Operations Management: Introduction

Week 6

Management Themes & Case Studies

Course syllabus
WEEK TOPIC
1 An introduction to Management Themes

2 Overview of the Historical Development of Management Thinking, Theory and Practice

3 Strategy and Planning (A)
- Practical Strategic Management Issues (B)
4 Strategy and Planning (B)
5 Strategy and Implementation
6 Operations Management: Introduction
7 Operations Management and Quality
8 Operations Management and Supply Chain
9 Operations Management and New Product Development
10 Ethics - Current Issues and Future Positions
11 Stakeholder Theory and Implications for Ethics

12 Corporate Social Responsibility

13 Revision
14 Revision & Pre-leased Case Study Briefing
15 Exam Week
Learning outcomes
On completion of this lecture,
students should be able to:

Define the strand of operations

management within the context
of management themes.

Explain the meaning and

importance of supply chain
management, lean production
and quality to efficient
operations management.
Reading

 Core text
 Boddy, D. (2012). Essentials of Management: A concise
introduction (Ch16). Harlow, UK: Pearson Education Limited.
 Further reading
 Slack, N. Brandon-Jones, A. & Johnston, R. (2013). Operations
Management. 7th ed. Harlow, UK: Pearson Education Limited.
 Definition
“Operations management is the activity of
managing the resources which are devoted
to the production and delivery of products
and services” (Boddy, 2012:320)
System & Process
Repeatable Efficient
Consistent Competitive
Reliable Compliant
 Scope of operations
 Every organisation has operations function.
 The operations function is one of the three core
functions of any organization which are;
 Marketing & sales function
 Product & service development function
 Operations function

 Operations managers are the people who are

responsible for managing operations.
Figure 1.2 The relationship between the operations function and other core and support functions of the organization
 Main activities of operations

 Providing goods/services to customers depend

on five key operations activities:
 Creating capacity - the ability to yield an output from
resources.
 Setting standards – ensures quality and specification of the
product/service delivered to customers.
 Materials – ensure adequate supply of resources (materials,
parts) to support production.
 Scheduling – coordinating and making resources available at
right time to meet demand.
 Control - checking whether plans for the other activities are
working.
Importance of operations management

 Operations management is important in all

types of organizations.
 For example:
 Furniture
 Automobile

 Healthcare

 Consulting

 Advertising

 NGOs
Operations management in all types of organizations
Design a store layout
Design elegant which gives smooth Ensure that the jobs
products which can be and effective flow of all staff encourage
flat-packed efficiently their contribution to
business success

Site stores of an Continually examine

appropriate size in and improve
the most effective operations practice
locations

Maintain
cleanliness and Monitor and enhance
safety of storage Arrange for fast quality of service to
area replenishment of customers
products
Operations management in all types of organizations

Automobile assembly factory - Operations

management uses machines to efficiently
assemble products that satisfy current
customer demands
Operations management in all types of organizations

Physician (General practitioner)

- Operations management uses
knowledge to effectively diagnose
conditions in order to treat real
and perceived patient concerns
Operations management in all types of organizations

Management consultant - Operations

management uses people to effectively
create the services that will address
current and potential client needs
Operations management in all types of organizations

Disaster relief
charity - Operations
management uses
ours and our partners’
resources to speedily
provide the supplies
and services that
relieve community
suffering
 Operations management in all types of organizations
Advertising agency - Operations
management uses our staff’s knowledge
and experience to creatively present
ideas that delight clients and address
their real needs
 Operations management uses…………

Resources Appropriately Create Outputs

People Effectively Produce Ideas
Experiences Efficiently Change Products
to
Knowledge Creatively Sell services
Partners Cure
Machines Shape
Assemble

Fulfill Market Requirements

That Match Citizens Dreams
Satisfy Client Demands
Exceed Customer Needs
Delight Society Concerns
 Operations management challenges
 The best way to successfully manage production
and delivery of products and services is to
implement systems and process that are:
 Repeatable
 Consistent
 Reliable
 Efficient
 Competitive
 Compliant with industry legislation
 This can be achieved by understanding operations as a
transformation process.
 The transformation process

