2010 s1-operations managementsession1intro

Monday, 16/July/2001Slide: 1

Contextualizing Operations Management

Royston E Morgan

[email protected]


Objectives Session

Defining Operations Management

Examining Performance Objectives

Introducing Transformation Models

Brief overview core competences and their place in operations management

Exploring concept of operational fit

Applying the above to exercises and a Case history.


BA's new business class only plane

Jessops shares suspended ahead of winding-up

Vodafone & Orange announces UK iPhone deal


Why OM is important

Effective OM a clear source of competitive advantage

Plays a part in shaping strategic direction

Matters to all sectors of the economy

All managers are operations managers

Operations should be viewed in light of the extended supply network

OM is about managing processes


Contextualising operations…..

Operations management is an organisation-wide concern

Should be viewed as strategic

Clearly influenced by competitive positioning

Is ever-changing

Concerns services and manufacturing activities


Defining Operations Management

The management of the conversion of inputs into outputs


The input-transformation-output Model

Transformed Resources

Transformed Resources

MaterialsInformationCustomers

MaterialsInformationCustomers

TransformingResources

TransformingResources

FacilitiesStaff

FacilitiesStaff

InputInput OutputOutput Goods &ServicesGoods &Services

TransformationProcess



The Input Output Model



Buns

Patties

Salad

Car parking

Staff

Payment system

Shop facilities

Hamburger

Ambience

Service

Ease of use

Minimal waste

Payment

Enjoyment



Application – Input Output Model

Identify the inputs, transformation process and desired outputs of each operation

Check each output and input are traceable via the process


The performance objectives drive the configuration options

Quality

Speed

FlexibilityReliability

Cost


McLaren


Assess McLaren over the Five Dimensions

Where are they placing emphasis?

How does the way they configure their operations support their overall positioning


Key point

Order of performance objectives influences the configuration of Operations– Sets the relative importance and focus of operational improvement


Speed

Minimum price, highest value

Quickdelivery

Dependable delivery

Error-free products and

services

Frequent new products, maximum

choice

A focus on a key dimensions can give competitive advantage

CostCost

SpeedSpeed

QualityQuality

ReliabilityReliability

FlexibilityFlexibility

Minimum cost,maximum value Reliable

operation

Ability to changeError-free

processes

Fastthroughput


Core Competences

A core competence is a specific resource or capability that an organisation sees as being central to the way it succeeds.

A core competence fulfils three criteria:– Provides a direct benefit to a customer and is a process that adds

value to the product or service.

– It is not easy for a competitor to replicate.

– It can be leveraged widely to many products and markets (has scope)


A core competency can take various forms

Technical and subject matter know-how.

Expertise in a particular business (or technology) process– Note the cumulative nature of technology competence.

Deep knowledge in a particular market or product trajectory (is an aspect of collective learning)– e.g. lighting for Philips

Possession of a particular market entrance or relationship with suppliers and/or clients.

Pivotal position in the supply chain


A core competence is relative to other organisations

Provides fundamental basis of added value and competitive edge.

Found in added value parts and operational processes of organisations.

Involves coordination and integration of technologies and processes.

No more than about six core competences in an organisation.

Need to keep these close as they form the basis of survival in the competitive environment.


Scaling competences

MonitorMonitor CoreCore

NonCoreNonCore QuestionQuestion

Ability Competitors to follow or replicate

Tra

cea

ble

ben

efi

t to

cu

sto

me

r

Easy Hard

Lo

wH

igh


Assess McLaren, McDonalds, Sainsbury's over the Core Competence framework

Identify the operational core capabilities that give them an ‘edge’


Service & Manufacturing Operations

Services – essentially intangible outputs

Manufacturing operations – essentially tangible outputs


Front Office & Backroom Operations

Activities which involve the customer are generally undertaken within a ‘front-office’ environment

Operations that need not be seen by the customer are undertaken in a ‘backroom’ environment


Reflection

For MacDonald's and Sainsbury's identify the key front and back office operational processes?


