline
Step 2: Identify where Operation management is important to your organization
 Is it in setting direction or ensuring the delivery of required benefits or improving the
alignment, Operation and contribution of the internal and external resources used by
the organization?
 Identify the values for your organization.
 Key values for safety critical operational services are speed and integrity of
information. A different organization might place high value on information flows or
on single points of access to information at a contact/call centre.
 Techniques: Value chain analysis; benchmarking with other organizations (which
may identify things you had not thought of)
Step 3: Resolve any mismatch between steps 1 and 2
 Review Operation management at each of the four levels - (organization, strategic,
program and tactical). Are there weaknesses in areas that are important to your
organization?
 Techniques: to become more outward looking and customer-focused, use the well
established balanced scorecard and EFQM® techniques.
 To answer questions about where IT makes a contribution, use Goals, Questions and
Metrics (GQM) to identify and define measures.

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Step 4: Establish where you want to be and begin to build Operation management
into business processes and into the culture
 The aim is to have target, measurement and review processes for those things that the
business considers important such as product, process, service and staff.
 You will have lots of measures which need to be prioritised against your particular
perspective on effectiveness, efficiency and economy and against your values.
 establish benefits management as a norm
 Use databases to collect Techniques Operation information and analyse trends
 Include Operation management in the business, programme and project lifecycle
Step 5 : Feed information back into Operation improvement
Monitor and take action on:
 We achieve what we set out to do?
 Where are the opportunities to improve?
 What can we do to improve? You are seeking answers to:
 What is achievable?
 What is important for our organization?
 What was achieved?
Techniques: Process assessment; your own targets, looking at benchmarks from the
outside world.

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The process of Operation management

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2.6. Objectives of a Operation Management System
Operation management is an integral part of a comprehensive human resource
management strategy. Its objective is to maximize individuals' Operation and potential
with a view to attaining organizational goals and enhancing overall effectiveness and
productivity.
A staff Operation management system aims at: -
To help achieve departmental objectives through staff
Departments formulate strategies and objectives to support their vision, mission and
values. To achieve these broad objectives, departments have to turn them into specific
objectives and targets for the divisions, sections, units and subsequently individual job
objectives and targets for implementation. As individual job objectives are linked to those
of departments', the Operation of individual officers contributes to the delivery of
departmental objectives.
To evaluate Operation and improve communication between managers
and staff on managing Operation
The staff Operation management system provides a mechanism to monitor and evaluate
staff Operation. Operation objectives are set at the beginning of the Operation
management cycle through open discussion between the supervisors and the appraisees.
Progress is monitored regularly and feedback from staff and supervisors is collated to
help clarify objectives and output expectation; and to enhance Operation.
To provide opportunities for development
The staff Operation management system serves as a multi-purpose management tool. It
provides valuable information to help identify individual training needs so as to enhance
Operation and to develop the potential of the staff for further advancement.

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The following figure provides an illustration of how Operation management links with
other human resource functions.
2.7. Overall Goal and Focus of Operation Management
The overall goal of Operation management is to ensure that the organization and all of
its subsystems (processes, departments, teams, employees, etc.) are working together in
an optimum fashion to achieve the results desired by the organization.
2.8. Operation Improvement of the Organization or a Subsystem is an
Integrated Process
Note that because Operation management strives to optimize results and alignment of all
subsystems to achieve the overall results of the organization, any focus of Operation
management within the organization (whether on department, process, employees, etc.)
should ultimately affect overall organizational Operation management as well.
2.9. Ongoing Activities of Operation Management
Achieving the overall goal requires several ongoing activities, including identification
and prioritization of desired results, establishing means to measure progress toward those
results, setting standards for assessing how well results were achieved, tracking and
measuring progress toward results, exchanging ongoing feedback among those
participants working to achieve results, periodically reviewing progress, reinforcing
activities that achieve results and intervening to improve progress where needed. Note
that results themselves are also measures.
Note: these general activities are somewhat similar to several other major approaches in
organizations, e.g., strategic planning, management by objectives, Total Quality
Management, etc. Operation management brings focus on overall results, measuring
results, focused and ongoing feedback about results, and development plans to improve

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results. The results measurements themselves are not the ultimate priority as much as
ongoing feedback and adjustments to meet results.
The steps in Operation management are also similar to those in a well-designed training
process, when the process can be integrated with the overall goals of the organi zation.
Trainers are focusing much more on results for Operation. Many trainers with this
priority now call themselves Operation consultants.
2.10. Basic Steps
Various authors propose various steps for Operation management. The typical Operation
management process includes some or all of the following steps, whether in Operation
management of organizations, subsystems, processes, etc. Note that how the steps are
carried out can vary widely, depending on the focus of the Operation efforts and who is
in charge of carrying it out. For example, an economist might identify financial results,
such as return on investment, profit rate, etc. An industrial psychologist might identify
more human-based results, such as employee productivity.
The following steps are described more fully in the topics Operation Plan,
Operation Appraisal and Development Plan, including through use of an example
application. The steps are generally followed in sequence, but rarely followed in exact
sequence. Results from one step can be used to immediately update or modify earlier
steps. For example, the Operation plan itself may be updated as a result of lessons learned
during the ongoing observation, measurement and feedback step.
NOTE: The following steps occur in a wide context of many activities geared towards
Operation improvement in an organization, for example, activities such as management
development, planning, organizing and coordinating activities.

