PRINCIPLES OF OPERATIONAL PLANNING

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Table of Contents Understand the activates that make up operations management ................................................................ 2

Main types of operations ........................................................................................................................................... 2

Operational processes ........................................................................................................................................... 5

Characteristics of operational systems ................................................................................................................ 8

Understand the relationship between operations and business performance .......................................... 9

How operations function supports business performance ............................................................................ 9

Objectives of Operational Performance.................................................................................................... 10

Improving Business Processes ...................................................................................................................... 11

Internal measures of success ......................................................................................................................... 14

Operations, Business Performance and Internal Measures of Success ................................ 17

Five Simple Ways to Increase Your Customer Base.......................................................................... 18

How to Expand Customer Base ...................................................................................................................... 19

How to improve customer satisfaction in 5 simple key points ................................................... 20

25 Surefire Ways to Improve Customer Satisfaction ....................................................................... 22

How to increase workplace satisfaction ................................................................................................... 27

Understand the importance of administration in operations management ............................ 30

Relationship between operations and administrative management ...................................... 30

Difference Between Management and Administration .................................................................... 31

Supply Chain ............................................................................................................................................................. 34

Supply chain management ............................................................................................................................... 37

Operations and quality management ......................................................................................................... 41

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Understand the activates that make up operations management

Main types of operations

Management process is a process of setting goals, planning and/or controlling the organizing and

leading the execution of any type of activity, such as:

A project (project management process) or

A process (process management process, sometimes referred to as the process

performance measurement and management system).

An organization's senior management is responsible for carrying out its management process.

However, this is not always the case for all management processes, for example, it is the

responsibility of the project manager to carry out a project management process.

Steps

'Planning, it determines the objectives, evaluate the different alternatives and choose the

best Organizing, define group's functions, establish relationships and defining authority

irresponsibility Staffing, recruitment or placement and selection or training takes place for the

development of members in the firm directing, is to give the Direction to the employees.

Four Functions of Management Process

Four Basic Functions of Management is a systematic way of doing things. We refer to

management as a process to emphasize that all managers, irrespective of their aptitude or skill,

engage in some inter-related functions in order to achieve their desired goals.

In this post, I am briefly going to describe the functions of the management process.

Management process /functions involves for basic activities;

Four Basic Functions of Management Process are;

1. Planning and decision making

2. Organizing

3. Leading

4. Controlling

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1. Planning and Decision Making: Determining Courses of Action

Looking ahead into the future and predict possible trends or occurrences which are likely to

influence the working situation is the most vital quality as well as the job of a manager.

Planning means setting an organization’s goal and deciding how best to achieve them. Planning

is decision making, regarding the goals and setting the future course of action from a set of

alternatives to reach them.

The plan helps to maintain the managerial effectiveness as it works as a guide to the personnel

for the future activities. Selecting goals as well as the paths to achieve them is what planning

involves.

Planning involves selecting missions and objectives and the actions to achieve them, it requires

decision-making or choosing future courses of action from among alternatives.

In short, planning means determining what the organization’s position and the situation should

be at some time in the future and decide how best to bring about that situation. Planning helps

maintain managerial effectiveness by guiding future activities.

For a manager, planning and decision-making require an ability to foresee, to visualize, and to

look ahead purposefully.

2. Organizing: Coordinating Activities and Resources

Organizing can be defined as the process by which the established plans are moved closer to

realization.

Once a manager set goals and develops plans, his next managerial function is organizing human

and other resources that are identified as necessary by the plan to reach the goal.

Organizing involves determining how activities and resources are to be assembled and

coordinated. The organization can also be defined as an intentionally formalized structure of

positions or roles for people to fill in an organization.

Organizing produces a structure of relationships in an organization and it is through these

structured relationships that future plans are pursued.

Organizing, then, is that part of managing which involves: establishing an intentional structure

of roles for people to fill in the organization.

It is intentional in the sense of making sure that all the tasks necessary to accomplish goals are

assigned to people who can do then best. The purpose of an organization structure is to create

an environment for best human performance.

The structure must define the task to be done. The rules so established must also be designed in

the light of the abilities and motivations of the people available.

Staffing is related to organizing and it involves filling and keeping filled, the positions in the

organization structure.

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This can be done by determining the positions to be filled, identifying the requirement of

manpower, filling the vacancies and training employees so that the assigned tasks are

accomplished effectively and efficiently.

The managerial functions of promotion, demotion, discharge, dismissal, transfer, etc. Are also

included with the broad task “staffing.” staffing ensures the placement of the right person at the

right position.

Basically organizing is deciding where decisions will be made, who will do what jobs and tasks,

who will work for whom, and how resources will assemble.

3. Leading: Managing and Motivating People

The third basic managerial function is leading. The skills of influencing people for a particular

purpose or reason is called leading. Leading is considered to be the most important and

challenging of all managerial activities.

Leading is influencing or prompting the member of the organization to work together with the

interest of the organization.

Creating a positive attitude towards the work and goals in among the members of the

organization is called leading. It is required as it helps to serve the objective of effectiveness and

efficiency by changing the behavior of the employees.

Leading involves a number of deferment processes and activates. The functions of

direction, motivation, communication, and coordination are considered a part of leading process

or system.

Coordinating is also essential in leading. Most authors do not consider it a separate function of

management. Rather they regard coordinating as the essence of manager ship for achieving

harmony among individual efforts towards accomplishing group targets.

Motivating is an essential quality for leading. Motivating is the function of management process

of influencing people’s behavior based on the knowledge of what cause and channel sustain

human behavior in a particularly committed direction. Efficient managers need to be effective

leaders.

Since leadership implies fellowship and people tend to follow those who offer a means of

satisfying their own needs, hopes and aspirations it is understandable that leading involves

motivation leadership styles and approaches and communication.

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4. Controlling: Monitoring and Evaluating activities

Monitoring the organizational progress toward goal fulfillment is called controlling. Monitoring the

progress is essential to ensure the achievement of organizational goal.

Controlling is measuring, comparing, finding deviation and correcting the organizational activities

which are performed for achieving the goals or objectives.

Controlling consist of activities, like; measuring the performance, comparing with the existing

standard and finding the deviations, and correcting the deviations. Control activities generally

relate to the measurement of achievement or results of actions which were taken to attain the

goal.

Some means of controlling, like the budget for expenses, inspection records, and the record of

labor hours lost, are generally familiar. Each measure also shows whether plans are working out.

If deviations persist, correction is indicated. Whenever results are found to differ from the

planned action, persons responsible are to be identified and necessary actions are to be taken to

improve performance.

Thus outcomes are controlled by controlling what people do. Controlling is the last but not the

least important management function process.

It is rightly said, “planning without controlling is useless”. In short, we can say the controlling

enables the accomplishment of the plan.

All the management functions of its process are inter-related and cannot be skipped. The

management process designs and maintains an environment in which personnel’s, working

together in groups, accomplish efficiently selected aims.

All managers carry out the main functions of management; planning, organizing, staffing,

leading and controlling. But depending on the skills and position on an organizational level, the

time and labor spent in each function will differ.

Operational processes

Perhaps the most frequently used and the most important type of processes in any company are

the operational processes. These are processes which define the primary activities that a

company needs to perform in order to successfully execute its business.

It is very important to understand the concept of value stream and map the same before

beginning to develop operational processes. After all the process ought to be designed from the

point of view of the customer. They are the ones that are going to finance the entire

organization.

As we know that processes can be defined with the help of inputs, outputs, sequential activity

and an objective, let’s see how to put the pieces of the puzzle together to manage and improve

business processes.

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The Role of Inputs: Inputs are required by every process to perform work. Inputs may be in

the form of men, money, material, machinery, knowledge and information. It is important to

understand that some inputs like men, money and material are approximately proportional to

their usage. This means that the more you use of them the more it costs you. Hence the

objective of any operational process is to ensure that resources are utilized in the most

conservative manner possible. At the same time other inputs like knowledge and information

have little cost and can improve the efficiency of the process drastically as we shall see later.

The objective is to use them to reduce the amount of inputs required thereby bringing down the

cost.

Search for the Best Practice: It is important to understand that processes follow the principle

of equifinality. This means that the same process can be designed in “n” number of ways.

Considering your objective in mind, all the possible alternative ways must be explored.

Break free from the traditional mindset and use some lateral thinking to develop alternatives

before a choice is made. The idea is to choose one best practice which will meet the company’s

objectives best. However it is important to understand that even after the choice regarding the

best practice has been made, a company must be constantly on the vigil to ensure it doesn’t

become obsolete. Technologies keep on evolving over time and along with them, best practices

have to evolve too or else one stands the risk of being rendered obsolete by a well informed

competitor.

Standard Operating Procedure: Once the process is decided it must be documented and

created as a manual. This manual must then be given to all employees during their training. One

must ensure that the process is built in such a way that only the best practice can be followed. If

the employee has choices between alternative courses of action, the design is faulty. What is the

point of studying alternatives and coming up with the best one, if the employees are not going

to follow it in a standardized manner? This standardization creates uniform levels of service and

standardized quality no matter where the service or product is delivered.

Because strategic planning is about improving the status quo, looking at how to improve

operations is the key. Operations produce and deliver the goods and services to customers.

