the operations function

7/25/2019 The Operations Function

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The Operations Function

Prepared by

Boman Moradian

Reference

Operations Management by Roger G. Schroeder

Operations Management by N Slack, S Chambers, C arland, ! arrison, R"ohnston


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Operations as a System Operations can be de#ned as a transformation

system that con$erts inputs into outputs

Inputs Outputs

%nergy Goods or

Materials Ser$ices

&abo'r

Capital(nformation

Con$ersion Process ) Methods and Proced'res

Conversionprocess


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Operations as a SystemOperation Inputs Outputs

Bank *ellers, Sta+, %'ipment,-acilities

&oans, eposits,Safekeeping

Resta'rant Cooks, /aiters, %'ipment,-ood, -acilities

Meals, %ntertainment,Satis#ed C'stomers

ospital octors, N'rses, Sta+,%'ipment, -acilities

ealth Ser$ices,ealthy Patients

!irline Planes, -acilities, Pilots,!ttendants, Maint Sta+,%nergy

*ransportation of Peopleand Goods

0ni$ersity -ac'lty, Sta+, &ibrary,%'ipment

%d'cated St'dents,Research


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Operations as a System epartmental Stores1

*ransporter1

*elephone Ser$ice Pro$ider1


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Operations as a System

Mktg

Mr Boman K

Moradian:

Mr Boman K

Moradian:

%ngg

R

-inance!cco'nts M(S

TransformationSystem

S'ppliers

C'stomers

CompetitorsGo$ernment

Society


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Outputs

P're Goods P're Ser$icesTangible Intangible

Output can be stored Output cannot be stored

Output can be resoldNo resale possible

Output can be transported Cannot be transported

Production precedes usage Simultaneous usage

Low customer contact High customer contact

Output can be demonstrated Output does not eist

!uality is e"ident !uality is #udged

Capital intensi"e Labour intensi"e


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Outputs

P're Goods P're Ser$ices

Cr'de oil prod'ctionSpecialist machines man'fact'rer

-ast food resta'rant

Comp'ter systems

!'to maintenance

airc'tManagement cons'ltancy

Psychotherapyclinic


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Characteristics of Outputs 2ol'me

2ariety

2ariation in demand egree of c'stomer contact


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Characteristics of Outputs2ol'me

Low High

Low $epetition High%ultis&ill S&ills Specialisation

Low Systemisation High

Labour Intensi"eness Capital

High 'nit Cost Low

(ourmet restaurant Fast food

Tai ser"ice %ass transport

(enerator factory T) factory


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Characteristics of Outputs2ariety

Low High

Standardised Systemisation FleibleLow 'nit Cost High

Standardised Customer needs)ary

$eadymade garment Tailor

*eans shop +epartment stores

Financial audit Ta ad"ice


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Characteristics of Outputs2ariations in emand

Low High

High 'tilisation of resources LowLow 'nit Cost High

Consulting ,udits


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Characteristics of OutputsC'stomer Contact

Low HighHigh Cycle time to manufacture Low

Low S&ills High

High Systemisation Low

Low 'nit Cost High

%ost manufacturing %ost ser"ices

Fast food (ourmet restaurant

+istance learning %usic teacher


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Cross-Functional +ecision

%a&ing Marketing

/ho is the c'stomer1 /hat does the c'stomer

need1 3'ality management

Market si4e1 Capacity, *ype of processes

istrib'tion channel1 (n$entory, /here to stock

Ne5 prod'ct de$elopment1 Cross6f'nctional teams


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%a&ing -inance and !cco'nting

Capital

Capacity, !'tomation, Process selection,(n$entory

%7ciency Process selection, 2al'e6added

Cash -lo5 (n$entory

Performance Meas'rement Costing system


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%a&ing 'man Reso'rces

Skill le$el of employees

Process type selection, !'tomation N'mber of employees

Capacity, Sched'ling decisions "ob design

Process, *echnology choice


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%a&ing (nformation Systems

Soft5are e$elopment

-orecasting, Capacity, 3'ality, (n$entorycontrol, Sched'ling, Material !cco'nting ard5are !c'isition