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1. Review organizational goals to associate preferred organizational results in terms of
units of Operation, that is, quantity, quality, cost or timeliness (note that the result
itself is therefore a measure)
2. Specify desired results for the domain -- as guidance, focus on results needed by other
domains (e.g., products or services need by internal or external customers)
3. Ensure the domain's desired results directly contribute to the organization's results
4. Weight, or prioritize, the domain's desired results.
5. Identify first-level measures to evaluate if and how well the domain's desired results
were achieved
6. Identify more specific measures for each first-level measure if necessary
7. Identify standards for evaluating how well the desired results were achieved (e.g.,
"below expectations", "meets expectations" and "exceeds expectations")
8. Document a Operation plan -- including desired results, measures and standards
9. Conduct ongoing observations and measurements to track Operation
10. Exchange ongoing feedback about Operation
11. Conduct a Operation appraisal (sometimes called Operation review)
12. If Operation meets the desired Operation standard, then reward for Operation (the
nature of the reward depends on the domain)
13. If Operation does not meet the desired Operation standards, then develop or update a
Operation development plan to address the Operation gap* (See Notes 1 and 2)
14. Repeat steps 9 to 13 until Operation is acceptable, standards are changed, the domain
is replaced, management decides to do nothing, etc.
Note 1: Inadequate Operation does not always indicate a problem on the part of the
domain. Operation standards may be unrealistic or the domain may have insufficient
resources. Similarly, the overall strategies or the organization, or its means to achieving
its top-level goals, may be unrealistic or without sufficient resources.

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Note 2: When Operation management is applied to an employee or group of employees,
a development plan can be initiated in a variety of situations E.g.
a. When a Operation appraisal indicates Operation improvement is needed, that is, that
there is a "Operation gap"
b. To "benchmark" the status of improvement so far in a development effort
c. As part of a professional development for the employee or group of employees, in
which case there is not a Operation gap as much as an "growth gap”
d. As part of succession planning to help an employee be eligible for a planned change
in role in the organization, in which case there also is not a Operation gap as much as
an "opportunity gap"
e. To "pilot", or test, the operation of a new Operation management system.
2.11. Operation management mainly include following things:
Operation management is the systematic process by which an agency involves its
employees, as individuals and members of a group, in improving organizational
effectiveness in the accomplishment of agency mission and goals.

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 Planning work and setting expectations,
 Continually monitoring Operation,
 Developing the capacity to perform,
 Periodically rating Operation in a summary fashion, and
 Rewarding good Operation.
The revisions made in 1995 to the Government wide Operation appraisal and awards
regulations support sound management principles. Great care was taken to ensure that the
requirements those regulations establish would complement and not conflict with the
kinds of activities and actions practiced in effective organizations as m after of course.
Additional background information on Operation management can be found in the
following
2.11.1. Planning
In an effective organization, work is planned out in advance. Planning means setting
Operation expectations and goals for groups and individuals to channel their efforts
towards achieving the organizational objectives. Getting employees involved in the
planning process will help them understand the goals of the organization, what needs to
be done, why it needs to be done, and how well it should be done.
The regulatory requirements for planning employees' Operation include establishing the
elements and standards of their Operation appraisal plans. Operation elements and
standards should be measurable, understandable, verifiable, equitable, and achievable.
Through critical elements, employees are held accountable as individuals for work
assignments or responsibilities. Employee Operation plans should be flexible so that they
can be adjusted for changing program objectives and work requirements. When used
effectively, these plans can be beneficial working documents that are discussed often, and
not merely paperwork that is filed in a drawer and seen only when ratings of record are
requirement

