August 24, 2009

Human Resource Management Lesson 8 Excercise

1. With reference to your own experience, criticaly evaluate the idea that there is a business case for family friendly working practices.

There are a few interlinked elements which need to be considered which would determine the idea “business case” for family friendly working practices (FFWP);

  1. Dual Burden
  2. Job Satisfaction
  3. Legislation
  4. Employee’s Voice à Works Council
  5. Challenges for Employers
  6. Impact from Recession
  7. Role of Line Manager
  8. Conclusion

[1] “Dual Burden”

This is faced by women who  combine paid employment (or are forced) with an extensive commitment to caring for other family member (Crompton et al, 2005).

This creates a significant pressure on managing both the domestic and professional needs which can often lead to conflicts and negatively affect the “relationships”.

As a result of this Legislation and more modern work arrangements are implemented, such

  • working from home 
  • job-sharing
  • teleworking
  • term-time working
  • compressed hours
  • flexitime
  • staggered hours
  • annualised hours
  • self-rostering.

[2] Job Satisfaction;

As per “Working Life; Employee attitudes and engagement 2006, London, CIPD – “Hours of Work” was the second highest on components on Job Satisfaction.

As per Maslow (1943) and Herzberg (1966) – Social Needs can include that of caring for the dependants and other family members, which would require some form of “flexibility in working hours”

Fulfilling this need will boost Job Satisfaction and have positive impact on performance, hence also providing a benefit for the employer                                             


As per Elton Mayo , "The Workplace is a social system" - The worker is a person whose attitudes and effectiveness are conditioned by social demands from both inside and outside the work plant. This statement amplifies the need to have a "social friendly" environment that stimulates postive morale.

[3] Legislation in the 90’s

As a result of Legislation, employers need to be complaint and introduce several FFWP policies and given the recession where most employers are looking at “cost reduction” and improving Operational Efficiencies, we could see potential conflicts in application of such policies, which could have serious implication if employers refuse to approve to requests or find arguments to reject them, which in return will have negative impact on morale and job satisfaction, hence HR to be instrumental in coordinating the FFWP strategy

[4] Employee’s Voice à European Works Council

Several EU Works Councils (EWC) Directives will from a holistic point ensure that employees are being given the opportunity to have “Flexible” working hours, or improvied “Work Life Balance” situations, the EWC which in most companies would exist provide the “voice” of the employee and rather than having to deal with on conflicting basis with the employer, the employee can turn to the EWC and the employer would receive the directions/confirmation to “accept” the request of the employee. From experience point of view, maternity and paternity was introduced in the 90’s and was widely used by parents, including myself.

[5] Challenges for the employer

Integrating FFWP into the organisation will require HR fulfil the “game changer” role as this is clearly where the added value of HR would be appreciated by employees and policies will need to be clearly published/communicated and updated for employees to have a clear understanding (unambiguously) of which elements of FFWP are available. With the Works Council playing a key role in compliance of FFWP (at least in The Netherlands) the earlier requirements from HR perspective are critical ones.

For a large organisations this is easier to incorporate in the “day-2-day” workload/schedules, as in case of emergency there would be someone to support the request, without having to increase the staffing levels on a structured basis, here is where "economies of scales" works in favor large organisations.

However for a small organisation implementing FFWP would be challenging and even result in disproportionate higher costs, due to lack of economies of scale, which in return can result in the employer turning down a request

Employer to be Being Complaint !!

An employer may only turn down a request for flexible working on one or more of a number of ‘business’ grounds. These are:

  • burden of additional costs;
  • detrimental effect on ability to meet
  • customer demand
  • inability to reorganise work among
  • existing staff
  • inability to recruit additional staff
  • detrimental impact on quality
  • detrimental impact on performance
  • insufficiency of work during the periods
  • the employee proposes to workplanned structural changes

[6] Impact of Recession

The current recession is not provide for the best financial climate to implement a wide range of FFWP, due to impact on both bottom line and organisational structure.

Management is under such conditions more focussed in “Fight For Survival” and creating Operational Efficiencies.

The Classical FFWP could mean that someone works from Monday till Thursday and has Friday’s off, which means that any questions on Friday will have to wait till Monday, however if such questions are urgent or strategic it could be a challenge to answer them.

