The document discusses how operational management impacts business profit through five key operational decisions: production processes, quality, capacity, inventory, and human resource management. It explains that effective operations strategy focuses on adding value for customers through cost, quality, delivery, flexibility, and service. By improving technological, employee, and managerial productivity, operations management can increase sales and lower costs, positively impacting a company's net income and profit. The conclusion emphasizes that savings from efficient operations should be reinvested in new products, markets, or doing things better than competitors through an operations strategy aligned with the overall business strategy.

1. The Relationship between
Operational Management and
Business Profit
By: Raquel Graham

2. Five Kinds of Decisions involved in
Operations Management….
1. The processes by which goods and services are produced
2. The quality of goods or services
3. The quantity of goods or services (the capacity of
operations)
4. The stock of materials (inventory) needed to produce
goods or services
5. The management of human resources
2

3. What is the Bottom Line?
In a nutshell, the bottom line is your profit or loss: i.e.
do you have money in pocket or not?
This is the amount of profit that is realized after all
expenses and taxes have been satisfied
3

4. Bottom Line – Profit of Loss?
In business, the bottom line i.e. profit is actually what
keeps businesses afloat. The bottom line or profit
allows companies to expand their product
assortments and hire new employees.
Profitable businesses that have a healthy bottom line
might also invest in new technologies that will
ultimate enhance the customer experience.
Example – Cheffette with new digital menu boards,
high speed internet from Flow, improve checkouts at
supermarkets
4

5. Why do some companies make
money and others don’t?
The operations model of any business is dependent on:
COMPETITION!!!
Competition will determine success or failure
If there is low competition, the operations can be more
loose, but high competition means the operations of the
business has to be as tight and efficient as possible
5

6. Local Examples
Pizza Man Doc vs. Mama Mia - both sells pizza but quality is
different
Souse Factory vs. ordinary local sellers – same product
Trimart vs. Popular Discount – same type of products
basically but who are the target markets
Courts vs. Standards – same appliances sold typically
PriceMart vs. Shopmart – both are using the bulk buying/
membership model
Flow vs. Lime
Can you think of any other examples?
6

7. Beat Competition through
Operations Strategy
What Is Operations Strategy?
An operations strategy should guide the structural decisions and the
evolution of operational capabilities needed to achieve the desired
competitive position of the company as a whole i.e. how are we going
achieve the purpose of the business as efficiently as possible to match or
beat competition.
Some of the major long-term issues addressed in operations strategy
include
• How large do we make our facilities?
• What type of process(es) do we install to make the products or provide
services?
• What will our supply chain look like?
• What will be the nature of our workforce?
• How do we ensure quality?
7

8. Operations Strategy Means Adding
Value for the Customer
“Customers want their money’s worth”
Customers want more than their money’s worth, and
the more they receive for their money, the more value
they see in the goods and services they are purchasing
The key element in developing a successful operations
strategy is for a firm to provide its customers with
additional benefits at an increase in cost that is
perceived to be less than those benefits.
E.g. Samsung vs. Apple
8

9. Operations Strategy Means Adding
Value for the Customer
Perceived customer value = Total benefits
Total costs
9

10. 5 Competitive Priorities
The key to developing an effective operations strategy
lies in understanding how to create or add value for
customers
1.
2.
3.
4.
5.
Cost
Quality
Delivery
Flexibility
Service
10

11. Link between Operations Management,
Productivity and Competitiveness
Every organisation attempts to improve its productivity i.e.
its rate of production output per unit of input in a given
time period.
Increasing productivity produces a more competitive cost
structure for the organisation and enables the organisation
to offer more competitive prices to its customers.
11

12. 3 Types of Productivity
1.
Technological productivity – refers to the use of more efficient
equipment, robots, computers etc. to increase output. Companies
in their attempt to achieve and then maintain competitive edge
must remain at the forefront of technological advances.
2. Employee productivity - employees produce more output in the
same time period. Achieved by better training, the re-engineering
of work practices, introduction of participative management
styles, or the altering of remuneration levels or types.
3. Managerial productivity - managers do a better job of running the
business. Management productivity improves when managers
emphasise quality over quantity, break down communication
barriers and empower employees using a participative decisionmaking management style
12

13. Operations Mgmt’s Impact on Net
Income and Profit
Increased Sales:
Faster to Market
Improved Quality
Pricing Flexibility
Innovation
Lower Total Cost:
Acquisition
Processing
Quality
Downtime
Risk
Cycle Time
Conversion
Non-value Added
Supply Chain
Post Ownership
13

14. Conclusion
By managing the cost of running the business, the monies
saved can be pumped backed into the organisation
Enhance and redevelop the existing product or service
Enter new markets
See what the competition is doing and find a way to do it
better
Employ an operations strategy that syncs with the overall
business strategy
14

15. Thank You!!!
Email: caerusintl@gmail.com
Cell #: 262 9379
LinkedIn: Raquel Graham
15