These processes encompass managing your creation of customer value. Service companies may

be tempted to think that processes aren’t managed in this area, but consider how you deliver

your service. It doesn’t happen by magic. You take specific steps to deliver what you do; these

steps are your operational processes.

Operations management covers four generic processes:

Developing and sustaining supplier or vendor relationships: Bringing raw material

and goods into your company is a set of processes that feed into how you produce

products and services. Do you effectively manage your supplier relationships to ensure

that you obtain the total lowest cost of the products and services you buy? Are you

efficiently sourcing, moving, storing, and inspecting the raw materials you use?

Producing products and services: At the heart of your operational processes is the

production of your product and service. Are you efficient at production, thereby lowering

production costs and increasing your asset utilization? Are you effectively producing your

product with minimal scrap, error rates, or returns?

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Delivering the product or service to your customer: Just like with managing your

suppliers, you also have processes that manage your distribution. Are you efficiently

delivering your products or services to your customers? Are you effective at reaching your

customers through your distribution channels?

Managing operating risk: Not all companies have direct operating risk, but most

companies are exposed to some kind of risk associated with market fluctuations.

Processes in this area deal with effectively and efficiently reducing costs associated with

capital costs and taxes.

Erlach Computer Consulting, a small technology service company, improved the one key

operational process that nearly doubled the company’s revenue in one year. The process? Time

tracking. Yes, the process may sound simple, but for Erlach, time is the company’s inventory,

product, and distribution medium. Starting from the top, management required every employee

to track his or her time down to 15-minute increments.

The company was tracking time previously, but not with 100 percent compliance. Now that the

time is captured, Erlach can account and bill for previously unbilled time. Not only were the

employees more conscious of their work day, but also clients were correctly charged for the

services they received.

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Characteristics of operational systems

An information system is a system comprised of technology --- primarily computers --- data and

operations managers in management processes. Two types of information systems are

operational and strategic. These systems often are used in the same business, but they have

some distinguishing characteristics and functions.

People Supported

People who work with operational information systems typically are operations managers. These

managers are concerned with the daily flow of activities and data. By comparison, those who use

strategic informational systems tend to be senior-level managers. These managers are

concerned with how data might be applied in different ways for the benefit of the business and

have more control over how operations proceed.

Role

With an operational information system, the objective is to track fundamental activities, as well

as basic transactions that happen over the course of operations. This tracking allows managers

to answer routine questions such as where inventory is or how many hours employees worked.

With a strategic information system, the objective is to identify trends in the business so

managers can develop new methods of operation that may increase productivity, eliminate

problems, improve customer service and relations and raise profits. Strategic systems look at

what changes in the business are possible.

Change

Operational information systems generally do not change operations, instead merely gathering

data on operations already occurring or in place. However, they sometimes are connected to

greater efficiency, depending on the data collected. Strategic information systems are put in

place specifically to define changes that are possible. They always relate to the change goals

that management develops.

Bottom Line

Operational information systems tend to be those used to gather and track data, while strategic

information systems tend to be those that apply the data. However, there is some degree of

overlap between operational and strategic information systems. For instance, by tracking the

number of sales, managers can determine periods of the year where more workers might be

beneficial and develop a plan for expeditiously hiring, paying and dismissing some temporary

workers.

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Understand the relationship between operations and business

performance How operations function supports business performance

Operations managers are integral to organizational strategy in many companies and

organizations. The Bureau of Labor Statistics (BLS) reports that over 1.7 million operations and

general managers were employed throughout the United States in 2010 in various industries.

Operations managers made an average salary of $113,100 per year, according to the BLS. This

provides some indication of their overall importance for the development of the organizations for

which they are employed.

Planning

Operations management professionals are responsible for collaborating with other managers and

executives to determine how operational planning can contribute to the long-term strategy of

the organization. They provide the functional component of the strategic operations of the

company by planning the activities that contribute to the overall goals of the organization. This

planning can include determining goals and policies for logistics management, budget

management and support services management. In short, the operations manager ensures that

all departments on the same page about the direction the company is heading.

Direction

To ensure that planning is carried out, operations management professionals are also

responsible for providing direction to various managers under their watch. Operations managers

ensure that all departments are completing their necessary function within the organization by

meeting productivity goals and budgetary guidelines. The operations manager may need to

make corrections or modifications when goals are not being met or carried out in a manner

consistent with company policy.

Coordination

Operations managers also help in the achievement of organizational strategy goals by

coordinating the activities between various departments within their companies. They improve

efficiency and focus by facilitating and improving relations between departments, especially

those that often operate independently of one another. They play the same role that an

orchestra conductor plays in the field of music, coordinating and directing the activities of each

section of musicians (departments) as it completes its part in the production.

Resources

The operations manager is also integral to the continued strategy and vision of a company in his

role as a resource manager. Operational managers must be able to assess the resources of the

organization, whether they be monetary or otherwise, and ensure that the resources are used as

efficiently as possible. An effective operations manager can assess whether or not resources are

being used wisely and increase profitability as a result of his assessment. Profitability contributes

to long-term company goals and strategies by providing additional resources for planning

strategy.

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Objectives of Operational Performance

There are many ways to measure the performance of a company so as to determine if it is doing

well. The most common method is to look at its gross or net profit. This, however, isn’t always a

reliable way to determine the performance of a company. Let us consider the net income or loss

of the company. This is determined by subtracting the operating expenses from the gross profit.

The operating expenses consist of the selling expenses, the administrative expenses, and other

miscellaneous expenses.

You may have a situation in which your net income is increasing, but so are the operating

expenses; or, the gross profit stays the same, year in and year out, but the operating expenses

steadily increase. These are both bad scenarios, and can easily be missed by focusing only on

the gross and net incomes of a business. This is where operational performance comes in.

What Are Operational Performance Objectives?

Operational performance objectives are the areas of operational performance that a company

tries to improve, in a bid to meet its corporate strategy. After defining its corporate strategy, a

company will identify the relevant operational performance objectives to measure and configure

the environment, to enable the objectives to be accomplished. According to Andy Neely, author

of the book “Business Performance Measurement: Unifying Theory and Integrating Practice,”

there are five main operational performance objectives: speed, quality, costs, flexibility, and

dependability.

Speed

The objective of speed measures how fast a company can deliver its products and generates

sales quotes. This objective will be concerned with such issues as the time that it takes to

manufacture and process one or more products of the company or the time that it takes to

research a new product and develop it.

Quality

Typically, quality is considered to measure how well a product conforms to certain specifications.

However, it’s more than that, according to Andy Neely. It’s also how desirable the features of

the product are; how reliable the product is; how durable it is; how easily it can be serviced;

how well it performs its intended function; and, how much the customers believe in its value. All

of these are relevant measures of quality.

Costs

This objective looks at how much variation there is in the unit cost of a product as measured by

changes in a variety of factors, including the volume and the variety of the products. Products

that feature a greater variety tend to sport lower volumes and higher unit costs and vice versa.

Ultimately, this affects the price of the product, the costs of producing it, and the profits to be

obtained from that product.

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Flexibility

Flexible operations are operations that can configure the product lines to deal with various

requirements and to also adjust these product lines quickly to new requirements. The latter is

also closely related to the speed objective. A company should be able to produce different

quality product varieties and also adapt its operations to suit different market conditions and

delivery schedules.

Dependability

This operational performance objective measures how dependable the company is when it comes

to timely delivery of products to its customers, in accordance with planned prices and costs. The

product’s ability to function in an intended way consistently over a reasonable period of time is

also a measure of its dependability.

Improving Business Processes

You probably use dozens of business processes every day.

For example, you may go through the same steps each time you generate a report, resolve a

customer complaint, contact a new client, or manufacture a new product.

You've likely come across the results of inefficient processes, too. Unhappy customers, stressed

colleagues, missed deadlines, and increased costs are just some of the problems that

dysfunctional processes can create.

That's why it's so important to improve processes when they are not working well. In this article,

we'll look at how you can do this.

About Business Processes

Processes can be formal or informal. Formal processes – also known as procedures – are

documented, and have well-established steps.

For example, you might have procedures for receiving and submitting invoices, or for

establishing relationships with new clients. Formal processes are particularly important when

there are safety-related, legal or financial reasons for following particular steps.

Informal processes are more likely to be ones that you have created yourself, and you may not

have written them down. For example, you might have your own set of steps for noting meeting

actions, carrying out market research, or communicating new leads.

The Importance of Efficient Processes

These different kinds of processes have one thing in common: they're all designed to streamline

the way that you and your team work.

When everyone follows a well-tested set of steps, there are fewer errors and delays, there is less

duplicated effort, and staff and customers feel more satisfied.

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Processes that don't work can lead to numerous problems. For example:

Customers may complain about poor product quality or bad service.

Colleagues get frustrated.

Work may be duplicated, or not done.

Costs increase.

Resources are wasted.

Bottlenecks can develop, causing you to miss deadlines.

Step 2: Analyze the Process

Use your flow chart or swim lane diagram to investigate the problems within the process.

Consider the following questions:

Where do team members or customers get frustrated?

Which of these steps creates a bottleneck?

Where do costs go up and/or quality go down?

Which of these steps requires the most time, or causes the most delays?