Viewing Operations as Strategic


Operations strategy - definition

Operations strategy is the total pattern of decisions which shape the long term capabilities of any type of operation and their contribution to overall strategy, through the reconciliation of market requirements with operations resources

(Slack & Lewis, 2008, p18)


OperationsCapabilitiesOperationsCapabilities

OperationsPerformanceObjectives

OperationsPerformanceObjectives

OperationsStrategyDecision

Areas

OperationsStrategyDecision

Areas

MarketPositioning

MarketPositioning

CompetitorActivity

CompetitorActivity

MarketSegmentation

MarketSegmentation

Understand markets

Define competitive

position

State market requirements

in terms of operations

performance objectives

Make strategic

operations decisions

… to enhance core

capabilities

‘Fit’ operations resources to market requirements ‘fit’


Operations Management v Operations Strategy


Stop holdingOrganisation

back

Stop holdingOrganisation

back

Be as good ascompetitors

Be as good ascompetitors

Be best inindustry

Be best inindustry

RedefineIndustry

expectations

RedefineIndustry

expectations

The role of operations is defined by its aspirations (Hayes and Wheelwright)

Increasing contribution operations

Increasing contribution operations

STAGE 1 STAGE 2 STAGE 3 STAGE 4

Ability to support strategy

Ability to drive

strategy

Give an operations advantage

Correct worst

problems

Link strategy

with operations

Adopt best practice

Externally supportive

Internally supportive

Externally neutral

Internally neutral

Ability to implement

strategy


position (with justification) the following organisations using the 4 stages of the H&W model


Quality

Perf

orm

ance

obj

ectiv

es

Resource Usage

Mar

ket

Com

petiti

vene

ss

Decision areas

Speed

Dependability

Flexibility

Cost

The operations strategy matrix

Capacity Supply Network

Process Technology

Development and

Organisation

Operations strategy

The operations strategy matrix


Operational Improvement Model (Platt/Gregory)

Assessment of the market demands, quality, delivery and service requirements

Assessment of the market demands, quality, delivery and service requirements

AS IS assessment of organisation’s capabilities in capacity, service and delivery capability

AS IS assessment of organisation’s capabilities in capacity, service and delivery capability

TO BE Gap Analysis and improvement

objectives identified

TO BE Gap Analysis and improvement

objectives identified

STAGE 1 STAGE 2 STAGE 3

STEP Analysis +

market requirements

STEP Analysis +

market requirements

Integration of running

initiatives

Integration of running

initiatives


Using the Passport Agency ‘Fiasco’ Case

Use the Platts-Greggory model to show what might have been!


Mar

ket r

equi

rem

ents

Level of operations resource capability

Line of fi

t

Alignment between market and operations capability

X

Y

In operations strategy ‘fit’ is the alignment between market and operations capability


Mar

ket r

equi

rem

ents


Line of fi

t

Nissan

Virgin Trains

Virgin Trains and Nissan positioned in relation to market requirements and operations capabilities


Key issue with fit is sustainability

Achieving fit over time = sustainability

Strategies should adapt to changes in operations capabilities and/or market requirements


Sustainability


Mar

ket r

equi

rem

ents


Exte

nsio

n of

mar

ket

requ

irem

ents

Susta

inable impro

vement

Improvements in operations capabilities

Sustainable improvement implies simultaneous extension/improvement of market requirements and operations capabilities


Reflection

What are the practical implications of engineering a ‘simultaneous’ improvement?

How might we do this?


Risk

The less certain and predictable it is for an operation to reposition itself on either of the two axes, the more likely is deviation from the line of fit and therefore the greater the exposure to risk


Leve

l of m

arke

t re

quire

men

ts


Line of fi

t

External operational risk (Market needs exceeding current level of capability means risk of failing to satisfy the market)

Internal operational risk (excess capability

for current market needs means risk of

unexploited capabilities)

B

A


Flight for Survival case

In your groups analyse this case using concepts from the first session

Present your findings

Business

2010 s1-operations managementsession1intro