chapter 1 What Is Operations Management? - Cc.sspu.cncc.sspu.cn/download/5320acc7-bc7d-4eba-a462-de72d236eb2b.pdf · Chapter 1 What is operations management? ... How do operations

Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011

Chapter 1

What is operations management?


In Chapter 1 - Operations management– Slack et. al. identify the following key questions…….

What is operations management?Why is operations management important in all types of organization?What is the input-transformation-output process?

What is the process hierarchy?

How do operations processes have different

characteristics?

What are the activities of operations management?

Key operations questions


Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services.

Operations management defined


CustomersInput

resourcesOutput products and services

Transformed resources

•Materials •Information•Customers

Transforming resources

•Facilities

•Staff

Design

Deliver

Direct

Develop

Operations Management

Slack et al’s model of operations management


The consultancy services market - % of world revenues of 40 largest consultancy firms

Marketing/sales2

Operations and process management

31

Corporate strategy17

IT strategy17

Benefits/Actuarial16

Organizational design

11

Financial6

Operations management is fashionable!


Design a store layout which gives smooth and effective flow

Design elegant products which can be flat-packed efficiently

Site stores of an appropriate size in the most effective locations

Maintain cleanliness and safety of storage area

Arrange for fast replenishment of products

Monitor and enhance quality of service to customers

Continually examine and improve operations practice

Ensure that the jobs of all staff encourage their contribution to business success

Operations management at..... IKEA


Back office operation in a bank

Kitchen unit manufacturing

operation

Retail operationTake-out / restaurant

operation

They are all operations


The best way to start understanding the nature of “Operations” is to look around you

Everything you can see around you (except the flesh and blood) has been produced by an operation

Every service you consumed today (radio station, bus service, lecture, etc.) has also been produced by an operation

Operations Managers create everything you buy, sit on, wear, eat, throw at people, and throw away

Operations are everywhere


Engineering/ technical function

Accounting and finance

function

Human resources function

Information technology (IT) function

Understanding of the capabilities and constraints of the

operations process

New product and service ideas Understanding of the

capabilities and constraints of the

operations processMarket

requirements

Financial analysis for performance and decisions

Provision of relevant

data

Recruitment development and training

Understanding of human resource needs

Analysis of new technology options Understanding of

process technology needs

Provision of systems for design, planning and

control, and improvementUnderstanding

of infrastructural and system

needs

Marketing function

Product/service development

function

Operations function

Interfunctional relationships between operations and other functions


“High-end” sandwich and snack retailer

Use only “wholesome” ingredients

All shops have own kitchens which makes fresh sandwiches every day

Fresh ingredients delivered early every morning

Same staff who serve you at lunch made the sandwiches that morning

“We don’t work nights, we wear jeans, we party…”

Prêt a Manger


Nutritional “mechanical” and aesthetic design of

the sandwiches and snacks

Design, location and management of stores and in-store processes and the network

that supplies them

The three basic functions at Prêt a Manger

Product/Service

Development

OperationsMarketing

Promotional activities, market

research, etc.


Automobile assembly factory - Operations management uses machines to efficiently assemble products that satisfy current customer demands

Operations management in all types of organization


Physician (General practitioner) - Operations management uses knowledge to effectively diagnose conditions in order to treat real and perceived patient concerns



Management consultant - Operations management uses people to effectively create the services that will address current and potential client needs



Disaster relief charity - Operations management uses ours and our partners’ resources to speedily provide the supplies and services that relieve community suffering



Advertising agency - Operations management uses our staff’s knowledge and experience to creatively present ideas that delight clients and address their real needs



machines

Operations management uses…………to efficiently assemble products

effectivelyknowledgeto treat real and

perceived patient concerns

diagnose conditions

to

people create services that will address current and

potential client needs

effectivelyto

ours and our partners’

resources

speedily provide supplies and services that relieve community suffering

to

our staff’s knowledge and

experience

creatively ideas that delight clients and address

their real needs

presentto


The business environment is changing, for example……

Prompting operations responses, for example…….

