Operations Management Plan: Contingency, Costing, and Performance

This report presents an operations management plan for AZZ Pty Ltd, addressing critical aspects such as contingency planning, accurate costing, and performance measurement. The plan emphasizes the importance of proactive strategies to mitigate risks, ensuring business continuity through various contingency measures, including assigning responsibilities and employing temporary staff during crises. The report also stresses the significance of accurate product costing for maintaining profit margins and competitiveness, highlighting the need for businesses to understand their costs. Furthermore, it details performance measurement using Key Performance Indicators (KPIs) to evaluate business outcomes, make informed budgeting decisions, and guide strategic planning. Methods and models for operations plans are discussed, alongside productivity and budgeting processes, and guidelines for contacting job candidates. The report also covers strategies for improving resource usage and eliminating inefficiency, promoting sustainable resource management practices.

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Running Head: OPERATIONS MANAGEMENT
Operations Management Plan
Name
Institution

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Contingency Planning
All businesses large or small are all vulnerable to risks, challenges and other unforeseen
situations which may affect the businesses’ financial condition, reputation or its daily operations.
This creates the need for a contingency plan (Chinn, n.d). A contingency plan is a course of
action that a business or company could take in case of occurrence of an unexpected situation
such as the death of the CEO, financial crisis, fire, flood, network failure among other
occurrences that could happen to the business (Britton, 2016). This is a form of a proactive
strategy.
Contingency plans are very crucial since it helps in ensuring the continuity of the
business through securing the company assets and managing a given crisis as fast as possible.
Most of the organizations and companies develop a variety of contingency plans to ensure all
potential threats and risks to the business are properly researched and their solutions put in place
to combat the damage that might be caused (Britton, 2016). The Leadership of the company has
the responsibility to ensure a contingency plan is put in place by funding the development of the
plan, testing if it works and lastly maintaining it. In the case of AZZ Pty Ltd, a contingency plan
would ensure the sale of the printers, electronics and services offered in the store continue even
after a situation happens. This could include assigning workers other responsibilities and
employment of temporary employees at the time of the crisis.
Accurate Costing
Product costing refers to the process of allocating cost to products based on the expenses
involved in the production or initial buying price. It is true that accurate costing is an important
process for manufacturers and distributors since the cost determines the profit margin in a

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business (Melanie, 2017). A business will operate in the dark if it fails to gather the right cost
information. Accountants in a business have to trace the expenses incurred through product cost
analysis in order to make accurate costing of products in a business. With an accurate cost
information, a business is able to run efficiently and also it is able to make optimal choices.
Inability to gather accurate information on the cost and the expenditures by the company
greatly influence the success of the business (Melanie, 2017). To be competitive in the market,
AZZ Pty Ltd is required to know the accurate figure of what it spends on acquisition every
product. This helps it to make relevant product costs that are acceptable to the customers and
competitive to other businesses offering the same products. The price of a product must be
placed within the perceived cost by the customer (Martin, 2014). If a product cost is inaccurate,
which means it is higher than the perceived product value by the customer, the consumers might
not buy the product which means less profit to the company. In our case, AZZ is aiming to
increase its service sales by 10% which creates the need for accurate costing to maintain
customers and attract new ones.
Performance Measurement
Performance measurement refers to the process of assessing or evaluating the outcomes
and the results of a given business. It involves the collection of information, analysis, and
reporting of the outcomes or the progress of a given business using Key Performance
Indicators(KPIs). AZZ Pty Ltd should regularly use KPIs to gauge how each store and
department is doing in the business. It is also important since it provides a basis for improving
the processes that are not doing well balancing them with those that are performing well.

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Information provided through performance measurement is crucial since it helps in
making better budgeting decisions that control the processes in the business. It is also important
to measure performance in order to understand the strategies that your company should apply
(Strategy Management Group, 2018). KPI are those figures that matter in your business. For
instance, measuring the number of Printers, furniture, electricals sold per day, the number of
dollars the shop made and also the amount of cash being used due to mistakes made at AZZ. All
transactions at AZZ should be tracked and recorded according to the things that matter most,
those areas doing great and those that are not. For instance, tracking the averages per
day/month/year, business totals sales for both services and products.
Performance measurement (PM) is based on the following principles. First, it is to expose
the business weakness. PM must be able to expose the weaknesses in the processes involved in
your business with an aim of improving them (Moore, 2018). If a business wants to succeed, it
must measure its losses and manage them. Weaknesses can be measured by analyzing the cost of
production, maintenance cost and also time management. The other principle is founded on
balancing the lagging and the leading measures. Lag measures inform you if you are getting the
right results by measuring the outcomes or results got. Lead measures help in telling what might
happen before it happens by prediction. This means that the things done in a business have to be
balanced with the results or the outcome (Barr, n.d). This helps in reviewing the things you do in
order to get the right results (Moore, 2018). Other principles involve building the right behavior
(that which better business performance), building integrity among other principles. The
principles should be based on the foundation of SMART goals. KPIs can be used to create
SMART goals which means they are Specific, measurable, achievable, realistic and timely. Our