First use Root Cause Analysis, Cause and Effect Analysis, or The 5 Whys to trace the problem

to its origins. After all, if you only fix the symptoms, the problems will continue.

Then look at other teams in your organization. What tactics have they developed to deal with

similar situations?

Step 3: Redesign the Process

You're now going to redesign the process to eliminate the problems you have identified.

It's best to work with the people who are directly involved in the process. Their ideas may reveal

new approaches, and, also, they're more likely to buy into change if they've been involved at an

early stage.

First, make sure that everyone understands what the process is meant to do. Then, explore how

you can address the problems you identified in step 2 (Brainstorming can help here). Note

down everyone's ideas for change, regardless of the costs involved.

Then, narrow your list of possible solutions by considering how your team's ideas would translate

to a real-life context.

Start by conducting an Impact Analysis to understand the full effects of your team's ideas.

Then, carry out a Risk Analysis and a Failure Mode and Effects Analysis to spot possible risks

and points of failure within your redesigned process. Depending on your organization's focus,

you may also want to consider Customer Experience Mapping at this stage.

These tests will help you to understand the full consequences of each proposed idea, and allow

you to make the right decision for everyone.

Once you and your team agree on a process, create new diagrams to document each step.

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Step 4: Acquire Resources

You now need to secure the resources you need to implement the new process. List everything

that you'll need to do this.

This could include guidance from senior managers or from colleagues in other departments, such

as IT or HR. Communicate with each of these groups, and make sure that they understand how

this new process will benefit the organization as a whole. You may need to prepare a business

case to demonstrate this.

Step 5: Implement and Communicate Change

It's likely that improving your business process will involve changing existing systems, teams, or

processes. For example, you may need to acquire new software, hire a new team member, or

organize training for colleagues.

Rolling out your new process could be a project in itself, so plan and manage this carefully.

Allocate time for dealing with teething troubles, and consider running a pilot first, to check for

potential problems.

Keep in mind that change is not always easy. People can be resistant to it, especially when it

involves a process that they've been using for some time. You can use tools such as the Change

Curve and Kotter's 8-Step Change Model to help overcome resistance to change.

Step 6: Review the Process

Few things work perfectly, right from the start. So, after you roll out the new process, closely

monitor how things are going in the weeks and months that follow, to ensure that the process is

performing to expectations. This monitoring will also allow you to fix problems as they occur.

Make it a priority to ask the people involved with the new process how it's working, and what – if

any – frustrations they're experiencing.

Adopt continuous improvement strategies such as Kaizen. Small improvements made regularly

will ensure that the process stays relevant and efficient.

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Internal measures of success

Success often comes down to one thing – focus.

Focusing on the right things will help you save time and money. The most valuable tools to help

you focus are Critical Success Factors and Key Performance Indicators.

Measurement tools

Critical Success Factors (CSFs) are strongly related to the strategic goals of the business:

They're the essential areas of activity that should receive constant and careful

attention from management.

They must be performed well if you're to achieve the business's goals.

Set between four and eight CSFs in order to be effective in implementing change.

When starting to use CSFs, consider selecting the most meaningful and easiest to

assess.

Key Performance Indicators (KPIs) are the measurement tools used for each CSF:

They monitor the progress of achieving the CSFs.

They should be quantifiable (able to be measured) and aligned to the CSFs and

business goals to be effective and achievable.

They limit the amount of data (or areas of focus) to the ones that are truly important to

business success.

Choosing your CSFs

In order to set CSFs that will be effective to achieve business success, you should first review:

the overall business operations

the environment in which you operate – both internal and external

business performance, including;

o financial

o operational

o strategic.

Spending time to do this exercise will help you identify the most important CSFs for your

business.

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To keep your CSFs easy to monitor and manage – and in line with better business practice

– consider setting one or two CSFs covering the following areas:

Financial – what is the financial viability of the business, and will our strategy deliver

financial benefits?

Customer – are we satisfying the customer’s needs, and how do our customers see us?

Internal business processes – what needs to be improved within the business to

deliver to our customers and other stakeholders?

Learning and innovation – what needs to be done to improve and innovate to create

value for our customers and stakeholders?

Creating your KPIs

Setting KPIs will vary between each business. If you do some research on KPIs, you'll notice

there are literally thousands of measures that can be used in business.

So it's important that you choose KPIs:

that mean something to your business

that can be easily measured (you don’t want to have to create new reports or data

sources each time you need to measure)

that provide outcomes to achieve your CSFs.

Take a look at the examples below to get a sense of the four key areas of the CSFs outlined

above.

1. Financial

Your financial measures should tell you:

What is the financial viability of the business?

Will our strategy deliver financial benefits?

Examples of financial CSFs and the matching KPIs:

Strong cashflow (CSF) = positive cashflow balance for each 12 month forecast or access

to finance facility (KPIs)

Profitability growth (CSF) = sales growth of 2.5 percent per month, no change in gross

margin or 1 percent reduction in expenses per month (KPIs).

2. Customer

Your customer measures should tell you:

Are we satisfying the customer’s needs?

How do our customers see us?

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Examples of customer CSFs and the matching KPIs:

Customer retention (CSF) = number of repeat purchases per customer over six months,

or number of new customers over six months (KPIs)

Reliability (CSF) = number of customer returns, or percentage of time on delivery (KPIs).

3. Internal business process

Your internal business process measures should tell you:

What needs to be improved within the business to deliver to our customers?

What needs to be improved within the business to deliver to other stakeholders?

Examples of internal business processes CSFs and the matching KPIs:

Environmental sustainability (CSF) = increase monthly office recycle of waste by two

cartons or introduce a 'green' policy for purchasing and working with other business

partners (KPIs)

Optimise resource allocation (CSF) = increase employee sales as a percentage of net sales

or reduce excess and aged stock by 20 percent by half year (KPIs).

4. Learning and innovation

Your learning and innovation measures should tell you:

What needs to be done to continue to improve and innovate to create value for your

customers?

What needs to be done to continue to improve and innovate to create value for your

stakeholders?

Examples of learning and innovation CSFs and the matching KPIs:

New product introduction (CSF) = number of new products compared to competition or

increase stock turnover by 5 percent per month (KPIs)

Workforce training (CSF) = each employee to attend one training event yearly or 5

percent of workforce to achieve improved strategic skills for the financial year (KPIs).

Critical Success Factors and Key Performance Indicators when used well in business will:

ensure goals set are measured

ensure that everyone in the business understands what the important aspects to the

success of the business are

direct all business activity towards improving the overall performance of the business.

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Operations, Business Performance and Internal Measures of Success

Company operations have direct impact on business performance and internal measures of

success can be applied in order to assess the nature of this impact. Great impact of operations

on business performance can be explained by using the term of balanced scorecard, that consist

of a set of measures used to assess four critical aspects of a business practice: financial

performance, customer service, internal processes and innovation and learning.

Most important operations-related internal measures of success within balanced scorecard

include the amounts of waste and scrap, duration of time to produce a single unit, numbers of

defected units, numbers of returned units, and the level of effectiveness of labour utilisation.

Balanced scorecard has been widely praised by business scholars and practitioners for its

advantages that include possibility to identify ‘best practices’ more effectively, opportunities to

identify additional sources of competitive advantage, achieving alignment between key

performance measures and organizational strategy, possibility view operations from holistic

approach etc.

Accordingly, acknowledgement of operations as one of the critical measures of success within

the framework of balanced scorecard can be interpreted as indication of great impact of

operations on business performance.

Unless the quality aspect of operations is addressed in an effective manner, proposed

management initiative of producing upgraded product range for online sales may have negative

effects in internal measures of success at least in short-term perspective. In other words, on-site

factory is already operating to near capacity with limited space for increasing inventory, and

therefore attempts to increase the volume of output with disregard to quality, capacity and

inventory is going to cause internal measures of success to decline which can lead to the overall

decline of business performance.

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Five Simple Ways to Increase Your Customer Base

Do you find yourself thinking about how to increase your customer base?

One of key drivers in your company’s value is the value of your customers. Analyzing customer

profitability and maximizing a customer’s lifetime value are highly important and essential to any

business.

To increase your customer base, it is necessary to stay in constant contact with potential and

existing customers and the more value your business can offer, the more likely they will remain

loyal.

A 5% increase in customer retention can result in a 75% increase in customer value. The

challenge is how to improve your retention by 5%.

Below are 5 simple ways to bring in more customers and increase your customer base.

1. Offer a free newsletter

Free is something that everyone can afford, from small businesses to global corporations. When

you offer a free newsletter, you are informing your potential customers that you are willing to

provide free information from the start. If you provide good content, customers will know more

about your business.

2. Increase your customer base by asking for opinions

Before a web visitor leaves your website, request that they complete a short survey related to

your business. People are happy to express themselves and often enjoy telling you about their

online and offline experiences. You can use a survey to conduct industry research, customer

experience or measure customer satisfaction.

3. Keep up and maintain excellent customer support and service

A customer who contacts customer support about their first order is just as important as a

customer who contacts customer service about their tenth order. Treat each customer with

respect and take appropriate action. A happy customer is likely to tell at least three friends

about a positive experience and great customer service leads to increased sales. Best of all, you

can keep track of previous customer communication through tools such as CRM software.

