Operations Management

Management and Operations

Week 1
Operations Management

Learning Schedule - 45 hours per course for Lecture / Workshop in class

No. Content
1 Induction: Module introduction information, Coursework
Briefing
The basic concepts of management and operations
2 Process Design, Process Mapping and Layout Types
3 Product and Service Design
Planning and Control
4 Capacity Management
5 Inventory Management
6 Quality Management and Control
7 Group Presentation in Class (group 1,2,3,4,5,6)

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Operations Management

Main Text Book:

Slack, N., Brandon-Jones, A., and Johnston, R. (2013/2016)
Operations Management, 8th Edition, Harlow: Pearson Education Limited.

Additional Reading List:

HILL, A and HILL, T. (2011) Essential Operations Management. London: Palgrave.
Pettinger, R. (2007) Introduction to Management. 4th Ed. London: Palgrave
Macmillan.
SCHEDLITZKI, D. and EDWARDS, G. (2014) Studying Leadership: Traditional and
Critical Approaches. London: SAGE.

Turner, J. R. (2014) The Handbook of Project-based Management: Leading Strategic

Change in Organisations, 4th Edition, New York: McGraw-Hill Education

Slack, N. (2015) Operations and Process Management: Principles and Practice for Strategic
Impact, 4th edition, Harlow: Pearson Education Limited

Slack, N., Johnston, R., Brandon-Jones, A. (2011), Essentials of Operations Management,

Harlow: Financial Times Prentice Hall

Heizer, J. H. and Render, B., (2014), Operations Management: Sustainability and Supply
Chain Management, 11th Edition, Harlow: Pearson Education

Group presentation
No Content
1 Induction: Module introduction
information, Coursework Briefing
The basic concepts of
management and operations
2 Process Design, Process Mapping
and Layout Types
3 Product and Service Design
3 Planning and Control
4 Capacity Management
5 Inventory Management
6 Quality Management and Control
Case
Case study: Design house partnerships at
Concept
Design Services
Case study: The Action Response
Applications Processing Unit (ARAPU)
Case study: Chatsworth – the adventure
playground decision
Case study: subText Studios,
Singapore (abridged)
Case study: Blackberry Hill Farm
Case study: supplies4medics.com
Case study: Turnround at the Preston plant

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Operations Management

THE BASIC CONCEPTS OF

MANAGEMENT & OPERATIONS

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Operations Management

Operations Management originate from

management of Manufacturing operations
to 18th century = craft production
18th century = Industrial Revolution: Volume Production
20th century = Henry Ford: Mass Production
Frederick Taylor and Scientific management
1960s = Operations Management emerges
1970s = Automation of planning systems :
Material Requirements Planning (MRP)
1980s = Introduction of Just-In-Time (JIT) and
Total Quality Management (TQM) principles
1990s = Supply Chain Management (SCM) and
Business Process Reengineering (BPR)
2000+ = e-commerce

Operations management finds application in Service Industries

Operations Management
the management of the processes that produce or
deliver goods and services. (Slack, et al., 2016)
Input Transformation Output
Process
Products and
Transforming Resources Services
Facilities, Staff

Input Output Products

and Services
Resources

Transformation Processes

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Operations Management

Operations Management
the management of the processes that produce or
deliver goods and services. (Slack, et al., 2016)

Input Transformation Output

Process
Goods and
Transforming Resources Services
Facilities, Staff
Transformed Resources
Materials (Manufacturing)
Information (Accountants; Market Research; Libraries)
Customers (Hairdresser; Hotel; Airline; Hospital; Entertainment)

The important role of POM

Overview of operations management
Value added benefit Satisfy shareholder &
Inputs stakeholder
Efficient
processing
Information Output
Labour Transformation

Materials Goods or
Or processing
Equipment Services
Money (satisfy customers)
(capital) reduce
waste, pollution, poor
Operations quality & design,
managers overspending

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Operations Management

The important role of POM

Process transformations (4 types)
Figure 1: Typical Supply Chain
Purchasing Manufacturing Distributing

Suppliers Raw Warehouse/ Retailers/

materials Factories storage customers

2. Suppliers 2. Wholesalers 2. Retailers

3. Hauliers, postal, 1. Manufacturers, (builders, 3. Hauliers, postal,

courier, transporters, gardeners) courier, transporters,
telephone services Transform raw materials/ telephone services
Transform place components to goods/ service Transform place

4. Supporting services: Insurance, finance, health-care…

The important role of POM

Production is transformation process from
INPUT (materials, labors, machines,
management, capital) to OUTPUT (goods or
services).

Transformation process is efficient process

when the value of output greater than the
total cost of input, in this case, this process
makes value added.