Based on the above, larger firms with a more stable financial outlook and an HR function which has fully incorporated the FFWP into the organisation will face little challenges despite the recession as economies of scale would allow for “stand-in” (emergency situations)

[7] Role of Line Manager

With the devolvement of HR roles to Line Manager, this is one of the most critical elements where the Role of the Line Manager becomes clear, as he/she will be responsible for ensuring the employee’s morale and job satisfaction are high and also support the employees in their effort to reaching the maximum of their professional potential, whilst at the same time implement FFWP.

This will require a great level of creativity and flexibility and huge amount of people’s skills from the Line Manager.

[8] Conclusion;

In IBM “Ron Glover” is the HR Vice President of Diversity and Workforce Programmes, which as per the webcast shown below demonstrates that IBM has a process that facilitates FFWP, however local culture and enforceable legislation will determine the level to which extent FFWP has been implemented and integrated into the organisation.

With IBM having a “Sophisticated Human Relation” Management style combining that with HR being a change maker in such “high visibility” issues where Diversity is wide advocated, employees are now able to ocnsult either Local HR or Regional or Global Function for guidance.

Taken from the IBM Intranet site on "working from home - connectivity" the first line clearly states “Discuss the options with your manager.”, which confirms the fact that the HR role also in the context has devolved to the Line Manager.

Incorporating the above 7 points into what IBM is advocating in terms of FFWP, I would say that there is a business case for FFWP.

                     Lesson 8 - Glover VP

The first point clearly states "Discuss the option with your Manager"

                     Lesson 8 - Mobility Connectivity


Marchington, M. and Wilkinson, A., "Human Resource Management at Work" (4th edn), London:CIPD

Storey, J (1992) – Development in the Management of Human Resources

Truss C., Soane E., Edwards C., Wisdom K., Croll A., and Burnmett J. (2006) - “Working Life; Employee attitudes and engagement 2006, London, CIPD – “Hours of Work”

Purcell, J (1986) Employee Relations Autonomy Within a Corporate Culture – Personnel Management, February

IBM Intranet - Permanently working from home – Mobility  []

IBM Intranet Integrating Work and Life - The "New Normal" - []

Worksmart (TUC) -

Maslow (1943) and Herzberg (1966)

The Hawthorne Effect - Mayo Studies in Employee Motivation -

April 12, 2009

Operations Management – Lesson 4


Tata Motors (Tata Group) the owners of prestige car brands such as Jaguar and LandRover has launched on March 23rd 2009 -  the cheapest car in the world Tata Nano, which is India's "People's Car".

What does $2,000 buy you?

To put $2,000 price tag into perspective, for this sum you can purchase;

  • a high spec LCD or
  • a high spec HiFi unit or
  • 1 or 2 pieces of designer clothes/wear or
  • a laptop.
  • or a Nano (basic)

The History of the "Classic Cheaper Cars"

(1908) - 100 years ago Model T-Ford (1908) was manufactured -

(1938) - Germany had it's "Volkswagen" Beetle which means "People's Car"

(1958) - Morris Mini Classic (1958)

(1998) - Mercedes Smart (1998)

(2008) - Tata Nano (2008)

T-Ford     VW Beetle      Morris Mini Classic     Smart 1998

   1908  T-Ford              1938  - VW Beetle               1958 Morris                 1998  Smart

     2008 Tata Nano

         Tata Nano


Lower vs Higher end ranges

We see that both Mercedes Benz and BMW are also offering a wide spread in "lower vs higher end" offering;

  1. Mercedes Benz ; Smart   - Mercedes Benz - Maybach
  2. BMW: Mini Cooper  - BMW - Bentley

"The Whats" (Customer requirements)

A comfortable, safe, all-weather car, high on fuel efficiency & low on emissions

  1. Stylish - family in mind, roomy passenger compartment, generous leg space and head room, comfortably seating four persons.
  2. Price - at $2,000 and Financing offered  (Tata is in talks with 15 local Banks) will make this an viable alternative to the 2wheel buyers.
  3. Performance and Fuel Efficient - with a 624cc, 35Bhp, MPFI, top speed of 105kmh, 23.6km/lt.
  4. Safety - whilst it has passed or exceeded all local tests, it still falls far behind the European standards which means that the European version will cost around $6k.
  5. Environment - with a CO2 emission of 101mg/km and a high fuel efficiency of 20+ km/ph, the Nano provides an affordable transportation solution with a low carbon footprint.
  6. Warranty - set at 18months or 24,000 kms

"The Hows" - (Key Design Characteristics)

  1. Quality (European partnership) whilst 97% of the car in locally sourced many of the key components are supplied by European firms

  2. Cost Reduction - achieved as Nano has no power steering, no boot opening (accessed via rear passenger), 1side view mirror, 3 nuts i/o 4 nuts for the wheel.