 The transformation process is:

“The operational system that takes all of the inputs; raw materials,
information, facilities, capital and people and converts them into an output
product to be delivered to the market” (Boddy, 2012:320)
 Operations strategy

 Defined as:
“Pattern of decisions that shapes the long-term capability of
an operation- so that it supports the corporate strategy”
(Boddy, 2012:324)
 It clarifies the primary purposes of the
operations processes and designs the
systems to achieve them.
 Operations processes
 Operations processes includes sets of activities
that produces a specific product or service.
 Production systems
 Project systems
 Job-shop systems
 Batch operations
 Mass production
 Service systems
 Professional services
 Service shops
 Mass services
 e.g., Batch operations

e.g., Project systems

e.g., Mass production

e.g., Job-shop systems

 The 4 Vs of operations
 Operations differ on four dimensions:
 Volume – number of units of a given product type
to be produced.
 Variety – number of versions of a product to be
manufactured by the same facility.
 Variation in demand – how the required number
of products differs over time.
 Visibility – how much customers see of the
operational process.
Managers must decide on volume, variety, variation and
visibility, before they can design the operations process

Low Volume High

High

High Variety Low

High Variation in demand Low

High Visibility Low

 Operations processes: Production
systems
Implications Implications

•Low repetition
•Each staff Low Volume High •High repeatability
member performs •Specialization
more of each task
•Capital intensive
•Less
systemization •Low unit costs
•High unit costs
 Operations processes: Production
systems

Implications Implications

•Flexible •Well defined

•Complex High Variety High
Low •Routine
•Match customer •Standardized
needs •Regular
•High unit costs •Low unit costs
 Operations processes: Production
systems
Implications Implications

•Changing •Stable
capacity Variation in
High High
Low •Routine
•Anticipation demand
•Predictable
•Flexibility
•High utilization
•In touch with
demand •Low unit costs
•High unit costs
 Operations processes: Production
systems
Implications Implications

•Short waiting •Time lag between

tolerance High Visibility High
Low production and
•Satisfaction consumption
governed by •Standardization
customer •Low contact skills
perception
•High staff
•Customer contact utilization
skills needed
•Centralization
•Received variety
is high •Low unit costs
•High unit costs
 Operations processes: Service systems
Low Volume High

High Variety Low

High Variation Low

High Visibility Low

Safari Lodge Hotel

 Three concepts help to distinguish service delivery

 Contact time
 Customer interaction
 Customization
Tesco – 4 V Analysis
 Other concepts of operations
management

 Supply chain management

 Lean production
 Quality
Supply chain management
“Supply chain management is the management of the
interconnection of organizations that
relate to each other through upstream and downstream
linkages between the processes that produce value to the
ultimate consumer in the form of products and services”
(Slack et al., 2013:406)

Watch IKEA video

Cainiao Smart Logistics Network Limited
Video – Cainiao Logistics Supply Chain Network
Importance of supply chain
management
 Decreases purchasing cost
 Improves quality and customer services
 Improves on-time delivery

 Managing the Supply Chain for Globally

Integrated Products (Case Study)
Lean production
 Lean production is an approach that focuses on
eliminating waste whilst ensuring quality.
 Waste is defined as anything that does not add
value in the production process and supply
chain.
 Thus, making the business more efficient and
responsive to market needs.

 Jaguar - Lean Production (Case Study)

Importance of lean production

 Reduction of waste
 Improves customer interactions
 Improves quality
Quality
Quality can be defined as ‘consistent conformance to
customers’ expectations’ (Slack et al, 2013)

 ‘Conformance’ implies that there is a need to

meet a clear specification which is a key
operations task.
 ‘Customers’ expectations’ recognizes that the
service or product must take the views of
customers into account.
Importance of quality

 Improves customer satisfaction

 Reduces costs of inspection
 Conclusions

 Operations support business performance by

efficiently meeting customer expectations.
 A process-based approach results in repeatable,
consistent, reliable, competitive and compliant
processes.
 Operations systems must be able to deal with
both tangible and intangible products.