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Operations Management

The important role of POM

Effectiveness Efficiency
Meaning + Effectiveness is about + Efficiency is about doing things in an
doing the right task, optimal way, for example doing it the
completing activities fastest or in the least expensive way. It
and achieving goal could be the wrong thing, but it was done
optimally
Effort oriented No Yes

Process No Yes
Oriented
Goal oriented Yes Yes
Time oriented No Yes
(Goal)/(Input) (Useful output)/(Input)

The important role of POM

Productivity: output/input

Productivity increases when firms become more

efficient, downsize, expand, retrench, or achieve
breakthroughs.
Output Output Output Output
Partial measure = or or or
Labor Capital Materials Energy

Output Output
Multifactor = or
Labor + Capital + Energy Labor + Capital + Materials

Output Goods & service produced

Total = or
Inputs All resources used

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Operations Management

The important role of POM

Productivity: example

Input and output production data

OUTPUT In $
1. Finished units 10,000
2. Work in process 2,500
3. Dividends 1,000
4. Bonds /
5. Other income /
Total output $13,500
INPUT In $
1. Human 3,000
2. Materials 153
3. Capital 10,000
4. Energy 540
5. Other expenses 1,500
Total input $15,193

The important role of POM

Productivity: example
Input and output production data
OUTPUT In $
1. Finished units 10,000
2. Work in process 2,500
3. Dividends 1,000
4. Bonds /
5. Other income /
Total output $13,500
INPUT In $
1. Human 3,000
2. Materials 153
3. Capital 10,000
4. Energy 540
5. Other expenses 1,500
Total input $15,193

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Operations Management

Knowledge Transfer – Education, Training

Definition Explanation Application

Operations Management

Framework Improvement
Understanding
Mapping Control

The important role of POM

Input examples:
-Land
- Labor (physical, intellectual)
-Raw materials (energy, water, chemical, metals,
woods, fibers,…)
-Equipment (machines, computers, trucks, vans,
tools,…)
- Facilities (factories, offices, warehouse, stores…)

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Operations Management

The important role of POM

Output examples:
-Goods: automobiles, clothing, computers, TV,
foods, beverages, shoes, textbooks, furniture,…)
-Services: health-care, car-repair, car-wash,
banking, education,…

Transformation process:
- Cutting, drilling, grinding, milling,…
- Mixing, packing, canning,
- Transporting, storing, teaching, advising,…

The important role of POM

Operations as a basic function
Operations

Enterprise
Marketing Finance

Marketing: Customer need for goods or service,

Finance: Budgeting, analysis of investment proposals
Provision of funds,

Operations: Making goods or providing services,

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Operations Management

The important role of POM

Operations as the technical core
Production &
Capital market, stockholders service
operations have

Workers, employees
central role in
Finance most firms.
Purchasing

They typically

Personnel
Suppliers

account for 70 –
80% of a firm’s
Operations assets,
expenditure &
people.

Marketing

Customers

The important role of POM

Others functions support operations/manufacturing:

Marketing: forecast customers’ demand, feedbacks,

orders.

Finance: analysis investment proposals, budget,

investment funds, stockholders’ requirement

Personnel: training programs, hired or fired

employees (recruitment)

Purchasing: meets material requirement planning,

tools, equipment to operations.

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Operations Management

POM strategies

Strategy Formulation
Define the primary task

Assess core competencies

Determine order winners & order qualifiers

Position of the firm

POM strategies
The value added chain
Value added

Operation managers must address every activities, they are engaged with on the value
added chain performance measurement!

Inputs Transformation Output

Value added objectives:

-Producing to target, to cost meet customers’ requirements at low operational cost
-Quality – doing things right – error free process reduce defective products, re-works,
quality cost, increase customers satisfaction
- Speed or time compression – customer responsiveness, lead time & elimination of delay,
bottlenecks & inventory reduce wastes in operations!

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Operations Management

POM strategies:
How to determine CORE COMPETENCIES?
Strategy How to do?
1 • Key technologies: machines, equipment, tools with cost
top leader efficiency reduce cost
in cost • Economic of scale: mass volume.
• Minimize set up time: quickly changing.
• Reduce transportation & distribution cost: advanced lines
and factory, area distribution centers, sales & marketing
efficiency
2 price focus • Profit via setting up high price? Excellent product or
• service -> customers accept product with high price.
• Differentiation for product or service. Example: high price
or standard product. Marketing is key to success this strategy.

3 segment
• Selected some segments. (current customers). Low,
focus
medium income segments focus PRICE
• High income segments focus QUALITY

POM decisions

1 Quality Q is the most important decision in

2 Product/service
design
3 Process & technology Based on product design.
planning
4 Facility layout
5 Material handling
and work-in-process
6 Job design
7 Demand forecasting
8 Scheduling and
sequencing
operations
Beginning of production process.
Assign & locate machines and tools for
efficient
operations.
Meet production requirements.
More productivity & quality
Quantity & time for production
Using and arranging production
resources to meet customers’ demand.

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Operations Management

The effects of the product / service life cycle

volume
Sales

Time
Introduction Growth Maturity Decline

Volume Slow growth in Rapid growth in Sales slow and Market needs
sales sales volume level off largely met

Customers Innovators Early adopters Bulk of market Laggards

Competitors Few/none Increasing Stable number Declining

numbers numbers

Variety of Customisation Increasingly Emerging Possible move to

Product/ or frequent standardised dominant types commodity
Service design changes standardisation
Design

The effects of the product / service life cycle (Ctn.)

volume
Sales

Time
Introduction Growth Maturity Decline

Order- Product/ Availability Low price Low price

winning Service Quality Dependable
Characteristics Supply

Qualifying Quality Price Quality Dependable

Range Range Range supply

Dominant Flexibility Speed Cost Cost

Performance Quality Dependability Dependability
Objectives Quality

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Operations Management

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