  3. Engine - a rear mounted engine to help maximise interior space makes the Nano similar to the original Fiat 500.

  4. Interior - The Nano has 21% more interior space, 8% smaller exterior, when compared with its closest rival, the Maruti 800. The car will come in different variants, including one standard and two deluxe variants. The deluxe variant will have air conditioning, but no power steering.

  5. Performance - with a 624cc, 35Bhp, MPFI with a top speed of 105kmh delivering 23.6km/ltr


European suppliers with key parts on the Nano

Ensuring highest quality was assured by creating strategic alliances with well known marketleaders in components-delivery such as;

Autoliv: Seat belts  / Behr: HVAC /  Bosch: Starter motor, engine-control module, injectors, sensors /
Continental: Transmission speed sensors, fuel-level sensor, fuel pump  / Mahle: Fuel filter, air cleaner
Saint-Gobain: Glazings / TT Electronics: Speed sensors / Valeo: Clutches / Vibracoustic: Engine mounts / ZF: Tie rods

"Hows vs Hows"

The only way to make the Nano as cheap as possible is to have all the design characteristics harmonized in such a way that "function and design" are optimized, making it a well build product without making too many compromizes, hence a recipe for a "Success Story".

"What vs Hows"

As the customer is getting a product which is so very low priced, it's expectations should normaly not be too high, however given the set of standard expectation levels of the car industry, I see mostly strong relationships with the the design characteristics as without the one the other could not be achieved, hence overtime we will see that the design specifications will change to accomodate customer requirements as the Nano will evolve (become mature) and also matched against increasing disposable income which allow for an increase in specification and also increase of the price.


Slack et al, 2006, "Operations and Process Management", Prentice Hall

Wally, 2009, Warwick MBA Study note on "Operations Management"


April 06, 2009

Operations Management – Lesson 8

Payroll Process of Lesson 2 is used.

Below is the process flowchart - which has 9 steps.



The Payroll Process has lot of improvements to be made as;

  1. The process on not completed "when needed" (irregular flow)
  2. Quality is inconsistent and from time to time very poor, as the Outsourced Vendor has high staff turnover and new joiners not 100% firmiliar with the process.(inflexible repsponse)
  3. Wastage is unacceptable as days are lost due to incorrect processing of input (Unneccessary variability)
  4. Costs are fixed as overtime is not paid

The 9 steps with description of what the key roles are and also what the Added Value - ranked with 5 being

highest (based on my personal perception)



Key Role

Add Value

(5 highest)


HR Assistant

Ensures that all input from employees has been received and that extracts data from Employee Data System



HR Manager

Validates input from other sources (Commission for Sales staff) – consolidates input from HR Asst into Payroll Input file, which is send to Chief Account for Approval



Chief Accountant

Chief Accountant has an Approval role for both Payroll Input and Payroll Output process




CFO has a final Approval role



Outsource Payroll Vendor

Payroll Vendor processes that Gross to Net calculation and creates DataFileInput (DFI) to be loaded into the ledger and also loads net payments into e-banking system




Ensures that e-banking data loaded is correct and gives the OK to 1st and 2nd approver to proceed




Need to provide monthly data on “personal calls” + “days spend overview (vacation) etc...)



Local Authorities

Receive payments of payroll taxes and social taxes



Accounting Center

Loads the DFI file into the ledger


Push vs pull

The Payroll process is a push proces where the the previous process is pushing his/her process to ensure that there are no bottlenecks, to ensure that his/her process is closed from a chain perspective.

Risk in Delays;

  1. Employees Input - this is currently the source of most delay as HR waits for final processing until all "personal mobilephones" input has been received. Solution can be to use have cut off date, afterwhich point in time everything else is processed in the month
  2. Chief Accountant - currently CA double checks and triple checks all the input and output stream, which combined with ongoing CA's workload is delaying the process. Solution to have Asst CA, dedicated for Payroll Checking and be available during the 1 week of the month (this person is not yet hired)
  3. CFO - adds no value in this process and can be removed, or have involvement limited to checking top 10 earners. However due to busy CFO schedule this delays the final process.
  4. Outsourcing Payroll Company - due to poor quality and the re-itteration process where errors are correct and re-submitted for approval and still not corrected correctly, this causes huge delays and when the date moves past the weekend this is unacceptable. Solution is to start the Payroll process a few days earlier and Asst CA jointly with Payroll Vendor review the critical changes (new hires... leavers... bonusses...)

