Module: Operations & Supply Chain Management

Lesson: The role of the operations function within the organisation

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The role of the operations function within the organisation

Introduction

In this lesson we will introduce the role of the operations function within the organisation. We
will clarify the concept of operations as the transformation of inputs into outputs in the form of
goods and services for customers both internal and external, and we will consider the role
operations plays in a changing business environment. For this lesson, please refer to chapters
1 and 3 of the core Slack text book.

https://vimeo.com/226418987/b1a6dbb80d

Transcript

Lesson Objectives

Evaluate the role and impact of operations management in the development of global trade

Discuss the role of operations management as a core business function

Determine different options for operations strategy.

Answer the questions to ensure that you have understood the key points presented in the
video.

Operations Management and Global Trade

As Slack et al. (2013) suggest, globalisation has made the world a smaller market to trade in
and presented more opportunities for operations managers. Economic activity is becoming
increasingly globalised. Multinational enterprises, which are the main drivers of that process,
are reconsidering the role of their subsidiaries. In countries where the industrialisation process
was heavily dependent on multinationals, such as Brazil, these changes are intrinsically
relevant, as they influence the operations of local companies as well as the definition of
economic and industrial policies. Slack et al. (2013) make the following suggestions:

Operations management has allowed global trade to flourish by sharing responsibilities

Improved understanding of design and that products can be shared globally

The growing awareness of gender and the policies that impact this, as well as the
opportunities it presents to different world economies

The growing improvement in technology has made international supply chain management
much easier and quicker

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 The rapid growth of CSR and ‘ethical globalisation’ has also meant that operations
management has made an impact on global trade.

Operations Management and Global Trade

https://www.youtube.com/watch?v=DvEh04LNJ_I

Watch this short video and comment on how you think DHL have influenced global trade via
effective logistics and supply chain management.

Having considered definitions of operations management and looked at some of the

fundamental concepts underpinning it, the following exercise will allow you to explore the
development of operations management as a business-critical function. Understanding the
history of operations management will help in applying the concepts in modern business.

Read the following article and answer the questions below:

http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=74491476&site=eds-live

Piercy, N. (2012). Business history and operations management. Business History. 54 (2), pp.
154-178.

The podcast below contains feedback on the questions related to the article.

Podcast 1

Transcript

Podcast Questions

Why has operations management not been seen as a core business function?

As a potential future operations manager yourself, what changes would you make to make
it more strategic and to be seen as a core business function?

What impact does this have on the business if it is not seen as a core business function?

Are you surprised by the findings in the paper; if so, why?

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Operations Management as a Core Business Function

As we hinted in the first video for this lesson, we discussed the fact that operations
management should not exist in isolation. The reason for this is clear. A business that has
functions which do not talk to each other will clearly not be successful. From the outset, it
requires horizontal and vertical integration, sometimes known as strategic fit. This is where all
of the functions that work alongside each other understand what the other departments are
doing and what their individual plans are. A business that does this will perform at a much
higher level.

Operations management, according to Slack et al. (2013), should be seen as a core business
function. It is at the heart of the business. Marketing would not understand the products to
market or the budget to do so, finance would then not understand the financial opportunities
that exist, and HR would not know how many people were required to make or provide a
product or service if the operations team didn’t talk to these individual departments.

Consider the operations that take place in your organisation. Produce a list of the inputs,
processes and outputs for these activities and post them in the discussion forum for lesson
one. Comment on the work of others.

Activities of Operations Management

Operations managers have responsibilities for the activities that contribute to the
organisation’s ability to deliver its products or services. These responsibilities will vary
depending upon the type of organisation and the nature of its outputs; however, there are
certain activities that can be considered generic and can apply to any type of operations
manager.

In the third video lecture for this lesson, the type of activities will be explored in greater depth
and some of the similarities and differences between operations will be considered.
Justification for the importance of operations managers will be presented for discussion.

Employing an operations manager in a given situation can have a positive impact upon the
working of the organisation. The following article explores the impact of employing a specific
operations manager within a library loan system.

Read the following article and answer the questions below:

http://search.ebscohost.com/login.aspx?direct=true&db=iih&AN=26650758&site=eds-live

© 2017 Arden University Ltd. ALl rights reserved

Forro, D. (2007). The role of an operations manager in interlibrary loan and document delivery
services. Journal of interlibrary loan, document delivery and electronic reserve. 17 (4), pp.
55-62.

The podcast below contains feedback on the questions related to the article.

Podcast 2

Transcript

Podcast Questions

What key lessons have you learnt from the interlibrary loan case?

What benefits do you think were to be had from using operations management more
effectively?

Can you think of another business where these principles could be applied for a more
effective result?

Select one of the general activities of an operations manager discussed in the video lecture
0101. Apply this to the work carried out by operations managers in your organisation and
report your findings in the discussion forum for this lesson. Comment on the work of others.

Summary

Carry out the following exercise and report your findings in the discussion forum before moving
on to lesson two.

Visit the online libraries and read the case study starting on page 31 of Operations
Management by Slack et al. (2013), entitled “Design house partnerships at concept
design services” Answer the following questions:
Why is operations management important in CDS?

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 Draw a four Vs profile for the company’s products and services

What would you recommend to the company if they asked you to advise them on
improving their operations?

The processes hierarchy

In any business that we look at, whether it be an automobile factory, a sandwich shop or an
independent counsellor, there are mechanisms that actually transform inputs into outputs -
these are called processes.

