Operations and Project

Management
Unit 16
LO1
LO1 Review and critique the effectiveness of operations
management principles
Operations vs operations management: Operations as a concept and
as a function vs management as strategic oversight

• Operations is the action of transforming inputs

into outputs
• Operation function is the term used to describe
how the core operation of the organization is
designed and functions. In manufacturing it is
how the raw materials are transformed into a
useable product. ... Operation function is
important because it is the basis for the business
 Operations vs operations management: Operations as a concept and as a
function vs management as strategic oversight

• Definition of Operations Process: Known for

leveraging economies of scale and narrowly
defined tasks, it is one of a family of four
work processes characterized as an on-going
endeavor undertaken to create a repetitive
product or result which is performed by
people, planned, executed and controlled
Operations vs operations management: Operations as
a concept and as a function vs management as
strategic oversight

• Operations management involves planning,

organizing, and supervising processes, and
make necessary improvements for 
higher profitability. The adjustments in the
everyday operations have to support the
company’s strategic goals, so they are
preceded by deep analysis and measurement
of the current processes
 Operations as a concept:
• Different approaches to operations management, Taylor’s
theory of Scientific Management, flexible specialisation,
lean production, mass customisation and agile
manufacturing.
• Taylor’s theory of Scientific Management
• Taylor’s Scientific Management attempts to find the most
efficient way of performing any job. He believed that
there were universal laws which governed efficiency and
that these laws were independent of human judgment.
The goal of Scientific Management was to find this “one
best way” of doing things as efficiently as possible
 Operations as a concept:
• Taylor’s theory of Scientific Management
• Since Taylor’s Motivation Theory is based on managers
telling employees what to do, it is closely related to an 
autocratic style of leadership
• Taylor’s work heavily influenced production methods at the
start of the 20th century. It formed the foundation upon
which Henry Ford introduced his mass-production
techniques to the production of cars
• Whilst Scientific Management, sometimes simply called
Taylorism, may sound obsolete, it is actually still in use today.
This is especially so if you need to remain competitive in a
labor-intensive industry by keeping costs as low as possible
 Operations as a concept:
• Taylor’s theory of Scientific Management
 Operations as a concept:
• Flexible specialisation
• Flexible specialization is a business strategy a
company takes to make itself more
competitive. ... “Competitive strategy where a
firm equips itself with multi-use equipment,
multi-skilled employees, and innovative
executives, in order to adjust very quickly to a
fast changing marketplace and business
environment.”
 Operations as a concept:
• Flexible specialisation
Operations as a concept:
 Operations as a concept:
• Lean production
• Lean production is an approach to
management that focuses on cutting out
waste, whilst ensuring quality. This approach
can be applied to all aspects of a business –
from design, through production to
distribution. Lean production aims to cut costs
by making the business more efficient and
responsive to market needs
Lean production
 Lean production

• Lean Production methods

 Lean production

• Kaizen is a Japanese term meaning "change

for the better" or "continuous improvement."
It is a Japanese business philosophy regarding
the processes that continuously improve
operations and involve all employees
 Lean production

• JIT and Lean Manufacturing. ... Thompson

writes, “Just-in-time manufacturing is focused
on efficiency, while lean manufacturing is
focused on using efficiency to add value for
the customer. Just-in-time manufacturing can
be practiced on its own or as one step in
the lean manufacturing process.”
 Lean production

• Kanban is a visual method for controlling

production as part of Just in Time (JIT) and Lean
Manufacturing. As part of a pull system it
controls what is produced, in what quantity,
and when. Its purpose is to ensure that you
only produce what the customer is asking for
and nothing more. It is a system of signals that
is used through the value stream to pull product
from customer demand back to raw materials
 Lean production

• In manufacturing, the term andon (Japanese:

アンドン or あんどん or 行灯 ) refers to a
system which notifies managerial,
maintenance, and other workers of a quality
or processing problem. ... “Andon” is a
Japanese loanword originally meaning paper
lantern; Japanese manufacturers began its
quality-control usage
• Starbucks case study
 Mass Customisation
• Mass customization is a marketing and manufacturing
technique that combines the flexibility and personalization
of custom-made products with the low unit costs
associated with mass production. Other names for mass
customization include made-to-order or built-to-order.
• Clothing: Ministry of Supply. ...
• Eye-ware: Warby Parker. ...
• Footwear: Nike's NikeiD Brand. ...
• Footwear: True Gault. ...
• Sporting Goods: Atomic Skis. 
 Agile Manufacturing
• Agile manufacturing is a term applied to an
organization that has created the processes,
tools, and training to enable it to respond
quickly to customer needs and market
changes while still controlling costs and
quality. It's mostly related to
lean manufacturing
The operation process in a service sector
and manufacturing sector organisation
• Operations management in the service sector
Operations management for services has the
functional responsibility for producing
the services of an organization and providing them
directly to its customers. ... The services
sector treats services as intangible
products, service as a customer experience
and service as a package of facilitating goods
and services
• Examples: education and restaurants
The operation process in a service sector
and manufacturing sector organisation
• Operations management in the manufacturing
sector
• The job of operations management is to
oversee the process of transforming resources
into goods and services. The role
of operations managers in the manufacturing
sector includes production planning, production
control, and quality control
• Examples car factory, furniture factory
The relationship between operations and
other business functions
• Operations and Marketing
• Marketing is the creation of customer
demand. Operations management is the
supply and fulfillment of that demand. ...
When the two areas are in conflict, one often
sees a mismatch in demand and supply,
leading to production inefficiencies and
unsatisfied customers.
The relationship between operations and
other business functions
• Operations and Finance
• Finance and operations departments play
critical roles in any
business. Finance departments provide
information necessary for the
continued operations of a business.
The operations department, on the other
hand, oversees the execution of day-to-day
tasks
The relationship between operations and
other business functions
• Operations and human resource
• In practice, operations managers and human
resource managers interact primarily on
administrative issues regarding payroll and
other matters. ... Operations are the context
that often explains or moderates the effects
of human resource activities such as pay,
training, communications, and staffing
 Operations management
• Overseeing the design, implementation and
effectiveness of an operations function
• Product and service design
• Product design describes the process of imagining,
creating, and iterating products that solve users'
problems or address specific needs in a given
market. The key to successful product design is
an understanding of the end-user customer, the
person for whom the product is being created
 Operations management
• Overseeing the design, implementation and
effectiveness of an operations function
• Service design
• Service Design is a human-centred approach
that focuses on customer experience and the
quality of service encounter as the key value for
success. Service Design is a holistic approach,
which considers in an integrated way strategic,
system, process and touchpoint design decisions
 Operations management
• Overseeing the design, implementation and
effectiveness of an operations function
• Implementation and effectiveness of the
operations function
• Process and techniques are guided by
standards of quality
• Standards of quality can be internal or
external such as benchmarking and ISO
 Operations management
• Quality
• “The Quality of a product or service is the
fitness of that product or service for meeting
or exceeding its intended use as required by
the customer.”
• Kaizen
• Total Quality management
• Benchmarking
 Kaizen
• Kaizen is a Japanese term meaning "change for the better"
or "continuous improvement." It is a Japanese business
philosophy regarding the processes that continuously
improve operations and involve all employees
• Improved Productivity.
• Safer Facility.
• Improves Quality.
• Cost Reduction.
• Improved Communication.
• Employee Morale.
 Total Quality management
• Total quality management (TQM) is the continual process of
detecting and reducing or eliminating errors in manufacturing,
streamlining supply chain management, improving the customer
experience, and ensuring that employees are up to speed with
training. Total quality management aims to hold all parties
involved in the production process accountable for the overall
quality of the final product or service
• Strengthened competitive position.
• Higher productivity.
• Enhanced market image.
• Elimination of defects and waste.
• Reduced costs and better cost management.
• Higher profitability.
 Benchmarking
• Benchmarking is a way of discovering what is the best
performance being achieved – whether in a particular
company, by a competitor or by an entirely different
industry. This information can then be used to identify
gaps in an organization’s processes in order to achieve a
competitive advantage.
• Drill down into performance gaps to identify areas for
improvement.
• Develop a standardized set of processes and metrics.
• Enable a mindset and culture of continuous improvement.
• Set performance expectations.
 Operations management
• Utilising control systems and contingencies to ensure
efficiency
• Efficiency is increasing output and reducing costs while
improving quality
• Control systems include:
• 1. Set SMART Goals
• 2. Manage Your Time
• 3. Set a Budget
• 4. Work on Communication
• 5. Know when to cut losses
 Contingency
• Contingency management leads to
preparedness in the event of an emergency,
disaster, or system failure. It utilizes risk
assessment and is intended to identify
vulnerabilities and threats, and to implement
countermeasures to prevent an incident or
limit its impact should it occur.
 Operations management
• The use of Six Sigma and Lean principles to improve efficiency
and effectiveness
• Six Sigma is a method that provides organizations tools to
improve the capability of their business processes. This increase
in performance and decrease in process variation helps lead to
defect reduction and improvement in profits, employee morale,
and quality of products or services.

• "Six Sigma quality" is a term generally used to indicate a process

is well controlled (within process limits ±3s from the center line in
a control chart, and requirements/tolerance limits ±6s from the
center line).
Six Sigma