4. Keep your website content fresh

Fresh and informative content is one of the main elements that pull in new visitors and potential

customers. Keep your content fresh by publishing a blog that reports the latest business news,

key-takeaways from whitepapers and hot topics within your industry. Fresh content will also help

your website be found in search engines.

5. Promote your business on social media networks

Facebook users have an average of 229 friends. When you create new content, launch a new

product or run a new campaign, be sure you share this across the social media channels you are

active in. There is no easier way to grow your customer base than providing value and then

having your customers promote your brand for you.

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Building a solid customer base

Marketing is the art of attracting and keeping customers. If building a solid customer base for

your product or service is what you are looking to achieve in 2018, implementing the five steps

above will greatly increase your customer database in a short period of time.

How to Expand Customer Base

Stagnated sales could mean you need a fresh batch of customers in your small business.

However, if you are already offering good prices and competitive products, you'll have to work

harder to reach new clients. One good method to apply is based on the "funnel effect" model.

The premise is as the business pours loads of new contacts into the top, the contacts funnel

through your sales team, some resulting in sales. Expand your customer list by creating

prospect momentum using short bursts of focused energy. Once you've gathered the necessary

information, you can begin booking sales appointments and making sales.

1. Inform your sales staff that you are leading the team to focus on collecting prospects. Give a

timeline for when you'll start and finish. You should give a specific prospect goal to each member

of the team. Provide each team member with a list of ideas on where to find prospects.

2. Call your current clients and tell them about your goal. Ask them to help you reach the target

by giving you 5 to 10 names. Promise to keep the information private and do not sell the

information. Give the helpful clients a discount or a small gift for filling out a prospect card with

names and contact information.

3. Call the potential customers, and identify who you are and why you are calling. Tell them

you'd like to meet them and show them your product. Book appointments for demonstrations.

Follow up on the bookings with sales. Encourage the other sales team members to follow your

example.

4. Examine your current customer list. Identify possible niche demographics for future sales.

Target the group you've identified using advertising in areas that will reach them. For example,

if your target market is college students, buy some advertising space in a college newspaper.

5. Use no typical methods to advertise your company and products. Create online videos that

skillfully demonstrate your product or services. Post about your product videos on social

networking sites, and ask them to view your videos.

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How to improve customer satisfaction in 5 simple key points

Have you ever heard: Once you get a bad recognition, it is very difficult to regain the good

position?

Gone are the days when customers were happy just by receiving “please” and “thank you”. Even

though part of a proper etiquette, they are not sufficient. Excellent customer service is one

of the keys to success in any businessbut is exceptionally important in the hospitality

industry. The guests are hoping that the help from staff members will make their stay as

peaceful and comfortable as possible.

Hoteliers must be constantly learning how to innovate and meet the high expectations of their

guests. So, here are 5 pieces of advice on how you can improve your customer’s

satisfaction:

1. Give more, get more

You only have one chance to make a positive impression, so get it right! If you make a terrific

first impression, they will surely come back. Therefore, present more than what they are

expecting, for instance, deliver extra toiletries, clean the rooms daily, give extra pillows and

blankets and provide a good Wi-Fi service.

Moreover, you need to make sure to have quality foods, such as good coffee and tea — they are

a plus on your guest’s satisfaction! The main point is to anticipate their needs and

wishes.Obviously, you cannot please everyone, so the priority should be knowing your ideal

customers and aim to attract them.

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2. Customer loyalty is priceless

As said by Jeffrey Gitomer, customer satisfaction is worthless, customer loyalty is priceless. Your

main goal and focus should be on creating loyal customers who are not easily influenced by your

competitors. Simple things can be done to build customer loyalty and consequently, increasing

customer satisfaction. For instance, remembering special occasions such as birthdays or giving

personalized promotions and discounts. Personalized treatment is the best way to build-up

your customer’s loyalty.

3. Use negative reviews to your advantage

The hospitality industry can be a tough one regarding requests and complaints from guests

because they come from the most various places: email, phone, in person. It is often difficult to

manage all of them, let alone address them quickly. But, most times, providing a fast

response makes the difference between gaining or losing a potential customer.

Furthermore, rather than trying to find a way to delete your bad review, you should use it for

your own benefit. Be sure to answer the negative feedback in a well-timed manner and try to

offer a solution to fix the client’s problem. Also, guarantee you apologize to the guest and,

whenever they are not happy with your response, suggest taking the conversation in a more

private place.

4. Messaging apps are an excellent channel to provide a good customer support

The hotel industry can especially benefit from using messaging apps to improve their customer

service and support. From booking reminders to promoting events to replying to guest queries,

artificial intelligence is no longer a technology related to the future and the hospitality industry

can and ought to take advantage of it.

With HiJiffy, the guest only needs to find the hotel’s Facebook Page, click the message button

and start the conversation with the chatbot. With this solution, guests don’t need to install a new

app and get to, instead use one they are already familiar with. The chatbot allows guests to

have a 24/7 communication channel with the hotel.

5. Ask for and track guest’s feedback

Being proactive is a must! Most of the times, customer satisfaction is linked to the level of

customer communication. Hoteliers, by creating a dialogue with guests, can see their weak and

strong points regarding customer service. Feedback can be gathered in several ways and, when

used correctly, these tools can be a huge advantage in gaining new costumers and keeping old

ones.

However, collecting surveys is not enough if you do not listen to your guests. You should read

their opinions and measure whether they are actionable or not. The feedback can be applied to

decision-making in all departments. Besides, you cannot forget to reply to your guest, it is

fundamental to show that you listen to their thoughts and ideas. Always express appreciation for

their review and apologize for any mistakes or misconduct made by your hotel.

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25 Surefire Ways to Improve Customer Satisfaction

According to new report from CFI Group, customer satisfaction levels have experienced a slight

decline over the past year. Data compiled from consumers across various sectors reflects a

customer satisfaction score of 68 (out of 100), a four-point decline from the previous year.

This year’s reading is the lowest score since the report was first issued and it represents the

uphill climb many companies face in satisfying increasingly demanding consumers.

So what are some ways companies can drive customer satisfaction in today’s consumer-centric

landscape? The following is a curated list of 25 different tactics to improve customer satisfaction,

from a variety of sources:

1. Develop Customer Service Communities

“The most advanced companies are using [customer service] communities to generate product

ideas and test new products. Seventy-two percent of respondents [who participated in a Get

Satisfaction survey] are using communities to get feedback on how existing products are used;

67 percent use them to collect ideas for new products or features from customers; and 46

percent rely on them for feedback on prototypes or beta products.”

2. Treat Customers Like You Would Want to Be Treated

“Remember that your customer wants to see the sunny side of you and your business, so have

your filter on and put yourself in their shoes.

A good way to instill this attitude among your staff is to do some simple role play in which they

act out a few scenarios that involve both easy-going and difficult customers. Observe how they

handle the situation and coach them on areas to improve.”

3. Provide Multichannel Support

“With newer communications channels such as social, mobile, web chat, and email becoming

increasingly important to customers, companies must develop an omnichannel approach to their

customer service in order to connect with customers on the channels they prefer to use.

Multichannel support not only offers customers a seamless transition between channels; it also

prevents them from having to repeat information they may have already provided to different

call center agents, which can be both irritating to customers and potentially damaging to a

company’s reputation.”

4. Make Employee Satisfaction a Priority

“Simply put, when your employees are happy, they can provide better customer service. Studies

have proven that employees often perform better at the jobs when they feel appreciated. Give

each employee a personalized ‘thank you’ every now and then, and introduce an employee of

the month program, if you don’t have one already. If you can help your employees take pride in

their jobs, their work performance will also improve.”

5. Encourage Agents to Take Ownership of Problems

“Encourage operators to take ownership of problems and spend time dealing with the customer,

rather than escalating or passing over the problem. This gives advisors a real sense of pride in

their job and means they are taking their own action and really shows excellent customer

service.”

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6. Turn Customer Survey Data into Action

“Good data reflects the experiences your customers actually have with your company.

Furthermore, good data equips your company to take action. [The key is to] develop a

satisfaction survey that probes truthfully into the heart of your gaps and opportunities.”

7. Figure Out What the Customer Really Wants

“Figure out what the customer really wants, if you can solve the problem they will pay; the value

is often not in the discount you can offer but rather in the solution you can provide.”

8. Focus on Company Culture

“The best companies put a focus on culture. They implement training programs around their

cultural values to ensure everyone shares the same values and that they are consistently

demonstrated when dealing with customers.”

9. Stay Current on Customer Reviews

“In a world that is heavily dependent on the internet, consumers are quick to hop online and

share how they feel about a product or service. Take the time to log onto the internet and

observe what people are saying about your business. Find out what people enjoy, as well as

what they’d like to see improved. The reviews you stumble across might surprise you and

introduce you to areas of improvement that you had not previously considered. An expert from

Meyers Transport Ltd says problems with shipping and receipt of goods, especially, can often be

identified through customer reviews. Being aware of these issues is the first step towards

resolving them.”

10. Offer Proactive Customer Service

“The key here is to contact your customers before they need to pick up the phone and contact

you! To be effective, these contacts should be timely, personalized and relevant to the

consumer.

