PRACTICAL REPORT

INDUSTRIAL ORGANIZATION DESIGN

ORGANIZATION DESIGN & SOP MODULE

1. Dina Farhanah
Name : Date Lab : 24 May 2018
2. Rahma Alrosdi
1. 16522123
NIM : Day Lab : Thursday
2. 16522042
Assistant Code : IPO59 Due Date :
Assessment Criteria Yogyakarta, ............ 2018
Format : (max. 10) Assistant
Content : (max. 50)
Analysis : (max. 40)

TOTAL :
(Vicki Ismi Caneca)

INNOVATION AND ORGANIZATION DESIGN LABORATORY

INDUSTRIAL ENGINEERING DEPARTMENT
FACULTY OF INDUSTRIAL TECHNOLOGY
ISLAMIC UNIVERSITY OF INDONESIA
2018
 CHAPTER II

ORGANIZATION PLANNING AND STANDARD OPERATING

PROCEDURE

2.1 Objective
1. Undestrand job description for each position in the company.
2. Evaluate the organizational structure of the company.
3. Understand the management of human resources.
4. Understand the understanding, purpose, and benefits of Standard Operating
Procedure (SOP).
5. Create and apply of Standard Operating Procedure (SOP) format in a business.
6. Understand how to monitor and evaluate the application of of Standard
Operating Procedure (SOP) in a business.

2.2 Organizational Structure

Organizational structure refers to the way in which a group of people is formed,
its lines of communication and its means for channeling authority and making
decisions (Barahemah, n.d.). In the 1967 book "Organizations in Action,"
sociologist James D. Thompson defined three types of interdependence to
describe the intensity of interactions and behaviors within an organizational
structure. The study of interdependence helps business owners understand how
the different departments or units within their organization depend on the
performance of others.
Every organization has five basic elements as an approach to clasify the
organization. It was stated by Henry Mintzberg in his book called Structure in
Fives (1983). Those five elements are strategic apex, middle line, operating core,
techno structure, and support staff as shown in figure below
 The company that researcher observed only have two elements which is strategic
apex and operating core. Strategic apex is the section which occupied by people
who are responsible for the overall running of the organization, in this company
is the owner himself. Operating core consist of employees who do the core job.
The employee in this section perform four functions of activities ehich are get the
input, transform inputs into outputs, distributes the output and help smooth the
process of input, transformation and output.

2.3 Classification of Organizations

In Henry Mintzberg books include "The Structuring of Organizations: A
Synthesis of the Research," published in 1979, and "Structure in 5's: Designing
Effective Organizations," published in 1983 he introduces his five types of
organizational structure and how they influence the functioning of organizations.
Those structure are the simple structure, machine bureaucracy, professional
bureaucracy, divisional structure, adhocracy.
The company only have two elements, so that the classification of
commercial organization is categorized as the simple structure. This structure also
called the entrepreneurial organization, the simple structure is a vertically
organized pyramid with vertical lines of authority. Its key characteristics are direct
supervision of subordinates, organic organization according to functions and a
lack of formal support structures. All the workers will directly report to the
strategic apex where the decision-making are centralized.
2.4 Identify Business Processes
There are several definitions of “business process”. The most influential ones are
presented by Hammer and Champy, they states that a business process is: A
collection of activities that takes one or more kinds of input and creates an output
that is of value to the customer. A business process has a goal and is affected by
events occurring in the external world or in other processes.

Tabel 1 Business Process

Process
Making door and window frame
Name
Main Receive order Production Delivery
Process
Activity  Receive  Preparation of  Payment
Process order from raw materials  Delivery
customer  Production
 Order process
confirmation  Finishing
Event  Customer  Order the  Customer
Process order the material send the
product and (wood) that the payment
give the criteria have  Check
design they been agreed whether
want before the
 Confirmation  Production payment
of the design process. First has been
and the is cutting the received
material wood into
 (wood) that some parts and  Delivered
will be used then assembly the
 Making an the parts product
order receipt according to to the
the design customer
wanted by
customer
 Finishing
(sandpapering)

Level 0 Making door

and frame

Level 1 Receive order Production

Product
delivery

Design and
Level 2 material
confirmation
Preparation of
raw material
Production
process
Finishing
Payment
process

Order
Level 3 Make Order
receipt
material
(wood)
Cutting Assembly
Deliver the
product

Figure 1 Organizational Level

 Level 0 Level 1 Level 2 Level 3
Order material
Preparation of
Receive Order (wood)
raw material

Cutting into
some parts
Making door Production
Production
and frame process
Assembly the
parts

Product
Finishing
delivery Sandpapering

Figure 2 Organizational Level

2.5 Interpersonal Work Unit

Table below consists of interpersonal work unit of UD Material enterprise.

