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C hapter 1. W hat is operations management?. Operations management defined. Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Marketing / sales 2. Financial 6. Organizational design 11. - PowerPoint PPT PresentationTRANSCRIPT
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Chapter 1
What is operations management?
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services.
Operations management defined
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
The operations function is fashionable!
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
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
They are all
operations
Back office operation in a bank
Kitchen unit manufacturing
operation
Retail operation
Take-out / restaurant operation
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Creating Customer Value
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Design a store layout which gives smooth and effective flowDesign 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
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
All operations are transformation processes …
Transformation processInputs
that transform inputs …
Outputs
into outputs
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Transformed resources …
Transforming resources …
Customers
Output products
and services
Input resources
Some inputs are transformed resources
Some inputs are transforming resources
Outputs are products and services that add value for customers
Transformation process
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Transformed resources …
?Served and
satisfied customers
Input resources
Transforming resources …
?
At Prêt a Manger
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
The output from most operations is a mixture of products and services
Mixture of products and services – Outputs
that are a mixture of the tangible and the
intangible
Prêt 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
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Characteristics of Goods v Services
ProductInventory
Customer ContactResponse times
MarketsFacilitiesCapitalLabourQuality
Contrast the characteristic differences between Manufacturing and Services over the following factors:-
Manufacturing <> Service
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Differences within sectors are often greater than the differences between sectors
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
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
A Typology of Operations
Variation in demand
High Low
VisibilityHigh Low
VarietyHigh Low
HighVolumeLow High
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
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
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
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
4 V’s profile of two operations
Formule 1 Hotel
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Decisions in Operations
Process
Quality
Work force
Inventory
Capacity
Five major decision areas:
Schroeder Section 1.6 - page 16
Operations Management R G Schroeder, Operations Management, 4th edition,1993, McGraw Hill
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Some interfunctional relationships between the operations function and other core and support functions
Engineering/ technical function
Accounting and finance
function
Human resources function
Information technology (IT) function
Marketing function
Product/service development
function
Operations function
Micro Environment
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Case : Too Short The DayAnalysis
What is Giles trying to do ?
What is Giles actually doing ?
What are the problems within the organisation ?
RecommendationsWhat should Giles do ?
What changes if any should the organisation make ?
Identify the functions of a manager
Identify the levels of management
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Case : The Glastonbury Festival
1 What is the role of an operations manager such as Michael Eavis in this situation? How does this change at different stages of 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 in R G Schroeder’s Operations Management, to the Glastonbury case.