Checking points;

  • This is very well incorporated and also causes the highest risk in delay, as CA is fully responsible for the financials (in Ukraine), hence needs to ensure that all input and output is correct. In some instances an error of less than $1.00 delayed the process  as this needed to be corrected.
  • CFO - also have a checking point role where the Top 10 earners details are reviewed and most important that of all the inviduals who are part of the process execution.
  • At the end of each Closing Month Cycle - Sarbanes Oxley (SOX) Business Control is performed on Payroll and several control points are tested with full evidences of documents.


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Slack et al, 2006, "Operations and Process Management", Prentice Hall

Wally, 2009, Warwick MBA Study note on "Operations Management"

April 05, 2009

Operations Management – Lesson 7

Storehouse Stock - Drilling Company

Amoco Netherlands Petroleum Company (now BP) operates in the Netherlands, onshore and offshore drilling activity?

As I was the Storehouse Stock Analist during that point in time of my career, I will describe the situation as it was relevant for that period of time.

Purchasing Quantity Decision (Annual Drilling Budget)

Based on ongoing drilling and testing activities combined with geological, geophyscial and seismic survey data, the Drilling Manager developed a "Drilling Budget" for the year which could look as follows;

  1. Exploration Wellss         3 at a cost of $xM each with a total depth of 2,000 meters
  2. Development Wells        5 at a cost of $yM each etc....
  3. Extension Wells             1 at a cost of $xM etc...

Based on the above plan and taking into account the current stock levels a "Inventory Purchase Plan" was designed, which is basicly an Material Requirement Plan;

  1. How many meters of 30inch, 20inch, 13 3/8 inch etc..
  2. How many Diamond drill bits
  3. How many spare parts...
  4. etc...etc....

Given the $-value of these items synchronizing the purchase --> receipt in stock --> release to drilling was critical to minimize working capital and in some instances the tubulars never made it to stock but were loaded from in-bound ship to release/despatch ship and off to the offshore drilling site.

Choosing ROP or MRP

High Value (30% of the items = 70% of total value)- Diamond bits and high grade steel tubulars were classified as High Value items and kept indoors and these were mainly imported from either USA or Japan. Despite their value, in a few instances, due to cancelling of a project items became obsolete and were scrapped.

Based on the above MRP was the principle used for Inventory Management.

Low and Medium (70% of the items = 30% of the value) - most of these items were purchased purchased on ROP basis and mainly from local distributor


Inventory Management - MRP

The Purchasing Environment was Dependent Demand by nature as it was fully dependent of the Wells to be drilled and this was pre-approved and agreed and planned, hence no surprises.

The nature of the supplies needed made the Inventory System was based on MRP for the most expensive (high quality)  parts and ROP for consumables (spare parts)

From a decision point of view;

[1] What Should be bought - this was the outcome of the Drilling Budget which got translated into "SKU" and "Quantity"

[2] Where should it be bought from - this was in many cased obvious Nippon Steel and in some cases from Germany

[3] When should it be bought - this was determined by the timing of the drilling activity and the ordering was placed as late as possible to minimize working capital

[4] How much should be bought - this was calculated by taking into account current stock levels and non-resevered quantities.

Operating Costs

Operating Costs of the Facilities were allocated to the wells drilled during the year, which made have a cost effective operation in place (close to the harbour), which had reduced storage costs and lower transportation/release costs. As the stock items were all steel they could be kept in stock for many years, provided they did not became obsolete.

Import - Custom Clearance ... - Fully loaded cost;

As all costs associated with the purchase were added to the initial purchase price - we needed to ensure that all costs were either available or estimate on the point of "release of material"

How did MRP work ?

  • Gross Requirement - Drilling Manager and Purchasing Department develop purchasing plan based on drilling plan of next year and the year after

  • Scheduled receipts - orders which have already been placed but still "in process" are taken into consideration, however in general orders were placed to meet specific "individual well" needs, hence

  • on hand inventory - this inventory was used to determine which items met the criteria's of the newly to be drilled wells and which quantities are "available" meaning not yet reserved for other drilling activity
  • Planned order release - from a Logistic point of view the wharehouse was located by the harbour which made "on and off" loading easy process. A so-called Requisition (called 777) was drafted complete with "Item" - "SKU number" - "Description" - "Quantity" - "Estimated Value". Whenever the complete batch was released from the wharehouse a copy (signed) came to myself for processing into the books and assigning to costs to the Drilling Project

Whenever "existing stock" was released/used - we applied the Average Price Principle.