Slack et al. (2013) describe processes as the building blocks of all operations and state: ‘A
process is an arrangement of resources that create some mixture of services and products.
They are the “building blocks” of all operations, and they form an “internal network” within an
operation.’

Within each process there is an internal supplier and an internal customer for other processes.
Each process within each operation is part of a wider network of processes and operations,
including a supply network. As such, we can look at operations on three levels -
inputs, processes and outputs.

Figure 1.03 illustrates this concept with examples from different businesses.

Figure 1.03 - Exhibit A.3

Source: Slack et al. (2013).

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We can establish that there is a hierarchy of processes in these three levels:

a supply network - a network of operations with flow between them

the operation itself, which is a network of processes with flow between them

the process, which is a network of resources with flow between them.

Operations exists in all parts of the business, in all functions

All functions have some element of operations within them. For example, sales & marketing
has planning and forecasting processes, the outputs of which are obviously plans and
forecasts. This is information processing for internal customers. All managers manage
processes.

Positing this, we should distinguish between different meanings of operations:

operations as a function - this is the part of the organisation which produces goods and
delivers services for customers

operations as an activity - this is the management of processes within any of the firm’s
functions.

The four Vs characteristics of operations processes

All operations transform inputs but in different ways. We should consider:

the volume of outputs

the variety of outputs

the variation in demand for outputs

the visibility that customers have of the production of the organisation’s outputs.

As we describe these different characteristics, note that there will be at least one important
common factor - costs.

Volume refers to the number of outputs one process can deliver. Fast-food restaurants and
assembly-line furniture manufacturing are designed to produce a larger number of outputs
than, say, fine dining restaurants or a craftsman producing a customised cabinet. The higher-
volume business will have a greater level of systematisation and will be repeatable, with
customised equipment, at lower costs.

Variety refers to the number of different items produced from a process - and this raises the
issue of how standardised the product or service is. Taxi services offer a huge amount of
variety - they take customers where they want to go, whereas buses go where they go on a
standardised, scheduled basis. There is no flexibility, but then again buses are significantly
lower in costs than taxis.

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Variation in demand speaks to the extent to which demand can be predicted. Do orders, do
customers come in on a regular basis or are these staggered and unpredictable? The former
means that staff and resources can be carefully planned, thereby lowering costs, while the
latter means that we need to be ready for many different eventualities and be prepared to incur
higher costs.

The visibility dimension means that the processes are exposed to the customer. A ‘bricks
and mortar’ retailer will come under different scrutiny to an online retailer. The former’s
processes may come in the form of sound advice and customer recognition while the latter will
require constantly updated information on its website. A restaurant with an open kitchen will be
seen differently from an online delivery service. Businesses with highly visible processes will
require staff with customer contact skills. Some, like restaurants, hotels and transport firms, will
use a mix of front-of-house and back-of-house staff.

Operations in the changing business environment

It is inarguable that the business environment is changing. The changes in the business
environment - think of higher expectations of quality, increased cost-based competition,
demands for more choice and variety, greater security awareness; for all of these and more,
operations has responses.

Different options for operations strategy

Operations strategy is the setting of the specific decisions and actions which set the role and
objectives of an operation. There are four main perspectives on how this should be achieved:

top-down perspective

bottom-up perspective

market requirements translated

operations resources perspective.

The four perspectives on operations strategy are shown in Figure 1.04.

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 Figure 1.04 - Exhibit A.4

Source: Slack et al. (2013).

You might like to watch the following short videos:

https://www.youtube.com/watch?v=vKpzQ-E666M

https://www.youtube.com/watch?v=ZRcDVm6G50Y

References and journal articles

Essential reading

Slack, N., Brandon-Jones, A. and Johnston, R. (2013) Operations management. 7th edition.
Harlow: Pearson.

Journal articles

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Milner, C. (2016) Operations management: The interesting option, or ‘the pizza puzzle’.
Operations management. 42 (2), pp. 8-9 [Available from: Business Source Complete].

Piercy, N. (2012) Business history and operations management. Business History. 54 (2), pp.
154-178. DOI: 10.1080/00076791.2011.631121. [Available from: Business Source Complete].

Videos

Frankfurt School of Finance and Management (2016) What is operations management? [video,
online]. YouTube. Available from: [Accessed 14 January 2017].

Iitutor.com (2016) Strategic role of operations management [video, online]. YouTube. Available
from: [Accessed 14 January 2017].

North Highland (2015) Operational strategy made easy [video, online]. YouTube. Available
from: [Accessed 14 January 2017].

USDSCMI (2010) Operations and strategy with Nigel Slack [video, online]. YouTube. Available
from: [Accessed 14 January 2017].

DHL, 2015. DHL International Supply Chain [video, online]. YouTube. Available from:
[Accessed 18 July 2017].

© 2017 Arden University Ltd. ALl rights reserved

© 2017 Arden University Ltd. ALl rights reserved
© 2017 Arden University Ltd. ALl rights reserved
© 2017 Arden University Ltd. ALl rights reserved
© 2017 Arden University Ltd. ALl rights reserved
© 2017 Arden University Ltd. ALl rights reserved
© 2017 Arden University Ltd. ALl rights reserved
© 2017 Arden University Ltd. ALl rights reserved
 © 2017 Arden University Ltd. ALl rights reserved

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