Table 1 Interpersonal Work Unit

Activity / Process Work Unit

Owner Employee
Receive order Approval Operational
Preparation of raw Decision maker Operational
materila
Production process Information Operational
Finishing Information Operational
Payment process Information Operational
Delivery process Information Operational

2.6 Job Description

Job description is an orderly record of the essential activities involved in
the performance of a task that is abstracted from a job analysis and used
in classifying and evaluating jobs and in the selection and placement of
 employees. Job description of the company that researcher observed will
be explained in table below.

Table 2 Job Description

No Position Task Responsibilities

1 Owner  Decision maker  Ensuring all the

 Making work plan business run
and annual budget smoothly
 Receiving order  Responsible to all
 Supervised the off the rights of
employee employee

2 Employee  Doing all production  Reporting all

process such as progress of
cutting, assembly production
until finishing process to the
 Delivered the owner
product to the
customer

2.7 Procurement HR
Procurement process of human resource in UD Material is done by recuiting
people who has a qualification for the task that needed to hire new worker. This
enterprise has qualification for hiring new employee which are has a working
experience in furniture and has a good skill. The owner prioritize people who has
a working experience. The owner placing the new employee to the vacancy

2.8 Human Resources Development

In this company, there is no development program to increase the capability of the
employee. Since development program is very important for the quality of the
 employees, the researcher suggests the enterprise to make some development
program, such as:
1. Weekly evaluation to evaluate the worker and sharing each other. This
program gives benefit to the
2. Monthly training to improve or add the skill of the worker.

2.9 Compensation
In simple terms, compensation is everything that a company offers its employees
in return for their talent and time. There are two kind of compensation which are
financial compensation and nonfinancial compensation. Financial compensation
usually paid in the form of salaries, wages, or bonus. However, nonfinancial
compensation are given not in form of money for instance, the worker will be
promoted. The company that researcher observed only give their employee
financial compensaion. They will give salary to the employee everytime the
employee finished their job and will give bonus to them who finished it faster that
the due date.

2.10 Human Resources Maintenance

Employee benefits and services retain human resources in the organization, foster
loyalty and act as a security for the employees. Sound safety policy and health
programme prevent accidents and maintain good health of employee. At the same
time, in order to properly maintain human resources, an organisation needs to
create condition in which employee are willingly to work with zeal, initiative,
interest and enthusiasm, with a high personal and group morale satisfaction, with
sense of responsibility loyalty and discipline with pride and confidence which
requires various motivational techniques. According to Bangun (2012) there are
two important points in the maintenance of resources human, namely
communication performance and occupational safety and health (K3).

1. Communication Performance
It is used to transfer the information to make the work can be understod
clearly. In the company that the researcher observed the owner himself will
delivered directly to his employee the product that the customer wants. And
 the owner will ensure whether the employee understand or not. The owner also
will supervised the employee to ensure the employee work properly and to
control the quality of the product
2. Occupational Safety and Health (K3)
To protect the safety of the employee while doing their work, the company
already provide the safety tools such as mask, gloves, and protective glassess.
However, the owner state that some of their employee not use the safety tools
that have been provided.

