ENTREPRENEURSHIP

Governor Pack Road, Baguio City, Philippines 2600

Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section:
Email: email@uc-bcf.edu.ph; Website: www.uc-bcf.edu.ph

MODULE 6 – ENTREP Subject Teacher:

Operations and production management

Production- is defined as the creation of goods and services.

Operations Management – is involved with the management of systems and processes that create goods and/or
provide services.

Operations Management in Manufacturing

To compete with other organizations, a company must convert resources (materials, labor, money, information)
into goods or services as efficiently as possible. The upper-level manager who directs this transformation process is
called an operations manager. The job of operations management (OM) consists of all the activities involved in
transforming a product idea into a finished product. In addition, operations managers are involved in planning and
controlling the systems that produce goods and services. In other words, operations managers manage the process that
transforms inputs into outputs. Figure 6.1 illustrates these traditional functions of operations management.

Figure 6.1. Transformational Process

Making the decisions involved in the effort to attain these goals is another job of operations managers. Their
responsibilities can be grouped as follows:
 Production planning. During production planning, managers determine how goods will be produced, where
production will take place, and how manufacturing facilities will be laid out.
 Production control. Once the production process is under way, managers must continually schedule and
monitor the activities that make up that process. They must solicit and respond to feedback and make
adjustments where needed. At this stage, they also oversee the purchasing of raw materials and the handling of
inventories.
 Quality control. The operations manager is directly involved in efforts to ensure that goods are produced
according to specifications and that quality standards are maintained.

Products: Goods and Services

Products which are manufactured or created or done, are either goods or services. Some characteristics of a good are the
following:

- It is a tangible product.
- Consistent product definition.
- Production is usually separate from consumption.
- Good can be inventoried.
 ENTREPRENEURSHIP
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section:
Email: email@uc-bcf.edu.ph; Website: www.uc-bcf.edu.ph

MODULE 6 – ENTREP Subject Teacher:

- Low customer interaction.

Some examples of goods are can of soft drink, cell phone, ball pen, refrigerator, or car.

Some characteristics of a service are the following:

- Intangible product
- Produced and consumed at the same time.
- Often unique
- High customer interaction
- Inconsistent product definition
- Often knowledge-based

4M’S OF OPERATION MANAGEMENT

• METHODS
How entrepreneur will run the business from all the facets of the business
• MANPOWER
Expertise of qualified employees that can handle operational functions
- Job Description
Enumerates the duties and responsibilities of the potential employee, including the scope, limitations, and
terms and condition of employment.
- Employee’s Qualification
a. Educational attainment – degree of the candidate’s knowledge of basic things.
b. Work experience- what to expect from the applicant and what he or she can potentially contribute.
c. Specific Skills
d. Work Attitude – deals with the worker’s integrity and how he or she deals with his or her coworker,
bosses
 MACHINES
“best friend” of manpower in producing goods and offering services.
 MATERIALS
Entrepreneurs should decide on what route to choose when it comes to materials requisitioning
• Manufacturing own product
• Outsourcing of manufacturing
• Purchasing own product

Producing for Quality

But what is quality? According to the American Society for Quality, the term quality refers to “ the
characteristics of a product or service that bear on its ability to satisfy stated or implied needs .” When you buy a
DVD player, you expect it to play DVDs. When you go to a drive-through window, you expect to be served in a
reasonable amount of time. If your expectations are not met, you’ll conclude that you’re the victim of poor-quality.

Quality Management
Total quality management (TQM), or quality assurance, includes all the steps that a company takes to ensure that
its goods or services are of sufficiently high quality to meet customers’ needs. Generally speaking, a company adheres to
TQM principles by focusing on three tasks:
 Customer Satisfaction .Companies that are committed to TQM understand that the purpose of a business is to
generate a profit though customer satisfaction. Thus, they let their customers define quality by identifying
desirable product features and then offering them. They encourage customers to tell them how to offer services
that work the right way.
 Employee Involvement. Successful TQM requires that everyone in the organization, not simply upper-level
management, commits to satisfying the customer. When customers wait too long at a drive through window, it’s
the responsibility of a number of employees, not the manager alone. A defective DVD isn’t solely the
responsibility of the manufacturer’s quality control department; it’s the responsibility of every employee involved
in its design, production, and even shipping. To get everyone involved in the drive for quality assurance,
managers must communicate the importance of quality to subordinates and motivate them to focus on customer
satisfaction. Employees have to be properly trained not only to do their jobs but also to detect and correct quality
problems. In many companies, employees who perform similar jobs work as teams, sometimes called quality
circles, to identify quality, efficiency, and other work-related problems, to propose solutions, and to work with
management in implementing their recommendations.
 ENTREPRENEURSHIP
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section:
Email: email@uc-bcf.edu.ph; Website: www.uc-bcf.edu.ph