Scheduling - Sequencing

Once the Drilling Manager and Purchasing Department had the approval for stock purchase it was the task of the Wharehouse Manager to provide an inventory and also to support in the scheduling of the material release plan for the year.

Material Release Plan

To avoid surprises each of the costly components were allocated to a drilling project in terms of quantity and loaded into the Material Release Plan, which resulted in gap in stock and sometimes in emergency situations, stock of one plan had to loaned to another project. In a view instances stock was transported from UK operations to support Netherlands operations as the journey from Nippon Steel to Ijmuiden (Netherlands) took too long.

Monitoring Control

This was the task of Wharehouse Manager and Storehouse Stock Analist (myself) as stock levels needed to be reconciled on a 80/20 basis, meaning the most expensive items were 100% reconcilled and monitored and since their size is massive, it is easy to determine their location (20 inch in diameter and 6 meter long). The same for Diamond drill bits, these were kept in-doors and boxed.

Sequencing Rules

This process required the Drilling Manager to clearly indicate which quality level was required;

  1. Condition 1 = Brand new
  2. Condition 2 = used with 75% value
  3. Condition 3 = used with 50% value

The nature of the well and it's geological charecteristics will determine which quality of tubulars are needed, hence customer priority was the main rule applied.

Spare Parts

The stock levels for Spare Parts were kept are critical levels, however the risk is that some items were never used which made them obsolete, hence often Stock levels were reviewed to determine if they are still needed or if they can be scrapped, as they occupied valueable space.

There have been instances where very expensive Diamond Drilling Bits which were ordered for a specific drilling programme, however was not needed not used. This stock item was too unique and could never be used again and it was scrapped for a fraction of the purchase price.


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Slack et al, 2006, "Operations and Process Management", Prentice Hall

Wally, 2009, Warwick MBA Study note on "Operations Management"

Operations Management – Lesson 5

Center of Excellence

IBM has moved into the direction of creating COE for mainly support role functions (such as Accounting)

When properly designed and managed, an ECM Center of Excellence (COE) can help customers make sure their new business solutions are planned, executed, and maintained in the most efficient manner possible.  This efficiency helps speed time-to-market and reduces cycle times, while producing higher-quality solutions through the re-use of proven resources.  Helping maintain focus on individual solution needs, while ensuring business solution flexibility also helps to ensure effectiveness across the enterprise.

A Center of Excellence can help customers:

  1. Improve efficiencies
  2. Reduce project development and deployment times
  3. Enable reuse of resources
  4. Create higher quality solutions
  5. Improve user productivity and technology adoption rates
  6. Enable corporate governance and compliance solutions
  7. Ensure effectiveness across the enterprise

Finance CoE Bratislava


In this Center IBM has created 5 Services which are staffed to support all of Europe;

  1. Accounting
  2. Finance & Planning
  3. Fixed Assets
  4. Incentive Operations
  5. Logistics

By combining the above streams into a single Center:

  • the "upstream" part of the process, being with the actual processing of the financial/accounting data and
  • the "downstream", being the final results and subsequent financial analysis and expense tracking performance are all within the same environment.

Lean Sigma

Lean Sigma has implemented Lean in Rochester (USA) Bratislava COE as the activity level has increased to a level that customer satisfaction is being critical, complete with on-line material for customers.

Supply Chain Relationship

Creation of specialised functional teams - in a Partnership Relationship environment - the sharing of information, learnings, problem solving is critical as they all have the same overall Manager with common objectives and this should contributes to the effectiveness and quality level of the output, however this is not in 100% of the cases the fact.

Quality of output - As the Center needs to be cost effective you often see higher employee turnover, as employees seek faster career track which in a COE is bit more challenging -  which affects the quality/output and consistency as the "ease of doing business" is interrupted as you have to start dealing with a new "service contactperson/coordinator" and build trust again. This is in the minority of the cases, however it still forms a challenge. Hence putting aside the challenges, the quality level of the COE's are overall consistent in timing and quality.