The best proactive strategies make regular contact throughout the consumer lifecycle. Examples

include: payment reminders, fraud monitoring, and personalized loyalty and reward schemes.

This strategy can reduce inbound calls and improve agent efficiency. This proves that offering

great customer service isn’t just good for the consumer, it’s good for the business as well.”

11. Personalize

“In everything you do, make sure the customer feels like he or she is the only one that matters.

Use the customer’s name, refer to personal information and congratulate a customer on his or

her birthday. Make them feel at home.”

12. Slash Wait Times

“Everyone is busy, and if your company can’t provide the highest levels of service your

customers won’t hesitate to find someone who can. Customer wait time needs to be eliminated

or managed. Bureaucracy needs to be replaced with customer-friendly processes. Be easy to do

business with, and your customers will reward you over and over again.”

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13. Put a Social Media Plan in Place

“Customers are increasingly demanding speedy responses—sometimes as quickly as in real

time—to their complaints on social media. A company that isn’t paying attention can wreak

havoc with its reputation.”

14. Rethink the Approach to Doing Business & Building Relationships

“Because consumers are operating differently today, and more differently tomorrow, companies

must embrace the environment in which we’re operating. It’s only fair to customers that

companies rethink their approach to doing business and building relationships with them.”

15. Demonstrate Product Knowledge

“One of the most important aspects of successful customer service revolves around product

knowledge. In other words, any and all agents who have direct customer contact should know

the company’s product and/or service inside and out.

In many cases, developing robust product knowledge involves managers helping agents build their confidence so they’re motivated to succeed. To do this, managers might try mapping out

their assessment of an agent’s product knowledge and compare it against the agent’s, identifying any gaps that exist and making it easier to put together a professional development plan for the future.”

16. Benchmark Customer Satisfaction

“Benchmarking is the process of comparing your own organization or operations against other

organizations in your industry or in the broader marketplace.

You might compare your most successful competitor’s customer processes and satisfaction with

your own. Or, you might look at a firm outside of your industry known for remarkable customer

service practices. Establishing a benchmarking initiative is an important component of measuring

and improving your customer service and satisfaction.”

17. Set Clear Expectations and Exceed Them

“Nothing is more frustrating for a consumer than wandering around in a digital world unsure of

what to expect from a business, or when. Let customers know up front what your standards and

practices are. How long will they wait for a response or a callback? Will that response truly be on

target and accurate? Removing the customers’ uncertainty about such common issues in

customer service lets them know that a company is committed to their success and satisfaction,

especially when the business builds in enough leeway that it can routinely exceed expectations.”

18. Study Complaints and Compliments

“Every message from a customer presents an opportunity to improve customer satisfaction.

Compliments show you what to reinforce, while complaints point to new ideas and action steps

for improvement.”

19. Hold Daily Stand Up Meetings with your Team

“Problems tend to come in waves. You might have a bug of the week, a new release causing

more questions or a seasonal volume increase. Instead of letting agents figure out how to deal

with this on their own, take it on as a team with daily stand-ups. You’ll start the day on the

same page and fire up.”

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20. Ask How Your Clients Would Like to be Responded to

“One way to increase customer satisfaction is to communicate with clients through their

preferred method. For online consumers, email is the standard method. This allows them to

maintain the anonymous status which is important to online consumers. Even when consumers

provide a telephone number, they may be surprised when you contact them by phone. If you

decide to place a call, take into consideration that it is a more personal and perhaps invasive

action.

Prepare notes or a list of questions beforehand to ensure you cover all your points and maximize

the time. By contacting people in their preferred method, you will most likely have a better

chance of reaching them with that reasonable time frame, communicating effectively and

achieving your goals.”

21. Provide Additional Benefits

“Who doesn’t like added benefits? Or, a special offer once in a while? Surprising your customers

with a free goodie unexpectedly can go a long way in building concrete relationships.

Sometimes, an unanticipated discount on the products your customers have been eying for

some time can work. On other events, you can consider throwing in an additional accessory or a

week’s worth post-purchase support for free. You would be amazed at how effective these little

things can be in building a positive image of your brand. It helps in increasing customer

satisfaction immensely.”

22. Offer Free Product Training and Support

“This is a clear, business-winning decision. Nothing decreases customer satisfaction more than

being confused with how to make a product work. And free product training and support will be

how you alleviate this customer frustration. Why does this work? For starters, when people

spend money on something, they tend to doubt themselves and their ability to make the product

work right. With detailed, free training, you’ll alleviate that self-doubt and win a life-long

customer.”

23. Press Reset After Every Call

“Dale Carnegie said “Dealing with people is probably the biggest problem you face, especially if

you are in business. Yes, and that is also true if you are a housewife, architect or engineer.”

Each new customer interaction should be entirely fresh and new for you. I used to imagine an

actual reset button that I would press after something frustrated me. Shed any frustration

before you interact with the next customer with a few deep breaths. Then, visualize the amazing

potential of your new opportunity to interact with your next customer.”

24. Ask for More Feedback

“Sometimes, it can be difficult to find ways to improve customer satisfaction. But there are

always more customers who have valuable insights that they haven’t given to you. It’s up to you

to go fishing, not for compliments, but for criticisms. In your survey, after asking customers how

satisfied they are, you should provide a form where they can type out a response. You have a

few different options here. It’s most common to ask customers to explain why they gave you the

score that they did. You can pick more customers’ brains by phrasing your question/statement

more clearly. For example, you could ask: “What could we have done differently to improve your

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experience?” By being upfront about what you’re asking, customers will provide you with more

insightful responses.”

25. Empower Your Agents

“Agents who have been carefully hired and properly trained then need the authority to handle

customer issues before they need escalation. No customer really wants to have to ask to speak

to a supervisor they want to be talking to someone who can solve the problem in the first place.

Giving your reps the power to make their own decisions makes your customers happy, and it

also keeps your reps happy, reducing agent turnover. More operational cost savings!”

How Do You Define Customer Satisfaction?

There are a number of definitions of customer satisfaction flying around, but they are all focused

on the same thing – how a company’s product or service measures up to customer expectation.

Companies place a great deal of focus on customer satisfaction because it can have a major

impact on revenue – the higher the level of customer satisfaction, the more likely customers are

to remain as customers. Furthermore, a high level of customer satisfaction increases the

likelihood of revenue generated from customer referrals and helps you to build your brand.

Many call centers use customer satisfaction surveys at the end of calls. Customers are asked to

complete a quick survey after every call to and rate the level of service they received and

understand how the customer feels about your business. Customer satisfaction surveys help

companies to uncover problems with their service in a timely manner. They also provide visibility

into the performance of each member of your team.

If your call center uses customer satisfaction surveys it is important that you turn the data you

collect into action. If agents are consistently getting low scores in surveys, coaching sessions

should be set up to identify and eradicate the behaviors that result in negative customer

sentiment.

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What is the Importance of Customer Satisfaction?

Customer satisfaction is an important metric for companies as it provides an insight into things

like customer loyalty, likelihood of churn, and also helps identify issues with the product or

service. Companies that provide a high level of customer satisfaction can also use it to

differentiate themselves from their competitors.

The importance of customer satisfaction was highlighted by a 2008 survey conducted by

Accenture which showed that poor customer service, and not price, was the main reason for

customer churn. By increasing the level of customer satisfaction you can reduce customer churn

rates at your company.

Similarly, a high level of customer satisfaction reduces negative word of mouth. McKinsey

estimates that an unhappy customer tells 9-15 people about their bad experience. One thing

companies who provide a low level of customer service sometimes overlook is the collateral

damage caused by unhappy customers. It is bad enough losing business because you provided a

customer with a low level of service, but what about losing 15 more customers as a result?

Customer satisfaction can have a massive impact on your business and appropriate care should

be taken.

You should also remember that acquiring new clients is a lot more expensive that keeping the

clients you already have. Misallocating resources and overlooking customer happiness as you

chase new business opportunities is a common mistake that must be avoided.

Final Thoughts

While there’s no one solution for improving customer satisfaction levels, the key is to develop a

customer-centric mindset that will help inform decisions and company direction. The above list

of recommended tactics from a wide variety of sources represents only the beginning – the

possibilities are endless.

How to increase workplace satisfaction

For many companies, your employees are your most important asset. Hiring and training new

employees is both costly and time-consuming, and losing key employees may mean losing key

knowledge and experience. In order to retain your best employees, it is important to make sure

that employees are satisfied with their jobs and work environment. There is no single correct

method for increasing workplace satisfaction; you may need to try a variety of measures and

survey employees regularly to find out what they want.

1.

Create a positive work environment. This may include surveying your employees to find out their

needs and what would make them more satisfied with their work.

This can include instituting programs, such as childcare vouchers, employee discount programs

or flextime. It may also include improving the physical design of the workplace. For example, by

having more natural lighting.

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2.

Pay your employees according to industry standards. Employees will be more satisfied with their

pay if they know it is comparable to what their industry colleagues are making. Compensating

employees with less money than their counterparts in the industry could also demotivate them

and encourage them to look for work elsewhere.

3.