MODULE 6 – ENTREP Subject Teacher:

 Continuous Improvement. An integral part of TQM is continuous improvement: the commitment to making
constant improvements in the design, production, and delivery of goods and services. Improvements can almost
always be made to increase efficiency, reduce costs, and improve customer service and satisfaction. Everyone in
the organization is constantly on the lookout for ways to do things better.

What Is SIPOC? How to Use a SIPOC Diagram in operations management?

SIPOC is a tool that summarizes the inputs and outputs of one or more processes in table form. It’s an acronym that stands
for Supplies, Inputs, Process, Outputs and Customers. Some organizations use the opposite acronym COPIS, which puts
the customer first and illustrates the value of the customer to the organization.
How to construct SIPOC Diagram?

1. Start with the process

If you decided to construct a SIPOC diagram, you probably already know which process you want to analyze. Write the
name of the process into the middle column and briefly describe its key steps. You can either list them or draw a simple
flowchart to make it easier to comprehend. When completing this step, keep a few things in mind:
 Make sure you know the exact starting and ending points of the process. If you don’t, this can mess up the whole
diagram once you move to the other columns.
 Don’t go into too much detail. Remember, SIPOC diagram is a high-level process map and is designed to get a birds-
eye overview of the process. Do not include decision points or feedback loops.
2. Identify the outputs of the process
As with the previous step, focus on the key outputs of the process. In this step, write down the three or more main
outputs. Use nouns for the most part and keep the tone neutral. Your goal is to avoid categorizing your outputs into
good or bad ones – that’s not the point of the diagram.
3. Identify the customers
In this step, list the people who benefit from the process. These don’t have to be the literal “customers.” E.g., if you
are working on a diagram for an internal process, the “customers” are your coworkers. Think of who benefits from
this process. Who would be upset if the process is not complete?
 When doing the research for this step, up your game by noting customers’ requirements in the “Output” column.
4. List the inputs for the process
Here you write down the inputs required for the process to function properly. Just like with every previous step,
focus on the most important ones. Four to six main inputs should do.
5. Identify the suppliers of the inputs
In the Suppliers column, write down the suppliers based on what inputs the process uses. Be sure to mention any
specific suppliers whose input has a direct influence on the output. For example, imagine you’re doing a SIPOC
diagram for the process “Making tomato sauce.” If the supplier has an impact on the variation of “Taste” output, you
definitely want to list them.

Sample SIPOC
 ENTREPRENEURSHIP
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section:
Email: email@uc-bcf.edu.ph; Website: www.uc-bcf.edu.ph

MODULE 6 – ENTREP Subject Teacher:

References:

Edralin,D.M. Entrepreneurship. Quezon City: Vibal Group Inc.

Kawasaki, G. (2004). Art of start: The time-tested, battle-hardened guide for anyone starting anything. USA: Penguin Group
Skripak, S. J. (2016). Fundamentals of business. USA: Pamplin College of Business and Virginia Tech Libraries
 ENTREPRENEURSHIP
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section:
Email: email@uc-bcf.edu.ph; Website: www.uc-bcf.edu.ph

MODULE 6 – ENTREP Subject Teacher:

Activity 6
I. Critical Thinking
Answer the following questions.
1. How should productivity be measured? Should all organizations/industries measure productivity the same way? Why or
why not?
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2. Healthy Hots, a fast-food restaurant that offers heart-healthy food, is experiencing several difficulties with operations.
Although customers like the idea of heart-healthy foods, and surveys indicate that customers find the food to be tasty and
appealing, business has fallen off in recent weeks. At this point, the restaurant is making a profit. Customers have
complained about slow service, and employee turnover is high.
How can you apply the three principles of total quality management discussed in this module to improve the
quality operations of the restaurant? Provide specific and possible solutions.
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II. SIPOC Analysis
Construct a SIPOC Analysis on the business you want to venture with. Make a creative presentation. (You may refer to
the given sample). Place this in a short bond paper.
Basis of scoring: (30 points)