!'tomation s'pport, Soft5are operation


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Historical Summary of O% 89::s ; Craftsmen

898:s ; Principles of Scienti#c Management :s ; Operations Research < Manyresearchers

89?:s ; 0se of Comp'ters in b'siness < (BM


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Historical Summary of O% 89@:s ; "(* < Ohno

3'ality Circles


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The $ole of Operations Function !s the implementer of b'siness strategy

!s a support to b'siness strategy

!s the driver of b'siness strategy


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*udging Operation.s Contribution

Stop holdingtheorganisationbac&

/e as good ascompetitors

/e the /est inthe industry

$ede0ne

industry.sepectations

1ternally

supporti"e

Internallysupporti"e

1ternallyneutral

Internallyneutral

Stage 2 Stage 3 Stage 4 Stage 5 Implementer Supporter +ri"er

Operations

,d"antage

Lin&Strategy

,dopt /estpractices

Correct worstproblems


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Hayes-6heelwright 5-Stage

%odel Stage 8 ; (nternal ne'trality

(n5ard looking, reacti$e

No originality, air, competiti$e dri$e !$oiding bigger mistakes Necessary e$il

Stage D ; %Eternal ne'trality Begin comparing itself Not yet creati$e Not holding the company back


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Hayes-6heelwright 5-Stage

%odel Stage = ; (nternally s'pporti$e

Broadly 'p 5ith the Best

!spire to be the Best Organise and de$elop reso'rces to eEcel and

compete

Stage F ; %Eternally s'pporti$e

One step aheadH of competitors Creati$e and proacti$e Capable of adaptation as markets change


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Operations Strategy 7Competiti"eness


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Operations Strategy 7

Competiti"eness Operations Priorities

6 Cost

6 Prod'ct 'ality6 Reliability

6 eli$ery speed

6 eli$ery reliability

6 Coping 5ith changes in demand

6 Range of prod'cts

6 Ne5 prod'ct introd'ction speed


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Competiti"eness Cost

Market $ery large

Prod'ct commodity6likeI c'stomers cannotdisting'ish prod'cts of one #rm from thoseof another

Competition is #erce

-ail're rate high !fter all, there can only be one lo56cost

prod'cer, 5hich 's'ally establishes theselling price


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Competiti"eness Product 8uality

Goal in establishing the proper le$el ofprod'ct 'ality is to foc's on there'irement of c'stomers

Je.g. childKs #rst t5o 5heeled bicycle $Asbicycle of a 5orld6class cyclistL

!fter sales s'pport


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Competiti"eness $eliability

%rror6free prod'cts

Prod'ct speci#cations m'st match theintended 'se

!dherence to tolerances essentialI process'ality is critical


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Competiti"eness +eli"ery speed

!bility to deli$er more 'ickly thancompetitors

Better prices possible

More orders possible

-'nction of in$entory, re5ork, distance

tra$eled, m'lti6skilled operators, set6'ptimes, do5ntimes, etc.


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Competiti"eness +eli"ery reliability

!bility of the #rm to s'pply on or before apromised deli$ery d'e dateI credibility iss'e

Penalties a$oided

Cancellations a$oided


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Competiti"eness Coping with changes in demand

!bility to e+ecti$ely deal 5ith dynamicmarket demand o$er the long term

(n$estment in ne5 technology

(n$estment in capacity

B'+er capacity


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Competiti"eness $ange of products

C'stomisation

i+erent market segments addressed Cope 5ith changes in demand


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Competiti"eness New product introduction speed

-irst entrant ad$antage

Organisation Str'ct'res Jmore than ones'periorL


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Order 5inners A Order 'ali#ers

Core competencies 1


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Order !uali0ers

Companies need to be as good as competitors

Order 6innersCompanies need to be better than competitors

Both are essential.


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T l i

Criteria Small Large

Product !uality 49 :;

Price 99 4;

,fter-Sales-Ser"ice 2; 2;

+eli"ery $eliability !! !!

$ange of Products ! !

Customer $elations ! !!

the operations function

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