Increased cost-based competition

Higher quality expectations

Demands for better service

More choice and variety

Rapidly developing technologies

Frequent new product/service introduction

Increased ethical sensitivity

Environmental impacts are more transparent

More legal regulation

Greater security awareness

Globalization of operations networkingInformation-based technologiesInternet-based integration of operations activitiesSupply chain managementCustomer relationship managementFlexible working patternsMass customizationFast time-to-market methodsLean process designEnvironmentally sensitive designSupplier ‘partnership’ and developmentFailure analysisBusiness recovery planning

Operations management is changing


All operations are input-transformation-output processes

Inputs OutputsTransformation process


Customers


•Materials •Information•Customers


•Facilities

•Staff

Operations input resources and outputs

Input resources

Output products and services

Transformation process

Outputs are products and services that add value for customers


Customers


Ingredients Packaging Customers


Equipment Fittings Staff

Inputs and outputs at Prêt a Manger

Input resources

Served and satisfied customers


Mixture of products and services –Outputs that are a mixture of

the tangible and intangible

Prèt a manger

Acme whistles

Mwagusi Safari Lodge

Crude oil production

Aluminium smelting

Specialist machine tool production

Restaurant

Information systems provider

Management consultancy

Psychotherapy clinic

Pure products –Outputs that are

exclusively tangible

Pure services –Outputs that are

exclusively intangible

IKEA

Most operations produce products and services


Flow between operations

The level of the supply network

The level of the operation

Flow between processes

The level of the processFlow between resources

Operations can be analyzed at three levels


Operations management is concerned with the flow of transformed resources between operations, processes, where….

Processes form an internal “supply network” and become each others customers and suppliers

External operations interact with internal processes to form the external supply network

Operations can be analyzed at three levels

Flow between operations

Flow between processes

Flow between resources


The supply network - Flow between operations

Broadcasting company

Promotion agency

Studios

Casting agency

Creative agency

A programme and video

supply networkProgram /

video maker

The programme and video operation

The operation - Flow between processes

Example of analysis at three levels



Programme and video

maker


The programme and video operation


Production unit

Set and props manufacture

Engineer-ing

Marketing and sales

Finance and accounting

Post production



Programme and video

maker



Set and props manufacture

Set design Props

acquisition

Set construction

Set finishing

The ‘Set and props

manufacturing’ process


Programme and video maker

End-to-end process for programme production

Programme set and props manufacture

Engineering

Programme marketing and

salesProgramme

production unitProgramme finance

and accountingProgramme

post production

End-to-end process for music video production

Music video set and props

manufacture

Music video marketing and

salesMusic videoproduction

unit

Music videofinance and accounting Music video

post production

The television and video company divided into two ‘end-to-end’ business processes,


Any organization

OperationsMarketing

SalesFinance

Human resources

Information systems

All functions use processes to provide service


Financial services

An account management centre at a large retail bank

Financial analyst advising a client at an

investment bank

Furniture manufacturing

Mass production of kitchen units

Craft production of reproduction

‘antique’ furniture

Hotels

Value-for-money hotel

Lobby of an international luxury hotel

Differences within sectors are often greater than the differences between sectorn


Variation in demand High Low

VisibilityHigh Low

VarietyHigh Low

HighVolumeLow High

A typology of operations and processes

The 4 vs............


High

Implications

•Low repetition•Each staff member performs more of each task•Less systemization•High unit costs

Implications

•High repeatability•Specialization•Capital intensive•Low unit costs

VolumeLow High


The implications of high and low Volume in operations and processes.......


High

Implications

•Flexible•Complex•Match customer needs•High unit costs

Implications

•Well defined•Routine•Standardized•Regular•Low unit costs

VarietyHigh Low


The implications of high and low Variety in operations and processes.......


High

Implications

•Changing capacity•Anticipation•Flexibility•In touch with demand•High unit costs

Implications

•Stable•Routine•Predictable•High utilization•Low unit costs

Variation in demandHigh Low


The implications of high and low Variation in operations and processes.......


High

Implications

•Short waiting tolerance•Satisfaction governed by customer perception•Customer contact skills needed•Received variety is high•High unit costs

Implications

•Time lag between production and consumption•Standardization•Low contact skills•High staff utilization•Centralization•Low unit costs

VisibilityHigh Low


The implications of high and low Visibility in operations and processes.......


Volume

Important to understand how different operations are positioned on the 4 V’s.

Is their position where they want to be?

Do they understand the strategic implications?

Variety

Variation

Visibility

Low

High

High

High

High

Low

Low

Low

Mwagusi Safari Lodge

Formule 1 Hotel

A 4 Vs profile of two operations

Documents

chapter 1 What Is Operations Management? - Cc.sspu.cncc.sspu.cn/download/5320acc7-bc7d-4eba-a462-de72d236eb2b.pdf · Chapter 1 What is operations management? ... How do operations