Use appropriate reward and recognition programs to show employees they matter to you. Give

positive feedback wherever possible. Send employees handwritten, personal notes when they

have done good work. Consider holding small, informal events throughout the year as rewards

for good work. According to professional business consultant Gregory Smith, creative and

personal rewards can have a big impact. Smith writes on his company website,

www.chartcourse.com, that Graham Weston, CEO of Rackspace Managed Hosting, rewards top

employees by letting them drive his convertible for a week.

4.

Provide training and advancement opportunities. Employees who know they have the

opportunity to improve their skills and rise within the company may be more satisfied with their

work.

5.

Engage your employees. Provide opportunities for your employees to be creative and to

contribute suggestions and idea for improvements. Hold an annual ideas day where employees

can present ideas for new products or processes to management.

What Makes Up Employee Satisfaction?

Employee satisfaction describes the level of happiness workers experience. Employee

satisfaction is an important element within business because it directly relates to the productivity

of employees. Workers who experience high employee satisfaction are generally more productive

than unsatisfied workers. Companies must understand what contributes to employee satisfaction

and implement necessary steps to improve morale within their firms.

Employee Flexibility

Companies that offer some level of flexibility to their employees typically possess workers with

high employee satisfaction. Some companies offer flexibility by rearranging work schedules to

better suit employees.

Some organizations implement staggered work schedules to help workers avoid traffic and ease

the stress of driving. An employee experiences less stress when he isn’t worried about getting to

work at a specific time to prevent a reprimand from a manager.

More Time to Work

Many companies implement deadlines that employees must meet. Employees who face deadlines

often deal with a lot of stress in an attempt to meet them. Employees who are given more time

to work appreciate the gesture from managers. Employers can give employees more time to

work by cutting team meetings and training sessions during times of approaching deadlines.

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Compensation and Benefits

Employees who receive competitive wages and fringe benefits are more likely to experience high

employee satisfaction than low-paid workers without benefits. A worker can make productivity

his main focus when not worrying about how to make money stretch to pay bills. Employees who

feel as if they are not paid enough experience low morale and a decrease in productivity.

Underpaid employees typically leave jobs in search of better opportunities. Companies can

increase employee satisfaction by offering competitive wages and benefits according to industry

standards.

Career Growth

Employees value their jobs and employers when given the opportunity to advance within a

company. Money is not the only thing employees value, but an increase in responsibility is also

important to them. When an employee understands that the organization's culture is to promote

internally, the employee maximizes his efforts to increase productivity, benefit the team and

contribute innovative ideas. An employee who knows there is little chance of moving to a higher

position within the firm sometimes lacks motivation, which only harms the company in the long

run.

Relationship with Management

The employee-manager relationship is an important factor within a business. Employees benefit

from good relationships with their managers. Managers increase employee satisfaction by

acknowledging positive contributions made by the employee. Employees do not always look for

monetary recognition but desire simple praise from a supervisor for a job well done. A good

manager encourages productivity and innovation by valuing employees’ input.

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Understand the importance of administration in operations

management

Relationship between operations and administrative management

The two terms ‘management’ and ‘administration’ are often used synonymously. In this title we

shall focus on management but most of what is said is also applicable to administration.

The distinction between management and administration is also related to the level of organisa-

tion.

As Dalton E. Mc Farland put it:

“In business firms, administration refers to higher, policy-determining level. One seldom

regards the first-line supervisor as an administrator; he is a manager. In the health care fields

and in many service organisations, problems (such as flu vaccine distribution) are

administrated”.

Administration may be defined as “the guidance, leadership and control of the efforts of a

group of individuals towards some common goals”.

Others often prefer the synthetic term ‘administrative management’ (which is concerned with

problem-solving and decision-making aspects of the organisation, to distinguish it from

‘operative management’ which, as the name implies, is concerned with the operational aspects

of the business. Some experts like Oliver Sheldon draw a distinction of their own.

Definition:

The former is defined as that function in the industry which is concerned with policy-

determination, the co-ordination of finance, production, distribution as also the establishment of

organisation and ultimate control of the executives.

Contrarily, the latter is that process concerned with execution of the policies within certain limits

set by the administration and employment of the organisation for the purpose of accomplishing

objectives laid down by the former.

Essence of Administration:

In fact it was Ordway Tead who has made an interesting analysis of the essence of

administration. He analysed the process of administration into ten distinct elements concerned

with establishment of objectives of the organisation, laying down of broad policies for structuring

and stimulation of the organisation, evaluation of the total outcome and above all, looking

ahead.

Contrarily, management endeavours to attain aims and objectives as laid down by

administration and within the organisational limits set forth by it.

It is, therefore, clear that administration is more important at higher levels whereas

management is more important at lower levels in the firm’s organisational pyramid.

Thus administration is a top-level function while management is a bottom-level one. The

fundamental point of distinction between these two aspects is that whereas the former is the

process of laying down broad policies and goals of the organisation, the latter directs and guides

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the operational or functional aspects of the organisation towards realising the objectives set

forth by the former.

A closer look reveals that the scope of management is broader than that of administration. In so

far’ as management comprises both the process of planning and policy-making as also their

execution, management embraces both administrative management and operative

management.

However, the cardinal point is that the distinction drawn above between the two aspects of

organisation serves no real purpose, in fact, the process of management is the same in all

enterprises and at all levels in the organisation. In truth, management is as much responsible

for planning as administration is. It is in fact, a common experience that the same set of

personnel are supposed to discharge both the above functions.

Of course, it is true that planning is more important and broader at higher levels of organisation.

Yet it is equally valid that every management, irrespective of its hierarchy in the organisational

set up, has to do some sort of planning and the process of planning is essentially the same at all

levels.

Difference Between Management and Administration

Simply put, management can be understood as the skill of getting the work done from others.

It is not exactly same as administration, which alludes to a process of effectively administering

the entire organization. The most important point that differs management from the

administration is that the former is concerned with directing or guiding the operations of the

organization, whereas the latter stresses on laying down the policies and establishing the

objectives of the organization.

Broadly speaking, management takes into account the directing and controlling functions of the

organization, whereas administration is related to planning and organizing function.

With the passage of time, the distinction between these two terms is getting blurred, as

management includes planning, policy formulation, and implementation as well, thus covering

the functions of administration. In this article, you will find all the substantial differences

between management and administration.

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Comparison Chart

BASIS FOR

COMPARISON

MANAGEMENT ADMINISTRATION

Meaning An organized way of

managing people and

things of a business

organization is called the

Management.

The process of administering an

organization by a group of

people is known as the

Administration.

Authority Middle and Lower Level Top level

Role Executive Decisive

Concerned with Policy Implementation Policy Formulation

Area of

operation

It works under

administration.

It has full control over the

activities of the organization.

Applicable to Profit making

organizations, i.e. business

organizations.

Government offices, military,

clubs, business enterprises,

hospitals, religious and

educational organizations.

Decides Who will do the work? And

How will it be done?

What should be done? And

When is should be done?

Work Putting plans and policies

into actions.

Formulation of plans, framing

policies and setting objectives

Focus on Managing work Making best possible allocation

of limited resources.

Key person Manager Administrator

Represents Employees, who work for

remuneration

Owners, who get a return on

the capital invested by them.

Function Executive and Governing Legislative and Determinative

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Definition of Management

Management is defined as an act of managing people and their work, for achieving a common

goal by using the organization’s resources. It creates an environment under which the manager

and his subordinates can work together for the attainment of group objective. It is a group of

people who use their skills and talent in running the complete system of the organization. It is

an activity, a function, a process, a discipline and much more.

Planning, organizing, leading, motivating, controlling, coordination and decision making are the

major activities performed by the management. Management brings together 5M’s of the

organization, i.e. Men, Material, Machines, Methods, and Money. It is a result oriented activity,

which focuses on achieving the desired output.

Difference Between Management and Administration

Definition of Administration

The administration is a systematic process of administering the management of a business

organization, an educational institution like school or college, government office or any nonprofit

organization. The main function of administration is the formation of plans, policies, and

procedures, setting up of goals and objectives, enforcing rules and regulations, etc.

Administration lays down the fundamental framework of an organization, within which the

management of the organization functions.

The nature of administration is bureaucratic. It is a broader term as it involves forecasting,

planning, organizing and decision-making functions at the highest level of the enterprise.

Administration represents the top layer of the management hierarchy of the organization. These

top level authorities are the either owners or business partners who invest their capital in

starting the business. They get their returns in the form of profits or as a dividend.

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Supply Chain

A supply chainis a system of organizations, people, activities, information, and resources

involved in moving a product or service from supplier to customer. Supply chain activities

involve the transformation of natural resources, raw materials, and components into a finished

product that is delivered to the end customer. In sophisticated supply chain systems,

used products may re-enter the supply chain at any point where residual value is recyclable.

Supply chains link value chains.

Modeling

A diagram of a supply chain. The black arrow represents the flow of materials and information,

and the gray arrow represents the flow of information and backhauls. The elements are (a) the

initial supplier (vendor or plant), (b) a supplier, (c) a manufacturer (production), (d) a customer,

and (e) the final customer.

There are a variety of supply chain models, which address both the upstream and downstream

elements of supply chain management (SCM). The SCOR (Supply-Chain Operations Reference)

model, developed by a consortium of industry and the non-profit Supply Chain Council (now part

of APICS) became the cross-industry de facto standard defining the scope of supply chain

management. SCOR measures total supply chain performance. It is a process reference model

for supply-chain management, spanning from the supplier's supplier to the customer's customer.

