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Summary Business Optimization and Operation Management
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Summary of BO&OM week 1 to 8
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Operations Management & Business OptimizationBusiness Optimization week 1
§1.1 Balanced Scorecard
BSC = Balanced scorecard
In the context of an airline within the context of BA8 it is necessary to get a good overview and
rational on which benefit justifies which investment. For example, on A-CDM and related
investments in equipment.
Therefore, it is very effective to investigate the relevant cause and effect relationships which exist
within the process of decision-making. The BSC is a model which can be used to define such
relationships and stimulates the cause and effect-thinking process.
BSC Frame for: “running assignment”
1. Define corporate or business strategy
2. Defining critical success factors
3. Defining interdependencies cause and effect; strategy-map
4. Translation interdependencies to KPI’s; measurements
5. Target-setting KPI’s
6. Defining the actions
§1.2 Value & Shareholders
Shareholder value:
A quantitively estimation of a strategy by discounting the investment itself, the cash flows and
expected scrap value at the right cost of capital.
§1.3 Management in control
There are three levels of control:
1. Existence of the organization: in most of the cases, the focus is on this level
2. Experience or behaviour: to adapt the goal-oriented processes to the changes in external
conditions
3. Evolution of becoming successful: problem of re-programming the less successful goals and
procedures + and the same time retaining the successful goals and procedures
However: an enterprise is a long-term partnership. It is continuous focused on shareholder value.
And is the guardian of social capital.
“if a company wants to be profitable in the long run and wants to survive by creating value with a
rise in labour productivity, the company needs to be able to translate changes in technology,
markets, demographics, laws and regulations, etc. Into adaptions and transformations of the
business model and therefore in all aspects of the organization.”
Before the market forces the organization to do so of course!
,§1.4 Forecasting
Every business calculation is a prognosis. It is influenced by certain factors:
• Internal data
• External data
• Personal expectations and prognoses
• Methods, rules of thumb and dogmas
So, what are the essential aspects which determine the success of your company?
,§1.5 BSC 2.0
To come back to the BSC, the BSC is an excellent instrument for synchronising an organization’s
various key relationships, because the BSC relates the financial measurement of historical
performance to the non-financial measurement of the primary factors behind future performance.
The objectives and performance measurements of the scorecard explain the company’s results on
the basis of 4 perspectives shown in figure above.
Financial Perspective:
What defines the success of the shareholders?
Consumer or Buyer Perspective:
On which critical factors do consumers assess our company?
Internal Processes Perspective:
What is vitally important to achieving buyers’ and shareholders’ objectives?
Learning and Growth Perspective:
Where does a company needs to excel in order to achieve performance breakthroughs? This context
is defined by the objectives set by the other 3 perspectives?
Critical success factors:
Factors which are determining the continuity of the organization, which gives colour to the
organization. This is derived from strategy.
, §2.1 Logistics in aviation
Logistics in aviation involves passengers or cargo, the ability to quickly and reliable move valuable
resources over great distances improves the quality of life and standard of living of people across the
globe.
Continuously balancing between demand and supply.
Think of capacity, A/C, equipment etc.
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