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2.11.2. Monitoring
In an effective organization, assignments and projects are monitored continually.
Monitoring well means consistently measuring Operation and providing ongoing
feedback to employees and work groups on their progress toward reaching their goals.
Regulatory requirements for monitoring Operation include conducting progress reviews
with employees where their Operation is compared against their elements and standards.
Ongoing monitoring provides the opportunity to check how well employees are meeting
predetermined standards and to make changes to unrealistic or problematic standards.
And by monitoring continually, unacceptable Operation can be identified at any time
during the appraisal period and assistance provided to address such Operation rather than
wait until the end of the period when summary rating levels are assigned.
2.11.3. Developing Employees
In an effective organization, employee developmental needs are evaluated and addressed.
Developing in this instance means increasing the capacity to perform through training,
giving assignments that introduce new skills or higher levels of responsibility, improving
work processes, or other methods. Providing employees with training and developmental
opportunities encourages good Operation, strengthens job-related skills and
competencies, and helps employees keep up with changes in the workplace, such as the
introduction of new technology.
Carrying out the processes of Operation management provides an excellent opportunity
to identify developmental needs. During planning and monitoring of work, deficiencies in
Operation become evident and can be addressed. Areas for improving good Operation
also stand out, and action can be taken to help successful employees improve even
further.

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2.11.4. Rating
From time to time, organizations find it useful to summarize employee Operation. This
can be helpful for looking at and comparing Operation over time or among various
employees. Organizations need to know who their best performers are.
Within the context of formal Operation appraisal requirements, rating means evaluating
employee or group Operation against the elements and standards in an employee's
Operation plan and assigning a summary rating of record. The rating of record is assigned
according to procedures included in the organization's appraisal program. It is based on
work performed during an entire appraisal period. The rating of record has a bearing on
various other personnel actions; such as granting within-grade pay increases and
determining additional retention service credit in a reduction in force.
Note: Although group Operation may have an impact on an employee's summary rating,
a rating of record is assigned only to an individual, not to a group.
2.11.5. Rewarding
In an effective organization, rewards are used well. Rewarding means recognizing
employees, individually and as members of groups, for their Operation and
acknowledging their contributions to the agency's mission. A basic principle of effective
management is that all behavior is controlled by its consequences. Those consequences
can and should be both formal and informal and both positive and negative.
Good Operation is recognized without waiting for nominations for formal awards to be
solicited. Recognition is an ongoing, natural part of day-to-day experience. A lot of the
actions that reward good Operation — like saying "Thank you" — don't require a specific
regulatory authority. Nonetheless, awards regulations provide a broad range of forms that
more formal rewards can take, such as cash, time off, and many no monetary items. The

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regulations also cover a variety of contributions that can be rewarded, from suggestions
to group accomplishments.
2.12. Managing Operation Effectively
In effective organizations, managers and employees have been practicing good Operation
management naturally all their lives, executing each key component process well. Goals
are set and work is planned routinely. Progress toward those goals is measured and
employees get feedback. High standards are set, but care is also taken to develop the
skills needed to reach them. Formal and informal rewards are used to recognize the
behavior and results that accomplish the mission. All five-component processes working
together and supporting each other achieve natural, effective Operation management.
2.13. Features of a Good Operation Management System
A good staff Operation management system normally consists of the following features:
 Fair and open Objective -The system designed should aim to facilitate objective and
fair assessment by the management and encourage frank and constructive feedback
of appraises. These can be achieved through:
 Setting clear targets and standards;
 Providing opportunities for supervisors to inform appraises of their Operation
regularly, to be accompanied by timely coaching and counseling;
 Permitting the appraise to have access to the entire report and to review the appraisal
before the appraisal interview; and
 Where necessary an assessment panel should be formed to ensure fairness in
Operation rating.
Adopting such an open system for staff Operation also supports the spirit of the Personal
Data (Privacy) Ordinance.

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2.13.1. Competency-Based
Competency refers to the knowledge, attributes, attitude and skills required to perform a
job effectively. There are two broad categories of competencies: core competencies and
functional competencies. Core competencies are the generic competencies associated
with effective Operation required by a group of job holders in a department across
different divisions/sections. An example is managerial competencies required for staff in
managerial positions. Functional competencies are the competencies specific to certain
job functions, such as computer programming skills for programmers in the Computer
Section and classroom skills for trainers in the Training Division of a department.
Competencies are reflected in a set of desirable behavior patterns which are observable,
measurable and can be tracked and monitored.
Developing and using a competency-based approach enables departments to use a
common language and structured way to define and describe appropriate job behaviors at
different ranks as officer’s progress through the grade. The approach help to assess staff's
potential and promo ability to the next higher rank and identify development needs of the
staff. It also enhances the objectivity and transparency of Operation assessment.
When core competency-based approach is adopted, departments need to ensure that the
competencies are developed properly by :
 Aligning individual Operation objectives with departmental ones,
 Securing senior management's commitment, and
 Involving staff in the process.
Furthermore there should be a clear differentiation in competency descriptions among
different ranks in the same grade. An unduly long list of competencies may adversely
affect the effectiveness of the system.