Ability to cope with volume - key aspect of the COE is to provide Service at consistent quality level and on a timely basis, which as the COE grows and the activity levels grows with it, the timing of completing tasks is put at risk as the required "processing time" is pre-determined, however the customer often waits as the COE is not always able to "deliver" the output/service on time, as the learning curve for new comers adds to this dilema. Again in this case, these are minor cases, but in a customer satisfaction environment it is a challenge.

Supply Chain Dynamics

Main reason for creating a COE are;

[a] Increased Efficiency - instead of having in each country a complete Accounting, Finance Team or Fixed Assets Team, the COE has all the resources together in one place and gaining efficiencies based on Economies of scale and as there are dedicated inviduals become SME they make fewer mistakes and also execute the role much faster.

[b] Information Sharing - as the COE has centralised TeamRooms (databases) all relevant information is stored and maintained for immediate release and usage, hence increasing the knowledge sharing/transfer.

[c] Channel Alignment - this is achieved as most of the Services are part of the same family group and lead by the same overall Manager, aligning the processes is much easier as Middle Management are also aligned with similar objectives, hence everyone is singing the "same song from the same sheet of paper" and with the ONE bandleader, which in the de-integrated environment is more difficult as each Chief Accountant has his/her own perception of matters.



Slack et al, 2006, "Operations and Process Management", Prentice Hall

Wally, 2009, Warwick MBA Study note on "Operations Management"


Operations Management – Lesson 6

Examples of the following practices and justifications for reasons of the their adoptation

  1. Level of Capacity Management
  2. Chase Capacity Management
  3. Yield Management
  4. Queue Design

Level of Capacity Management

GBS Consulting

IBM sets Annual Revenue Targets which each Business Units needs to develop a Strategy and Plans to faciliate  achieving such targets.

Taking into account the Growth factor (currently declining) , high staff turnover, more demand for experienced/skilled specialist - this is recipe for a complexed Resourcing Model.

What can be done is the following;

  1. Create a Delivery Pool based on core competencies and skills
  2. Align the level to the 70% Utilisation level
  3. Apply 65-25-10 rule
  4. 65% of resource base to be full time employed, whilst 25% subcontractors (have a strategic Alliance with a few) and 10% imported resources (from other IBM countries)
  5. Implement Resource Deployment Environment where local RDM's share their resources plans and share shortages and availability.

Advantage of the above is that you have a manageable exposure on the costs as these fixed costs/resources can be deployed on a 65% resource allocation rule.

Disadvantage - whenever lack of local resources becomes an issue, Resource Developement Manager will have to offer more expensive import resources to the PM, which depening on the project could introduce language issue or even jepordise project financials (increased costs : travel-accomodation-meals-allowances-taxi..)

Alternatively - after having trained them, the using of low cost interns can be deployed on higher skilled roles which increases the pool of resources at minimum costs, this brings more balance into the Delivery Pool, as we you will be mixing

  1. "experience/mature/skilled" with
  2. "interns/young/hungry to learn/fresh ideas"

Level of Capacity Management

Summer season means that restaurants have higher increased visit number, hence higher RevPASH (Revenue Per Available Seat Hour), which means need for more serving staff.

This has opened the market for Agencies who specialise in seasonal staff and offer such services. The majority of such workers will be students seeking summer jobs.

More extreme is during harvesting time when own labor force is either not willing nor enough for the increased work, hence import labor from former CEE countries is an addition to the peak workforce, as many of the products are low revenue, high volume commodities, needing quick harvest and quick to sales point, which makes using low cost "migrant" workers nowadays a business as usual concept.

Overtime is not always the solution as legislation has introduced stringent measures, which makes it less popular, hence external resources offer the solution.

Yield Management


Restaurants have very creative ways in how to Manage Revenue, as they have classic characteristics that invite revenue-management strategies (those characteristics being relatively fixed capacity, perishable inventory, a demand inventory, time-variable demand, appropriate cost structure, and segmentable customers).


  1. Day Time - Business Lunch (small portions) for $10 includes, starter - main course - tea or coffea (value for money)
  2. Evening Time - Reservations to ensure constant revenue levels
  3. Creating ambience which attracts customers (live music, belly dancing...)
  4. Discount cards to ensure customer loyalty
  5. Menu engineering - by offer discounts on some simple items vs higher prices on more sophisticated items
  6. Seating arrangement - moving from 4seating to 2seating arrangement or ability to flex the settings
  7. Post meal procedures - retrain on staff on how to shorten the "exit time" - some even have the cashier walking around with a "wallet" instead of having the server receive the cash and walk to the cashier and back.