It includes delivery and order fulfillment performance, production flexibility, warranty and

returns processing costs, inventory and asset turns, and other factors in evaluating the overall

effective performance of a supply chain.

The Global Supply Chain Forum has introduced another supply chain model. This framework is

built on eight key business processes that are both cross-functional and cross-firm in nature.

Each process is managed by a cross-functional team including representatives from logistics,

production, purchasing, finance, marketing, and research and development. While each process

interfaces with key customers and suppliers, the processes of customer relationship

management and supplier relationship management form the critical linkages in the supply

chain.

The American Productivity and Quality Center (APQC) Process Classification Framework (PCF) SM

is a high-level, industry-neutral enterprise process model that allows organizations to see their

business processes from a cross-industry viewpoint. The PCF was developed by APQC and its

member organizations as an open standard to facilitate improvement through process

management and benchmarking, regardless of industry, size, or geography. The PCF organizes

operating and management processes into 12 enterprise-level categories, including process

groups, and over 1,000 processes and associated activities.

In the developing country public health setting, John Snow, Inc. has developed the JSI

Framework for Integrated Supply Chain Management in Public Health, which draws from

commercial sector best practices to solve problems in public health supply chains.

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Management

A German paper factory receives its daily supply of 75 tons of recyclable paper as its raw

material.

In the 1980s, the term supply chain management (SCM) was developed to express the need to

integrate the key business processes, from end user through original suppliers. Original suppliers

are those that provide products, services, and information that add value for customers and

other stakeholders. The basic idea behind SCM is that companies and corporations involve

themselves in a supply chain by exchanging information about market fluctuations and

production capabilities. Keith Oliver, a consultant at Booz Allen Hamilton, is credited with the

term's invention after using it in an interview for the Financial Times in 1982. The term was used

earlier by Alizamir et al. in 1981 .

If all relevant information is accessible to any relevant company, every company in the supply

chain has the ability to help optimize the entire supply chain rather than to sub-optimize based

on a local interest. This will lead to better-planned overall production and distribution, which can

cut costs and give a more attractive final product, leading to better sales and better overall

results for the companies involved. This is one form of vertical integration.

Incorporating SCM successfully leads to a new kind of competition on the global market, where

competition is no longer of the company-versus-company form but rather takes on a supply-

chain-versus-supply-chain form.

Many electronics manufacturers of Guangdong rely on the supply of parts from numerous

component shops in Guangzhou.

The primary objective of SCM is to fulfill customer demands through the most efficient use of

resources, including distribution capacity, inventory, and labor. In theory, a supply chain seeks

to match demand with supply and do so with the minimal inventory. Various aspects of

optimizing the supply chain include liaising with suppliers to eliminate bottlenecks; sourcing

strategically to strike a balance between lowest material cost and transportation, implementing

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just-in-time techniques to optimize manufacturing flow; maintaining the right mix and location

of factories and warehouses to serve customer markets; and using location allocation, vehicle

routing analysis, dynamic programming, and traditional logistics optimization to maximize the

efficiency of distribution.

The term "logistics" applies to activities within one company or organization involving product

distribution, whereas "supply chain" additionally encompasses manufacturing and procurement,

and therefore has a much broader focus as it involves multiple enterprises (including suppliers,

manufacturers, and retailers) working together to meet a customer need for a product or

service.

Starting in the 1990s, several companies chose to outsource the logistics aspect of supply chain

management by partnering with a third-party logistics provider (3PL). Companies also outsource

production to contract manufacturers. Technology companies have risen to meet the demand to

help manage these complex systems.

There are four common supply chain models. Besides the three mentioned above, there is the

Supply Chain Best Practices Framework.

Resilience

In recent studies, resilience, as "the ability of a supply chain to cope with change", is regarded

as the next phase in the evolution of traditional, place-centric enterprise structures to highly

virtualized, customer-centric structures that enable people to work anytime, anywhere.

A resilient supply network should align its strategy and operations to adapt to risk that affects its

capacities. Supply chain resilience is improved by collaboration across the network, supporting

faster adaptation to supply changes.

It is not about responding to a one-time crisis, or just having a flexible supply chain. It is about

continuously anticipating and adjusting to discontinuities that can permanently impair the value

proposition of a core business with special focus on delivering customer satisfaction. Strategic

resilience, requires continuous innovation with respect to product structures, processes, but also

corporate behaviour.

Recent research suggests that supply chains can also contribute to firm resilience.

Role of the Internet

On the Internet, customers can directly contact the distributors. This has reduced the length of

the chain to some extent by cutting down on middlemen. Some of the benefits are cost

reduction and greater collaboration.

Social responsibility

Incidents like the 2013 Savar building collapse with more than 1,100 victims have led to

widespread discussions about corporate social responsibility across global supply chains. Wieland

and Handfield (2013) suggest that companies need to audit products and suppliers and that

supplier auditing needs to go beyond direct relationships with first-tier suppliers. They also

demonstrate that visibility needs to be improved if supply cannot be directly controlled and that

smart and electronic technologies play a key role to improve visibility. Finally, they highlight that

collaboration with local partners, across the industry and with universities is crucial to

successfully managing social responsibility in supply chains.

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BREAKING DOWN 'Supply Chain'

Business logistics management refers to the production and distribution process within the

company, while supply chain management includes suppliers, manufacturers, and retailers that

distribute the product to the end customer. Supply chains include every business that comes in

contact with a particular product, including companies that assemble and deliver parts to the

manufacturer.

How the Flow of Manufacturing Costs Works

The flow of manufacturing costs refers to the process of using materials and labor to complete a

finished good that can be sold to a customer. A supply chain management system can reduce

the cost and complexity of the manufacturing process, particularly for a manufacturer that uses

many parts. A clothing manufacturer, for example, will move raw materials into production first,

such as fabric, zippers and other pieces that are used to make clothing. The manufacturer then

incurs labor costs to run machinery and perform other work using the materials. Once the items

are completed, they must be packaging and stored until they are sold to a customer.

Examples of Reliable Suppliers

An efficient supply chain management process requires suppliers that are reliable. This means

that they produce a quality product that meets the manufacturer’s needs, and the product is

delivered on time. Assume, for example, that XYZ Furniture manufactures high-end furniture,

and that a supplier provides metal handles and other attachments. The metal components need

to be durable so that they can be used on the furniture for years, and the metal parts shipped to

XYZ should work as intended. The supplier must be able to fill the manufacturer’s orders and

ship metal parts to meet XYZ’s production needs. These steps are necessary to produce a quality

product that is shipped to a customer in a timely manner.

Supply Chain and Deflation

The evolution and increased efficiencies of supply chains have played a significant role in

curbing inflation. As efficiencies in moving products from A to B increase, the costs in doing do

decrease, which in turn lowers the final cost to the consumer. While deflation is often regarded

as a negative, supply chain efficiencies are one of the few examples where deflation is a good

thing.

As globalization continues, supply chain efficiencies are becoming more and more optimized,

which will keep pressure on input prices.

Supply chain management

In commerce, supply chain management (SCM), the management of the flow of goods and

services, involves the movement and storage of raw materials, of work-in-process inventory,

and of finished goods from point of origin to point of consumption. Interconnected or interlinked

networks, channels and node businesses combine in the provision of products

and services required by end customers in a supply chain. Supply-chain management has been

defined as the "design, planning, execution, control, and monitoring of supply chain activities

with the objective of creating net value, building a competitive infrastructure, leveraging

worldwide logistics, synchronizing supply with demand and measuring performance

globally." SCM practice draws heavily from the areas of industrial engineering, systems

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engineering, operations management, logistics, procurement, information technology, and

marketing and strives for an integrated approach. Marketing channels play an important role in

supply chain management Current research in supply chain management is concerned with

topics related to sustainability and risk management, among others, whereas the “people

dimension” of SCM, ethical issues, internal integration, transparency/visibility, and human

capital/talent management are topics that have, so far, been underrepresented on the research

agenda.

Functions

Supply chain management is a cross-functional approach that includes managing the movement of raw materials into an organization, certain aspects of the internal processing of materials into

finished goods, and the movement of finished goods out of the organization and toward the end consumer. As organizations strive to focus on core competencies and become more flexible, they

reduce their ownership of raw materials sources and distribution channels. These functions are increasingly being outsourced to other firms that can perform the activities better or more cost effectively. The effect is to increase the number of organizations involved in satisfying customer

demand, while reducing managerial control of daily logistics operations. Less control and more supply chain partners lead to the creation of the concept of supply chain management. The

purpose of supply chain management is to improve trust and collaboration among supply chain partners thus improving inventory visibility and the velocity of inventory movement.

Importance

Organizations increasingly find that they must rely on effective supply chains, or networks, to

compete in the global market and networked economy. In Peter Drucker's (1998) new

management paradigms, this concept of business relationships extends beyond traditional

enterprise boundaries and seeks to organize entire business processes throughout a value chain

of multiple companies.