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goal at AZZ is to increase service sales by 10% in the next 12 months. This percentage should be
made SMART by analyzing the records of how the business has been doing in the past year
Methods and Models for operation Plans
An operational plan is a document that contains the description of the business and the
strategy put in place to achieve success. The plan is a step by step guide on how to run the
business on daily basis for a given period of time (Mace, 2014). The operation plan answers the
what, when and how in the business. The methods to use in the operation plan include
developing a strong strategic plan, focusing on the goals and objectives to be achieved on a daily
and long-term basis, Using the leading measures which predict the future and also ensure
effective communication which is important for success (Andrews, n.d). Communication
involves holding meetings on a daily, weekly and monthly basis depending on the issues.
At AZZ Pty Ltd, the operation plan is aimed at achieving the strategic goal which is to
increase sales by 10%. This will be achieved by meeting objectives including improving the
quality of services and products, improving the technology base at the stores, ensuring the
system and the processes at the store are improves and also increasing efficiency. Services at
AZZ will also be expanded to include graphic design and delivery services. The store managers
at AZZ will have the responsibility to develop and implement the operation plan.
Productivity and budgeting process
Productivity refers to the measure of efficiency and effectiveness of a person, a system or
a business in changing the inputs into outputs at a cost. In other terms, productivity is also
referred to as the output per unit of labor and investment ratio (MBN, 2018). Productivity is
determined by a number o factors which include the quality of machinery or technology used in

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production, the skills and worker experience, the management and leadership factors among
others.
Budgeting process, on the other hand, refers to the way in which a business or a company
makes its budget (Hamilton, 2010). A budget is a financial allocation of fund to different
activities and processes in a company. A budgeting process is done by a team of accounts and
finance committee in conjunction with the senior management. A budgeting process should be
documented with each task, deadlines, and responsibilities well stated. A successful budgeting
process should ensure the income from the business is budgeted before the expenses. For
instance, at AZZ stores, budgeting will involve defining every task with its estimated cost to
achieve it. This includes acquisition of more products, training employees to promote expertise,
widening the service base. For instance, delivering products to customers will need a truck/van,
starting a graphic design service will need some capital.
Productivity is measured in different ways. For Instance, in a factory set up, productivity
can be measured by dividing the total output by the number of employees (dividing the number
of cars assembled by the number of employees in a factory will give the total number of cars
assembled per day). Productivity in terms of income in a business is measured by calculating the
ratio of the value of output and input value. The basic formula is Productivity= Output/Input.
Inputs include labor cost, capital investment, and other incurred costs. The output is the number
of items produced.
Contacting Candidates for a Job
Contacting the candidate(s) for a job have some rules that are aimed at ensuring the
reputation of the company and the individual is maintained. It is important to do some research

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on the candidates before contacting them. This can be done by reading their resumes and refer to
them while communicating. This will show that you have taken time to read their resumes. The
most popular ways of contacting a prospective candidate include the use of a phone call, most of
the applicants for a job leave their phone numbers on their resume or application letter. The other
method is by use of hiring emails. The email should be able to inform the candidates about the
job information in order to help them make an informed decision. The other popular way
involves sending a letter of acceptance to the candidate.
Improving resource Usage and eliminating resource inefficiency
Resource usage refers to the process of utilizing the materials and other inputs in order to
convert them into products or services. Resource usage can be improved by managing them
effectively. This helps in achieving high outputs from the same resources. Resource usage can
also be improved through monitoring of the processes in a company to reduce wastage. Resource
efficiency, on the other hand, refers to the process of getting more value from the materials and
other inputs in a way that reduces the impacts on the environment. It involves the use of
available resources in a sustainable manner (European Commission, 2017). This can be achieved
by saving on resources. This means deriving the most output using the minimum input. Saving
also helps in eliminating wastage of resources.
Resource inefficiency can also be eliminated by recycling waste produced by the
organization, improving the storage of materials, conserving energy and also reduction of risks
that could lead to wastage of resources.

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References
Andrews, B. (n.d) Developing an operations Plan: 5 Key elements. Retrieved on October 8,
2018, from https://www.bigskyassociates.com/blog/developing-an-operations-plan-5-
key-elements
Barr, S. (n.d) Seven Principles for Performance Measurement: What is excellent performance
measurement really based on? Samford Queensland. Retrieved on October 8, 2018, from
http://staceybarr.com/downloads/SevenPrinciplesforPerformanceMeasurement.pdf

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Britton, C. (2016) What Is A Business Contingency Plan & How to Create One.
https://www.rockdovesolutions.com/blog/what-is-a-business-contingency-plan-how-to-
create-one
Chinn, D. (n.d.). The Purpose of Contingency Planning. Small Business - Chron.com. Retrieved
on October 8, 2018, from http://smallbusiness.chron.com/purpose-contingency-planning-
24864.html
European Commission. (2017) Resource Efficiency. Retrieved on October 8, 2018, from
http://ec.europa.eu/environment/resource_efficiency/
Hamilton, E.F. (2010) The Budgeting Process. Retrieved on October 8, 2018, from
https://www.nonprofitaccountingbasics.org/reporting-operations/budgeting-process
Martin. (2014). Understanding the Marketing Mix Concept – 4Ps. Retrieved on October 8, 2018,
from https://www.cleverism.com/understanding-marketing-mix-concept-4ps/
MBN. (2018) What is productivity? Definition and meaning. Retrieved on October 8, 2018, from
https://marketbusinessnews.com/financial-glossary/productivity-definition-meaning/
Melanie. (2017) Why Accurate Costing is Vital for Success. Retrieved on October 8, 2018, from
https://www.unleashedsoftware.com/blog/accurate-costing-vital
Strategy Management Group. (2018) Top Ten Reasons for a Performance Measurement System.
Retrieved on October 8, 2018, from
https://www.balancedscorecard.org/BSC-Basics/Articles-Videos/Why-Manage-
Performance