Introduction to Operations

8/10/2019 Introduction to Operations

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Slack, Chambers and Johnston, Operations Management 5 th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007

Chapter 1

What is operations management?


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Operations management is the activityof managing the resources which aredevoted to the production and delivery of

products and services.

Operations management defined


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The operations function is fashionable!

The consultancy services market % of worldrevenues of 40 largest consultancy firms

Marketing / sales2

Operations and process

management31

Corporate strategy17

IT strategy17

Benefits / actuarial16

Organizationaldesign

11

Financial6


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They areall

operations

Back office operationin a bank

Kitchen unitmanufacturing

operation

Retail operation

Take-out / restaurantoperation


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Creating Customer Value


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Design a store layoutwhich gives smooth

and effective flowDesign elegantproducts which can beflat-packed efficiently

Site stores of an

appropriate size inthe most effectivelocations

Maintain cleanlinessand safety of storagearea

Arrange for fastreplenishment ofproducts

Monitor and enhancequality of service to

customers

Continually examine

and improveoperations practice

Ensure that the jobs ofall staff encouragetheir contribution tobusiness success

Operations management at IKEA


7/19Slack, Chambers and Johnston, Operations Management 5 th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007

All operations are transformation processes

Transformation processInputs

that transform inputs

Outputs

into outputs



Transformedresources

Transformingresources

CustomersOutput

productsand

services

Inputresources

Some inputs are transformed resourcesSome inputs are transforming resources

Outputs are products and services that addvalue for customers

Transformation process



Transformedresources

?Served and

satisfiedcustomers

Inputresources

Transformingresources

?

At Prt a Manger



The output from most operations is a mixture ofproducts and services

Mixture of productsand services Outputs

that are a mixture ofthe tangible and the

intangible

Prt a Manger

Acme Whistles

Mwagusi Safari Lodge

Crude oil production

Aluminium smelting

Specialist machine toolproduction

Restaurant

Information systems provider

Management consultancy

Psychotherapy clinic

Pure products Outputsthat are exclusively

tangible

Pure services Outputsthat are exclusively

intangible

IKEA



Characteristics of Goods v Services

ProductInventory

Customer ContactResponse times

Markets

FacilitiesCapitalLabourQuality

Contrast the characteristic differences between Manufacturing andServices over the following factors:-

Manufacturing Service



Differences within sectors are often greater than thedifferences between sectors

Financial services

An accountmanagement centre ata large retail bank

Financial analystadvising a client at an

investment bank

Furniture manufacturing

Mass production ofkitchen units

Craft production ofreproduction

antique furniture

Hotels

Value-for-moneyhotel

Lobby of aninternationalluxury hotel



A Typology of Operations

Variation indemand

High Low

VisibilityHigh Low

VarietyHigh Low

HighVolumeLow High



A Typology of OperationsImplications Implications

Changing capacity AnticipationFlexibilityIn touch with demandHigh unit costs

StableRoutinePredictableHigh utilizationLow unit costs

Variation indemand

High Low

VisibilityHigh Low

Short waiting tolerance

Satisfaction governed bycustomer perceptionCustomer contact skillsneededReceived variety is highHigh unit costs

Time lag betweenproduction andconsumptionStandardizationLow contact skillsHigh staff utilizationCentralizationLow unit costs

FlexibleComplexMatch customer needsHigh unit costs

Well definedRoutineStandardizedRegularLow unit costs

VarietyHigh Low

High

Low repetitionEach staff memberperforms more of jobLess systemization

High unit costs

High repeatabilitySpecializationCapital intensiveLow unit costs

VolumeLow High


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Volume

Important to understand how different operations are positioned

on the 4 Vs. 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

MwagusiSafari Lodge

4 Vs profile of two operations

Formule 1Hotel



Decisions in Operations

Process

Quality

Work force

Inventory

Capacity

Five major decision areas:

Schr oeder Section 1.6 - page 16

O erations Mana ement R G Schroeder, Operations Management, 4 th edition,1993, McGraw Hill



Some interfunctional relationships between the operationsfunction and other core and support functions

Engineering/technicalfunction

Accountingand finance

function

Humanresourcesfunction

Informationtechnology

(IT) function

Marketingfunction

Product/service

developmentfunction

Operationsfunction

Micro Environment



Case : Too Short The DayAnalysis

What is Giles trying to do ?What is Giles actually doing ?

What are the problems within theorganisation ?

RecommendationsWhat should Giles do ?

What changes if any should the organisation make ?

Identify the functions of a managerIdentify the levels of management


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Case : The Glastonbury Festival1 What is the role of an operations manager

such as Michael Eavis in this situation?How does this change at different stagesof the festival organisation?

2 List the different types of transformation processes involved in the festival

activities within the classifications:Materials/Information/Customer

3 Relate the 5 decision areas as outlined inR G Schroeders Operations Management,to the Glastonbury case.

Documents

Introduction to Operations