In recent decades, globalization, outsourcing, and information technology have enabled many organizations, such as Dell and Hewlett Packard, to successfully operate collaborative supply

networks in which each specialized business partner focuses on only a few key strategic activities (Scott, 1993). This inter-organizational supply network can be acknowledged as a new form of organisation. However, with the complicated interactions among the players, the

network structure fits neither "market" nor "hierarchy" categories (Powell, 1990). It is not clear what kind of performance impacts different supply network structures could have on firms, and

little is known about the coordination conditions and trade-offs that may exist among the players. From a systems perspective, a complex network structure can be decomposed into individual component firms (Zhang and Dilts, 2004). Traditionally, companies in a supply

network concentrate on the inputs and outputs of the processes, with little concern for the internal management working of other individual players. Therefore, the choice of an internal

management control structure is known to impact local firm performance (Mintzberg, 1979).

In the 21st century, changes in the business environment have contributed to the development of supply chain networks. First, as an outcome of globalization and the proliferation of

multinational companies, joint ventures, strategic alliances, and business partnerships, significant success factors were identified, complementing the earlier "just-in-time", lean manufacturing, and agile manufacturing practices. Second, technological changes, particularly

the dramatic fall in communication costs (a significant component of transaction costs), have led to changes in coordination among the members of the supply chain network (Coase, 1998).

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Many researchers have recognized supply network structures as a new organisational form,

using terms such as "Keiretsu", "Extended Enterprise", "Virtual Corporation", "Global Production

Network", and "Next Generation Manufacturing System". In general, such a structure can be

defined as "a group of semi-independent organisations, each with their capabilities, which

collaborate in ever-changing constellations to serve one or more markets in order to achieve

some business goal specific to that collaboration" (Akkermans, 2001).

Supply chain management is also important for organizational learning. Firms with

geographically more extensive supply chains connecting diverse trading cliques tend to become

more innovative and productive.

The security management system for supply chains is described in ISO/IEC 28000 and ISO/IEC

28001 and related standards published jointly by the ISO and the IEC. Supply Chain

Management draws heavily from the areas of operations management, logistics, procurement,

and information technology, and strives for an integrated approach.

Theories

There are gaps in the literature on supply chain management studies at present (2015): there is

no theoretical support for explaining the existence or the boundaries of supply chain

management. A few authors, such as Halldorsson et al. (2003), Ketchen and Hult (2006), and

Lavassani et al. (2009), have tried to provide theoretical foundations for different areas related

to supply chain by employing organizational theories, which may include the following:

Resource-based view (RBV)

Transaction cost analysis (TCA)

Knowledge-based view (KBV)

Strategic choice theory (SCT)

Agency theory (AT)

Channel coordination

Institutional theory (InT)

Systems theory (ST)

Network perspective (NP)

Materials logistics management (MLM)

Just-in-time (JIT)

Material requirements planning (MRP)

Theory of constraints (TOC)

Total quality management (TQM)

Agile manufacturing

Time-based competition (TBC)

Quick response manufacturing (QRM)

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Customer relationship management (CRM)

Requirements chain management (RCM)

Dynamic Capabilities Theory

Dynamic Management Theory

Available-to-promise (ATP)

Supply Chain Roadmap®

However, the unit of analysis of most of these theories is not the supply chain but rather another

system, such as the firm or the supplier-buyer relationship. Among the few exceptions is

the relational view, which outlines a theory for considering dyads and networks of firms as a key

unit of analysis for explaining superior individual firm performance (Dyer and Singh, 1998).

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Operations and quality management

Total quality management (TQM) consists of organization-wide efforts to install and make a

permanent climate in which an organization continuously improves its ability to deliver high-

quality products and services to customers. While there is no widely agreed-upon approach, TQM

efforts typically draw heavily on the previously developed tools and techniques of quality control.

TQM enjoyed widespread attention during the late 1980s and early 1990s before being

overshadowed by ISO 9000, Lean manufacturing, and Six Sigma.

Features

There is no widespread agreement as to what TQM is and what actions it requires of

organizations, however a review of the original United States Navy effort gives a rough

understanding of what is involved in TQM.

The key concepts in the TQM effort undertaken by the Navy in the 1980s include:

"Quality is defined by customers' requirements."

"Top management has direct responsibility for quality improvement."

"Increased quality comes from systematic analysis and improvement of work processes."

"Quality improvement is a continuous effort and conducted throughout the organization."

The Navy used the following tools and techniques:

The PDCA cycle to drive issues to resolution

Ad hoc cross-functional teams (similar to quality circles) responsible for addressing

immediate process issues

Standing cross-functional teams responsible for the improvement of processes over the

long term

Active management participation through steering committees

Use of the Seven Basic Tools of Quality to analyze quality-related issues

Notable definitions

While there is no generally accepted definition of TQM, several notable organizations have

attempted to define it. These include:

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United States Department of Defense (1988)

"Total Quality Management (TQM) in the Department of Defense is a strategy for continuously

improving performance at every level, and in all areas of responsibility. It combines fundamental

management techniques, existing improvement efforts, and specialized technical tools under a

disciplined structure focused on continuously improving all processes. Improved performance is

directed at satisfying such broad goals as cost, quality, schedule, and mission need and

suitability. Increasing user satisfaction is the overriding objective. The TQM effort builds on the

pioneering work of Dr. W. E. Deming, Dr. J. M. Juran, and others, and benefits from both private

and public sector experience with continuous process improvement."

British Standards Institution standard BS 7850-1:1992

"A management philosophy and company practices that aim to harness the human and material

resources of an organization in the most effective way to achieve the objectives of the

organization."

International Organization for Standardization standard ISO 8402:1994

"A management approach of an organisation centred on quality, based on the participation of all

its members and aiming at long term success through customer satisfaction and benefits to all

members of the organisation and society."

The American Society for Quality

"A term first used to describe a management approach to quality improvement. Since then, TQM has taken on many meanings. Simply put, it is a management approach to long-term success

through customer satisfaction. TQM is based on all members of an organization participating in improving processes, products, services and the culture in which they work. The methods for implementing this approach are found in the teachings of such quality leaders as Philip B.

Crosby, W. Edwards Deming, Armand V. Feigenbaum, Kaoru Ishikawa and Joseph M. Juran."

The Chartered Quality Institute

"TQM is a philosophy for managing an organisation in a way which enables it to meet

stakeholder needs and expectations efficiently and effectively, without compromising ethical

values."[16]

Baldrige Excellence Framework

In the United States, the Baldrige Award, created by Public Law 100-107, annually recognizes

American businesses, education institutions, health care organizations, and government or

nonprofit organizations that are role models for organizational performance excellence.

Organizations are judged on criteria from seven categories:

1. Leadership

2. Strategy

3. Customers

4. Measurement, analysis, and knowledge management

5. Workforce

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6. Operations

7. Results

Example criteria are:

How do you obtain information on your customers’ satisfaction relative to their satisfaction

with your competitors?

How do you select, collect, align, and integrate data and information for tracking daily

operations?

How do you manage your workforce, its needs, and your needs to ensure continuity,

prevent workforce reductions, and minimize the impact of workforce reductions, if they do

become necessary?

Joseph M. Juran believed the Baldrige Award judging criteria to be the most widely accepted

description of what TQM entails.

Standards

During the 1990s, standards bodies in Belgium, France, Germany, Turkey, and the United

Kingdom attempted to standardize TQM. While many of these standards have since been

explicitly withdrawn, they all are effectively superseded by ISO 9000:

Total Quality Management: Guide to Management Principles, London, England: British

Standards Institution, 1992, ISBN 9780580211560, OCLC 655881602, BS 7850

Electronic Components Committee (1994), Guide to Total Quality Management (TQM) for

CECC-Approved Organizations, Brussels, Belgium: European Committee for

Electrotechnical Standardization, CECC 00 806 Issue 1

System zur Zukunftssicherung: Total Quality Management (TQM), Düsseldorf,

Germany: Verein Deutscher Ingenieure, 1996, OCLC 632959402, VDI 5500

Total Quality and Marketing/Management Tools, Paris, France: AFNOR, 1998, FD X50-680

Total Quality Management: Guide to Management Principles, Turkish Standards Institution

(TSE), 2006, TS 13133

Legacy

Interest in TQM as an academic subject peaked around 1993.

The Federal Quality Institute was shuttered in September 1995 as part of the Clinton

administration's efforts to streamline government. The European Centre for Total Quality

Management closed in August 2009, a casualty of the Great Recession.

TQM as a vaguely defined quality management approach was largely supplanted by the ISO

9000 collection of standards and their formal certification processes in the 1990s. Business

interest in quality improvement under the TQM name also faded as Jack Welch’s success

attracted attention to Six Sigma and Toyota's success attracted attention to Lean manufacturing,

though the three share many of the same tools, techniques, and significant portions of the same

philosophy.

TQM lives on in various national quality awards around the globe.

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Criticism

The social scientist Bettina Warzecha (2017) describes the central concepts of Quality

Management (QM), such as e.g. process orientation, controllability, and zero defects as modern

myths. She demonstrates that zero-error processes and the associated illusion of controllability

involve the epistemological problem of self-referentiality. The emphasis on the processes in QM

also ignores the artificiality and thus arbitrariness of the difference between structure and

process. Above all, the complexity of management cannot be reduced to standardized

(mathematical) procedures. According to her, the risks and negative side effects of QM are

usually greater than the benefits (see also brand eins, 2010).