Queue Design

Whilst living in Ukraine and Russia, I realised that during peak traffic jam hours, the traffic lights are de-activated and manual traffic coordinators manage the flow of traffic via;

  1. Control on each intersection of main artheries of the cente
  2. Watch the size of the queue which is building up on the "waiting" side
  3. Instruct the "moving" side to move along and where needed dis-allow right/left turn (to avoid creating another queue) and move the moving traffic in a straight quickly as possible

"Advantage" - once you are moving you are moving smoothly instead of waiting for the traffic light to turn green, only to realise that the road is blocked due to traffic and the system collapses and everyone starts blowing their horns.

"Disadvantage" - you sometimes have to wait 10minutes before you start to move again, however this allows you to use your BlackBerry (mails) or get prep'ed for a meeting by reading some material.



Slack et al, 2006, "Operations and Process Management", Prentice Hall

Wally, 2009, Warwick MBA Study note on "Operations Management"


Operations Management – Lesson 2

Plastic Surgery


Advances of sience and technology has significantly lowered the costs of "procedures" which has contributed into the increase in demand (volume) whilst at the same time the "variety" of procedures being offered have also increased and simplified which has reduced the end-2-end time ("speed"), which basicly makes cosmetic surgery for some clients has become as routine as going to the dentist.

The wider accessibility and affordability has lead to a wide expansion of clinics and franchising clinics branching out to various countries (Poland, Greece..) whilst a few are including a holiday into package as part of the recovery process.

The term “plastic” comes from the Greek word plastikos which means to mold or to give form falls into 2 subdivision;

1.       Reconstructive surgery and

2.       Cosmetic surgery

"Variation" in Product offerings is determined by the type of treatment requests;

[1] Reconstructive procedures ;

these are performed with the goal of restoring form and in many cases function of body parts that are abnormal due to - few examples;

  • burns - traumatic injuries, such as facial bone fractures- congenital abnormalities, such as cleft lip, or cleft palate - developmental abnormalities- infection or disease-removal of cancers or tumors, such as a mastectomy

[2] Cosmetic procedures;

are performed done purely to enhance the appearance of body parts such as - few examples;


Operations Process (high level)

7 steps of cosmetic surgery - Management System

From a high level "End-2-End" process point of view the overall process can be high level be split into 7steps. These steps need to be perfectly integrated into the Operation Management System to ensure a smooth flow, as the patient wants to "come in and get out (with results)" in the shortest of time (speed) possible.

[1] Meet The Surgeon -> [2] Nurse Review -> [3] Consent Form -> [4] Estimation of Costs -> [5] Pre Operation Exam. -> [6] Operation -> [7] Recovery


Strategic Objective

Strategicaly clinics advertise in the media (see next example) – where the attention of the potential client is captured by displaying details aimed at tempting the client to contact the clinic (demand generation).

Flawless pictures and mentioning of Awards won etc.. and also view of the facilities. Most important the website comes complete with photo galleries and prices etc... (references...)

TORONTO COSMETIC CLINIC' s website information

[a] Home Page


[b] The Facilities


[c] Pricelist


[d] Patient Stories (customer satisfaction)

Patient Feedback

Performance Objectives;

Apart from executing the the 7-steps with military precision it is critical to understand and set the Performance Objectives are clearly established levels and communicated through all levels of Operations.

  • Quality – the is clearly the most e most important  as it has direct impact on customer satisfaction and "word of mouth" contributes to a clinic's reputation. After breast enhancement the client expects both breast to be perfectly aligned and of similar size.

  • Speed – both client and clinic would like to see the process executed at the agreed pace, meaning if the procedure is offered at 3 hours and leaving the clinic after 6 hours - these are targets which need to be met as this impacts both customer satisfaction and 7-steps process and the pipeline of clients needs to be processed through the system, hence time is critical.
  • Cost – as the market becomes commoditized prices are falling, hence offering attractive prices is critical as several clinics are quoting prices which are sometimes at 50% of the level of competition.
  • Dependability – the 7steps process will have a predefined time-line and for the client this is crucial as this forms part of the expectation and most important "mental and psychological" preparation.
  • Flexibility – with each client having unique needs the clinic needs to be ready to offer for example "breast increases in various sizes", however most procedures are standard with little room for flexibility in applying variety.

