Free Example of Operational Management Essay

IDEF modeling for the Business

The concept of IDEF (Integrated definition function modeling) methodology has been proposed and used to solve current and futuristic business challenges. Enterprise modeling methods and tools are used to offer solutions to business cycles which are often complex, large and dynamic in nature. The IDEF methodology uses a series of approaches that consist of A0 IDEF. That seeks to establish structures in the business and help management get a clear picture of the business in a compressive manner.

AO IDEF diagram was developed to represent processes that are performed routinely in an organized manner. Therefore, AO IDEF definition of function was established that is activities “takes certain inputs and, using some mechanism, subject to certain controls, transforms those inputs into outputs (Tserng and Lin, 2004).” Such can be used to create model relationships between activities.

To construct the business system all activities were modeled from marketing to final purchase of service. Fig.1 Represent the top-level of AO IDEF context diagram illustrating the scope of the process. In this case study the context diagram is sub-divided into four sub-sections marketing, sales, purchasing and warehousing. Fig.2, Fig3 and Fig.4 shows AO IDEF diagrams that correspond to various sub-functions.

The organization structure of the business has some functions centralized. Marketing, sales, purchase and distribution were the centralized functions within the organization. The marketing function provided the organization information regarding the pricing through communication and setting the right price for products and services (Sarkis and Liles, 1995). It also helped in developing product ideas in the business and improves existing services and product to meet customer needs. The marketing function offered information on distribution patterns of products and services depending on the customer’s preferences.  Promotion and management of marketing information are other functions that the marketing function performed within the organization (Malhotra, 2011).  The sales function offered the following selling through direct communication to existing and potential customers to determine if their needs were met. Purchasing or the procurement function was also another vital function in the business. It offered the business a means of procuring materials that are required by the business, evaluate the pricing of items , evaluated compliance with company’s procurement policies and performed paperwork and accounting on deliveries from suppliers. Warehousing of the storage function stored goods for distribution to various business centers.  

Accommodation is a business operation which is sub-function of other centralized functions. Its business units attended to customers according to their needs; perform audits to report incidents to management, cleaning and daily maintenance procedure and financial management in the facility (Ki-Young, Hyunbo & Don, 2008). Accommodation was broken down into four entities customer, reception, cashier and the room attendant. It enabled the analysis routine activities within and identifies possible gaps in operation in order to address business changes in the system. 

Water sports another business operation with the business. It involved a number of business activities that involve water sports (Lu & Liao, 2009). The business operation was decomposed into four entities that performed different core operations. Customer, reception, cashier and room attendant were the entities that were identified. The receptionist offered customer feedback to the client and attended to the customer needs such as answering phone and responding to emails and invoice customers. The cashier accepted payments from customer and process the financial reports. The water sport attendant attended to customers’ needs during water sporting activities. He or she was an expert in water sporting activities.

Restaurants, bars, entertainment and retail business operation in the business that identified and various activities decomposed into four entities that ensured that the customer’s needs are meet (Ferreira al, 2012). Customer, waiter, chef and cashier were the four entities identified. The waiter offered feedback, order food, served the customer, billed the customer and gave-out the menu. Therefore, waiter was at the crucial to offer good customer service to the customers. The chef prepared food and received orders from the waiters. The cashier on the other hand accepted payments of food invoiced by the waiter. The cashier ensured good booking practices to ensure that financial l transaction are accurate.

Ten Key Performance Measures Spread across the Business

Business development and success is driven by different activities that need to be measured. These activities are improved in order to meet the set goals and objectives set in the beginning. These activities vary from organization to organization and within each firm evolve. Here are some ten key performance measures that indentified spread across the business.

Leading Indicators

Dials and Conversations

Telephone is a tool used in business to promotes and enhance conversations with customers. Therefore, a tool for business development and enhancement through regularly speaking to prospective clients. Outbound calls are metrics worth measuring in this case. The number of outbound calls is a driver of a more desirable activity. Consequently, through measuring such an activity business owners can keep historical data on the number of time for one to convert a prospective client to a client. This is a targeted value for reaching the business developmental goals.

Formula Dial Rate= Number of Outbound Calls / Period

Advertising and Promotion

Businesses employing outbound adverting programs targeted at reaching a potential customers while other employ sustained, sporadic mailing systems. The can be calculated   in terms of rate, impression, mailings and cost.

Formula: Impression = (Number of outgoing promotional mail/ Number of Enquiring Received)

Speaking and Publishing

Business should increase the number of activities such speaking and publishing. Such activities will promote the business as complete and an expert in field (Indjejikian & Mate%u02D8jka, 2012). Therefore, by simply measuring such activities and correlating then with the results one is able to determine its contribution to the business.

Formula Impression = (Number of Speaking and Publishing/ Number of Enquiring Received).

Website traffic

Website traffic and online listing such as newsletters subscriptions are some key performance indicators whose measurement could lead to a desirable patterns and make linkages to how to improve business strategies.

Impression = (Number of visitors / Number of Enquiring Received)

Number of customer complaints

Customer satisfaction is another likely indicator of how the business is performing. Through it is difficult to attain 100% customer satisfaction in a business must quest for perfection in customer services (Hadi, et al, 2012). However, this is a bit unrealistic. Problems often occur due to the dynamism of business. Measuring the number of complaints received over a period would be a stepping stone in attain such success in the organization through continuously improving underperforming sections of the business.

Formulae Rate = (Number of customer complains / Period)

Drill-down comparison

This type of comparison offers a relative comparison of the efficiency and effectiveness of people of different sub-group (population, region, product or service. This measure identifies the effectiveness of different customers.

Formulae:  sales/service territory    

Rate of Contact Signed

Another leading indicator is the number of contract signed. This indicator is used to determine how effective the firm in its sales activities. In calculating this total number of contracts is divided by a given period e.g. 3 months and is compared with a similar data.

 Formula: Rate of Contract Signed= Number of Contract Signed/ Period

Lagging Indicators

Lagging indicators such as historical financial give information of the business past performance and the likely direction that the company in the future. Gross revenue, EBIDTA and others are used in the case. 

Profitability Ratio

This is used to measure the business use of its assets and its control of cost to generate profit.

Gross Margin= Gross Profit / Net Sales 

Operating Margin = Operating Income / Net Sales

Liquidity Ratio

Lucidity Ratios are used to measure the cash availability to pay debt in the business. This used to determine the company’s solvency.

Operation Cash Flow = Operating Cash Flow / Total Debt

Cash Ratio= Cash and Marketable Securities/ Current Liabilities 

Acid-test ratio = (Current Assets- (Inventories + Prepayments))/ Current Liabilities

Introducing Change

Changes in a business that take through procedures yield positive results. Changes are intended to reduce cost and increase growth the business. Changes are for individuals who easily accept and adapt to it. However, employees do not like to changes. Consequently, the transaction process must be planed to ensure it runs smoothly (Change management, 2007. To begin with, plan for the change process. One must introduce changes in the workplace slowly in order to ensure everyone makes the transition. Afterwards, build awareness inform the employees about the new changes, the produces, benefits, schedule and its impact to the organization. After building awareness one should provide documentation of the change procedure which should be in a step-by-step instruction (Murthy, 2007). Training should be offered to help the staff learn and understand change procedures. Change that touch on implementation should be effected slowly. A stepwise approach should be taken. Request for feedback from the employees since they offer helpful ideas and suggestions of how to improve the system and where they notice bottle-necks in the system. Lastly, show and celebrate success. This is done through having parties to commemorate its implementation and achievement.