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For competencies to effectively serve the needs of a department, they should be
department-specific and reflect the missions, values and culture of the department. Any
list of competencies cannot be exhaustive. It only provides the common language and
understanding of the key dimensions and descriptions that warrant attention.
Upon implementation, there should be proper and adequate training for the staff on the
implementation of the Operation management system
Operation planning starts with a session between the appraising officer and the appraisee
to agree on the list of objectives/responsibilities for the coming appraisal period. The
agreed list will include the objectives of the section/unit and the broad areas of
responsibilities of the appraisees, that is key result areas (KRAs).
2.13.2. A Continuous Process
Staff Operation management cycle is a continuous process which involves :
 Operation planning
 Continuous coaching and development
 Interim review
 Operation appraisal

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
2.13.3. Operation planning
Operation planning starts with a session between the appraising officer and the appraise
to agree on the list of objectives/responsibilities for the coming appraisal period. The
agreed list will include the objectives of the section/unit and the broad areas of
responsibilities of the appraises, that is key result areas (KRAs).
Examples of KRAs are:
 Timely completion of caseloads
 Customer satisfaction and relations
 Staff development
 Resource management
 Project management
Specific, measurable, achievable and time bound targets will then be set on the basis of
the KRAs. The appraising officer should ensure that these targets are in alignment with
the overall departmental objectives and that they are clearly understood by the appraisee.
Depending on the nature of the job, appraising officers may alternatively agree with
appraises a list of key responsibilities with specific Operation results. This list provides
the appraisees and the appraising officers with the yardstick to objectively discuss,
monitor and assess Operation. The list should be kept under frequent review and be
revised whenever there are changes in the job.
2.13.4. Continuous coaching and development
The Operation management system is a on-going process. After work targets and
standards have been decided and Operation objectives agreed upon, the appraising officer
should start the coaching and development process which threads through Operation

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planning, regular feedback and guidance, interim reviews and Operation appraisal.
Coaching is about providing regular feedback to staff on their Operation. It aims at:
 Giving recognition to encourage and reinforce good Operation; and
 Providing advice and counseling to help improve Operation, and where appropriate,
take corrective action.
Through the coaching sessions, training needs should also be identified and followed.
2.13.5. Interim review
An interim review is a scheduled, formal discussion between the appraising officer and
the appraisee to review the latter's progress in meeting the agreed
objectives/responsibilities. This usually takes place in the middle of the appraisal period.
An interim review should take the form of a structured session to provide an opportunity
for additional coaching, for problem solving, and for updating objectives/responsibilities.
An interim review aims to:
 Identify Operation results that are below, on or above target and determine
appropriate responses on corrective measures. Supervisors should use this occasion to
recognize and encourage good Operation. On the other hand, Operation below targets
is to be pointed out and guidance for improvement to be given;
 Assess and follow up development or training need of staff to assist them in achieving
their objectives/responsibilities;
 Ascertain whether there are potential problems that may affect the appraiser’s
Operation in the latter half of the reporting cycle and put in place preventive
measures; and
 Review whether adjustments to the agreed objectives/responsibilities are required.

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2.13.6. Operation appraisal
Operation appraisal is the formal assessment on the appraisee’s Operation for the
appraisal period. It covers the following aspects:
 How effectively the agreed objectives/responsibilities have been carried out and
targets met;
 Whether the effectiveness has been adversely affected by any constraints or obstacles;
 The strengths and weaknesses of the appraisee which affected or will affect the
officer's further development;
 And what sort of personal/career development and training actions should be taken.
2.13.7. To maintain an open system
 The appraisee should be shown the assessment by the appraising and countersigning
officers before the appraisal interview.
 Countersigning officers are encouraged to complete the appraisal form before the
appraisal interview is conducted; and
 An interview record has to be prepared and signed by both parties.
For training and career development proposals put forward in the appraisal, the grade
management must take the initiative to ensure any necessary follow up actions are taken
in a timely and appropriate manner. These proposals will also provide useful reference
for the supervisors to develop the staff's competencies. Common themes on training and
development identified should be consolidated for incorporation into the training and
development plans of the department and the grade.
To ensure consistency in assessment standards and fairness in Operation rating in staff
appraisals, heads of departments/grades may consider if an assessment panel should be

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set up. An assessment panel is a management tool to help departments cross moderate
appraisal ratings.
An assessment panel is usually chaired by the head of branch/division or head of grade
with members drawn from section/unit heads. At the start of a reporting cycle, the
assessment panel will meet to discuss the marking criteria and standard. Staff will be
informed of these criteria and standard and clear guidelines will be issued to appraising
officers.
The assessment panel will review the completed reports on the basis of panel members'
knowledge about the Operation of the appraisees. If the assessment panel disagrees with
the assessment of a report, the reviewing officer and the appraising/countersigning
officer, where necessary, may be requested to explain before the panel. Amendments may
be made to the appraisal reports to ensure parity of assessment, if necessary.