Rating of importance (based on personal interpretation of the matter);






short term results, flaws can be repaired


long term results, dont want to come back for repair job - scars, longer healing process





4 low budget

5 high budget





3 simple/routine procedures

5 routine procedures which could require creative solution to nature of patients medical and physical characteristics

Polar diagram reflecting the Performance Objecitves

Polar - Costmetic vs Reconstructive

solid line = cosmetic

dotted line = reconstructive

[2] 4 V's

The plastic surgery clinic will require experienced and highly skilled surgeons combined with latest technology of equipment which require huge capex.

  • Volume increase will require more focus on the 7-steps Operations Management and execution, however as the procedures as all "hands-ons" an increase in volume means increase in both headcount/staffing and increased facilities.
  • Variety in the form of offering a wide range of procedures enables the clients to create a kind of "Roadmap" which could mean, 2009 (breast enhancement), 2010 Tumy Tuck, 2011 (Liposuction) etc.... and in between Botox. With the wide variety clinics have the power to actively promote this and lead the client into long term "relationship"
  • Visiblity - the results of the procedure and photo galleries showing Before and After pictures are a strong tool in making the clinics efforts "visible"
  • Variation in Demand - with obesity having increased focus, clinics can increase their skills on offering liposuction and other weight/fat reduction procedures and with Botox being wide made popular, timely responding to this demand is critical

The next diagram shows the 4V's for the Reconstructive and Cosmetic Procedures


[4] Process Type vs Performance vs Layout Type

Combining the Process Objectives with the Volume nd Variety dimensions it shows that we are looking at a mix between Fixed and Functional layout - as the patient will in the early part of the 7steps be moving around (functional) the clinic, however during, after (recovery) of the Opeation phases we can see the patient being visited by specialist (fixed)

Process + Layout


Botox Before and After


Steps of the Facelift process




Slack et al, 2006, "Operations and Process Management", Prentice Hall

Wally, 2009, Warwick MBA Study note on "Operations Management"



Operations Management – Lesson 3

Monthly Payroll Process


From a "performance objective" point of employees would like to receive their paycheck on time reflecting the correct amounts, so without mistakes and their data treated with Confidentiality.

From a "Business Control" point of view we need to ensure that we have the appropriate check and balances in place whilst implementing a solid Separation of Duties (SOD) process mitigates potential conflict of interest.

Sarbaness Oxley controlpoints require that we indenpendently test the Payroll process from an "End-2-End" process point of view to ensure that we have executed a process as per predefined parameters.

Process Design

Process Mapping the Payroll process which ilustrates Who does What and When provides a comprehensive overview of the proces and potential conflicts of interest or capacity/workload issues can also be made visible.

[1] Separation of Duties

In this context the main objective of the Process Design should be aimed at executing a process which meets the 7 step criteria of SOD;






employees need to be paid



employees need to be eligible



employees should be paid fairly (market rate, peer, benchmark etc..).



Manager should have an approved budget


Accurately recorded

costs should be correctly recorded/charged to the respective cost center



all required approvals and documentations need to be in place


Timely recorded

all the approved/processed dates need to be accurately tracked


[1] Business Control (sarbanes oxley act) - Sox testing

As soon as we have completed the Payroll Process, in order to demonstrate that the 7steps of SOD have been executed correctly, the Process Design should include BC element which results needs to be part of the Company's Business Control performance measures.

Defects of Payroll Execution

Any defects discovered during the Sox testing need to be reported and action taken to correct findings and to implement process improvements on how to mitigate this from re-occurring. This can be tested by subsequent testing to see if remediation efforts have solved the control gaps.

Payroll Processflow chart


HR Administrator and HR Manager have the highest visibility as they interact directly and regularly with the employees, whilst the Chief Accountant, CFO and Treasury have medium to low visibility.

Process Task and Capacity Configuration

With a 9 stage approach the Payroll process is long and thin with narrow task for everyone (SOD) and they need to be aligned perfectly as delay in one stage severely effects the subsequent stage. From a logistic point of view the employee provides or is the starting point of the process and also ends the process as recipient of salary.

Cycle Time - this is very short as the process takes about 7 working days, however any errors made which need to be corrected and re-approved can jepordise the timely payment of salaries



Slack et al, 2006, "Operations and Process Management", Prentice Hall

Wally, 2009, Warwick MBA Study note on "Operations Management"


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