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© Nigel Slack, Stuart Chambers & Robert Johnston, 2004
Where does the business get its competitive advantage?
The way it produces its goods and services?
The way it positions itself in its market?
The “technological”
specification of its product/service?
Product/Service
Technology
Marketing Operations
© Nigel Slack, Stuart Chambers & Robert Johnston, 2004
The output from most operations is a mixture of goods and services
PURE GOODSTangible
Can be stored
Production precedes consumption
Low customer contact
Can be transported
Quality is evident
PURE SERVICES
Quality difficult to judge
Cannot be transported
High customer contact
Production and consumption are simultaneous
Cannot be stored
Intangible
© Nigel Slack, Stuart Chambers & Robert Johnston, 2004
Operations Management – Basic Principles
All types of enterprise have an operations function, even if it isn’t called ‘operations.
Most operations produce both products and services.
Materials
Products and services
Information
Customers
Operations management is concerned with producing and
delivering products and services
© Nigel Slack, Stuart Chambers & Robert Johnston, 2004
All operations are transformation processes
ENVIRONMENT
ENVIRONMENT
INPUT OUTPUTGOODS
AND SERVICES
TRANSFORMED RESOURCES
MATERIALS INFORMATION CUSTOMERS
FACILITIES STAFF
TRANSFORMING RESOURCES
TRANSFORMATION PROCESS
© Nigel Slack, Stuart Chambers & Robert Johnston, 2004
OrganisationWhat are the process inputs?
What resources does this transformation process use?
What are the process outputs?
AIRLINE
© Nigel Slack, Stuart Chambers & Robert Johnston, 2004
A Typology of Operations
Variation in demand
High Low
VisibilityHigh Low
VarietyHigh Low
HighVolumeLow High
© Nigel Slack, Stuart Chambers & Robert Johnston, 2004
A Typology of OperationsImplications Implications
Changing capacityAnticipationFlexibilityIn touch with demandHigh unit costs
StableRoutinePredictableHigh utilizationLow unit costs
Variation in demand
High Low
VisibilityHigh Low
Short waiting toleranceSatisfaction governed by customer perceptionCustomer contact skills neededReceived variety is highHigh unit costs
Time lag between production and consumptionStandardizationLow contact skillsHigh staff utilizationCentralizationLow unit costs
FlexibleComplexMatch customer needsHigh unit costs
Well definedRoutineStandardizedRegularLow unit costs
VarietyHigh Low
High
Low repetitionEach staff member performs more of jobLess systemizationHigh unit costs
High repeatabilitySpecializationCapital intensiveLow unit costs
VolumeLow High
© Nigel Slack, Stuart Chambers & Robert Johnston, 2004
Critical Success Factors
Fast turnaround
Flight Occupancy Loading
Low Cost base
OperationsManagement
© Nigel Slack, Stuart Chambers & Robert Johnston, 2004
The strategic role of operations can be defined by its aspirations (Hayes and Wheelwright)
Give an Operations Advantage
Externally supportive
Internally supportive
Externally neutral
Internally neutral
The ability
to Implement
Link Strategy With
Operations
Adopt best Practice
Correct the Worst
Problems
Increasing contri
bution of o
peratio
ns
STAGE 1 STAGE 2 STAGE 3 STAGE 4The
ability to
Drive strategy
Stop holding the
organization back
Be as good as
competitors
Be clearly the best
in the industry
Redefine the industry’s
expectations
The abilityto
support Strategy
© Nigel Slack, Stuart Chambers & Robert Johnston, 2004
Co
mp
etit
iven
ess
Speed
Flexibility
Cost
Dependability
Quality
The operations function can provide competitive advantage through its five performance
dimensions
Doing things RIGHT
Doing things FAST
Doing things on ON TIME
Being ABLE TO CHANGE
Doing things CHEAPLY
© Nigel Slack, Stuart Chambers & Robert Johnston, 2004
Co
mp
eti
tive
ne
ss
Speed
Flexibility
Cost
Dependability
QualityDoing things RIGHT
Doing things FAST
Doing things on ON TIME
Being ABLE TO CHANGE
Doing things CHEAPLY
Co
mp
eti
tive
ne
ss
Speed
Flexibility
Cost
Dependability
Quality
Speed
Flexibility
Cost
Dependability
QualityDoing things RIGHT
Doing things FAST
Doing things on ON TIME
Being ABLE TO CHANGE
Doing things CHEAPLY
Doing things RIGHT
Doing things FAST
Doing things on ON TIME
Being ABLE TO CHANGE
Doing things CHEAPLY
Polar Diagrams….
Dependability
Flexibility Quality
Speed
Cost
Application…
Compare against competitorsCompare actual vs desiredCompare products or services
© Nigel Slack, Stuart Chambers & Robert Johnston, 2004
54321
54
32
1
54321
Remember only allowed a maximum Score of 18
Quality
Cost
Speed
54
32
154321
FlexibilityDependability
© Nigel Slack, Stuart Chambers & Robert Johnston, 2004
These dimensions mean different things in different operations
Hospital
Bus company
Automobileplant
Supermarket
© Nigel Slack, Stuart Chambers & Robert Johnston, 2004
These dimensions mean different things in different operations
Hospital
Bus company
Automobileplant
Supermarket
© Nigel Slack, Stuart Chambers & Robert Johnston, 2004
These dimensions mean different things in different operations
Hospital
Bus company
Automobileplant
Supermarket
© Nigel Slack, Stuart Chambers & Robert Johnston, 2004
These dimensions mean different things in different operations
Hospital
Bus company
Automobileplant
Supermarket
© Nigel Slack, Stuart Chambers & Robert Johnston, 2004
Cost means different things in different operations
Hospital Automobileplant
Supermarket
Staff costs
Technology and facilities costs
Bought-in materials and services
Technology and facilities costs
Staff costs
Staff costs
Technology and facilities costs
Technology and facilities costs
Bought-in materials and services
Bought-in materials and services
Bus company
Staff costs
Bought-in materials and services
© Nigel Slack, Stuart Chambers & Robert Johnston, 2004
Step 2
Relative Priorities
© Nigel Slack, Stuart Chambers & Robert Johnston, 2004
Polar diagrams for a taxi service versus a bus service
Cost
Quality Flexibility
DependabilitySpeed
Taxiservice
Busservice
© Nigel Slack, Stuart Chambers & Robert Johnston, 2004
54321
54
32
1
54
32
1
Quality
Cost
Speed
54
32
154321
FlexibilityDependability
© Nigel Slack, Stuart Chambers & Robert Johnston, 2004
Quality Flexibility
Depend- ability
Speed
Cost
On-specification products and services
Short delivery lead-time
Speed
External and internal benefits