2.11 Standard Operatindg Procedure (SOP) Before

An SOP is a procedure specific of operation that describes the activities necessary

to complete tasks in accordance with industry regulations, provincial laws or even
just for own standards in running a business. In a manufacturing environment, the
most obvious example of an SOP is the step by step production line procedures
used to make products as well train staff. An SOP, in fact, defines expected
practices in all businesses where quality standards exist. SOPs play an important
role in the small business. SOPs are policies, procedures and standards needed in
the operations, marketing and administration disciplines within the business to
ensure success. These can create:

1. Efficiencies, and therefore profitability

2. Consistency and reliability in production and service
3. Fewer errors in all areas
4. Way to resolve conflicts between partners
5. A healthy and safe environment
6. Protection of employers in areas of potential liability and personnel
matters
7. A roadmap for how to resolve issues – and allowing needed focus on
solving the problem
8. A first line of defense in any inspection, whether it be by a regulatory body,
a partner or potential partner, a client, or a firm conducting due diligence
for a possible purchase
9. Value added to the business whenever wish to sell it
 The company that the researcher observed do not have any specific SOP, the
owner state that they only run and manage the business and ensure they can gain
profit, the employee doing the job well and the customer satisfy with the product.

2.12 Standard Operating Procedure (SOP) After

Businesses may carry out SOPs to reduce waste and increase profits. A nonprofit
may use an SOP to serve the community better. Some companies use SOPs to
ensure adherence to government regulations or to improve safety in the
workplace. Although the reasons for seeking improvement may vary somewhat,
regardless of the environment in which an SOP is utilized, the main purpose is to
improve efficiency in some capacity. Since the company that researcher observed
do not have SOP. The researcher recommend the SOP that can be used by the
company in table below.

Number

Date

Standard Operating Procedure

Making door and frame

1. Receive order :
 Clarify the desain of product with customer
 Clarify the material (wood) that will be used
 Make order receipt
2. Production process :
 Every employee who will do the job have to used safety tools
such as mask, gloves, and protectic glassess
 Check the quality of material before doing the production
process
 The sequence of production is cutting-assembly-finishing
 3. Delivery process :
 The customer have to finish the payment before the product can
be delivered
 Checking the payment whether already received or not
 Deliver the product to the customer. Ensure there is no
complaint from the customer
 Complete the receipt

Legalized by :

Owner

Figure 3 SOP Recommendation

2.13 Monitoring

Monitoring is useful to ensure whether the SOP is well executed or not. Since the
enterprise has not a SOP yet, so that there is no monitoring activity in the
enterprise. In this case, the researchers give recommendation of the monitoring
program for the enterprise:

1. Monitoring will be done by the owner.

2. Creating the report of how the SOP is carried out in the process.
3. Make temporary conclusion.

2.14 Evaluation

Evaluation is applied to check whether the use of SOP is already optimal or not.
Besides, the SOP cannot be used for a long period, so there should be an evaluation for
SOP. Since the enterprise does not have an evaluation program, the researchers
recommend an evaluation form for evaluation as follows:
 Table 3 Evaluation Form

SOP Code
No Assesment
AD CD EF GH IR
1. SOP is easy to understand
2. Easy to implement
3. SOP is used by all employee
4. SOP help solve the problem
5. Work is more effective
The SOP reduce complain
6.
from customer
7. SOP synergize one another

The table above, will ease the enterprise to evaluate the SOP by giving a rate to
each SOP code.

2.15 Reward and Punishment

The evaluation that conducted in the company is to know whether the business
process work properly. Reward and punishment is good to be applied in the
system to make the employee doing the job properly. Eventhough the company
initially have not had SOP they already used reward and punishment system.
When the employee doing their job well, finish their job before the due date, and
the customer satisfy with the product. The company will give a reward in form of
money for their bonus. However if the employee do not doing their job properly
the company will give warning to those employee. This system will make the
employee show good performance in order to gain more bonus.
REFERENCES

Barahemah, M. (n.d.). Organizational structure. Retrieved from

https://web2.aabu.edu.jo/tool/course_file/lec_notes/1001446_Organizational%2
0structure.pdf.

Beheshtifar, M. & Safarian, M. (2013). HR maintenance: a vital factor to promote job

commitment. International Journal of Academic Research in Business and Social
Sciences, 3(2). Retrieved from http://www.hrmars.com/admin/pics/1580.pdf.

Markgraf, B. (n.d.). Mintzberg’s five types of organizational structure. Retrieved from

https://yourbusiness.azcentral.com/mintzbergs-five-types-organizational-
structure-2705.html.

Murray, L. T. (2018). Three types of interdependence in an organizational structure.

Retrieved from http://smallbusiness.chron.com/three-types-interdependence-
organizational-structure-1764.html.