What is operations management?

1 1 What is operations management ? operations management is the activity of managing the resources which are devoted to the production and delivery of products and management defined2 The operations function is fashionable!The consultancy services market % of world revenues of 40 largest consultancy firms Marketing / sales2 operations and process management31 Corporate strategy17IT strategy17 Benefits / actuarial16 Organizational design11 Financial6 They are all operationsBack office operation in a bankKitchen unit manufacturing operationRetail operationTake-out / restaurant operation3 The best way to start understanding the nature of operations is to look around youEverything you can see around you (except the flesh and blood)

2 Has been processedby an operationEvery service you consumed today (radio station, bus service, lecture, etc.) has also been producedby an operationOperations Managers createeverything you buy, sit on, wear, eat, throw at people, and throw awayA general model of operations managementTransformed resources .. Materials Information CustomersTransforming resources .. Facilities StaffCustomersOutput products and servicesInput resourcesPlanning and controlImprovementDesignOperations strategyThe operation s strategic objectivesThe operation s competitive role and positionOperations managementOperations strategy4 Design a store layout which gives smooth and effective flowDesign elegant products which can be flat-packed efficientlySite stores of an appropriate size in the most effective locationsMaintain cleanliness and safety of storage areaArrange for fast replenishment of productsMonitor and

3 Enhance quality of service to customersContinually examine and improve operations practiceEnsure that the jobs of all staff encourage their contribution to business successOperations management at IKEAPr t a Manger high -end sandwich and snack retailerUses only wholesome ingredientsAll shops have own kitchens, which make fresh sandwiches every dayFresh ingredients delivered early every morningThe same staff who serve you at lunch made the sandwiches that morning We don t work nights, we wear jeans, we party .. 5 The three basic functions at Pr t a MangerMarketingOperationsPromotional activities, market research, /Service DevelopmentNutritional mechanical and aesthetic design of the sandwiches and snacksDesign, locationand management of stores and in-store processes and the network that supplies themAll operations are transformation processes.

4 Transformation processInputsthat transform inputs ..Outputsinto outputs6 Transformed resources .. Materials Information CustomersTransforming resources .. Facilities StaffCustomersOutput products and servicesInput resourcesSome inputs are transformed resourcesSome inputs are transforming resourcesOutputs are products and services that add value for customersTransformation processTransformed resources .. Ingredients Packaging CustomersServed and satisfied customersInput resourcesTransforming resources .. Equipment Fittings StaffAt Pr t a Manger7 The output from most operations is a mixture of products and services Mixture of products and services Outputs that are a mixture of the tangible and the intangiblePr t a Manger Acme WhistlesMwagusi Safari LodgeCrude oil productionAluminium smeltingSpecialist machine tool productionRestaurantInformation systems providerManagement consultancyPsychotherapy clinicPure products Outputs that are exclusively tangiblePure services Outputs that are exclusively intangibleIKEA operations can

5 Be analyzed at three levelsFlow between operations The level of the supply networkThe level of the operationFlow between processes The level of the processFlow between resources 8 operations management is concerned with the flow of transformed resources between operations , processes and transforming resources, where ..Flow between operations Flow between processes Flow between resources Processes form an internal supply network and become each other s customers and suppliersExternal operations interact with internal processes to form the external supply networkThe supply network Flow between operations Broadcasting companyPromotion agencyStudiosCasting agencyCreative agencyThe programme and video supply networkThree levels of operations management analysis.

6 The supply network, the operation, and the processProgramme / video makerThe operation Flow between processes The programme and video operation9 Three levels of operations management analysis: the supply network, the operation, and the processProgramme / video makerThe programme and video supply networkThe operation Flow between processes Production unitSet and props manufactureEngineeringMarketing and salesFinance and accountingPost productionThe programme and video operationThe Set and props manufacturing processProcesses Flow between resources (people and facilities) Three levels of operations management analysis.

7 The supply network, the operation, and the processProcesses Flow between resources (people and facilities) Set designProps acquisitionSet constructionSet finishingThe Set and props manufacturing processProgramme / video makerThe programme and video supply networkSet and props manufactureThe programme and video operation10 Three levels of operations management analysis: the supply network, the operation, and the processThe supply network Flow between operations Programme / video makerBroadcasting companyPromotion agencyStudiosCasting agencyCreative agencyThe programme and video supply networkThe operation Flow between processes Production unitSet and props manufactureEngineeringMarketing and salesFinance and accountingPost productionThe programme and video operationProcesses Flow between resources (people and facilities)

8 Set designProps acquisitionSet constructionSet finishingThe Set and props manufacturing processDifferences within sectors are often greater than the differences between sectorsFinancial servicesAn account management centre at a large retail bankFinancial analyst advising a client at an investment bankFurniture manufacturingMass production of kitchen unitsCraft production of reproduction antique furnitureHotelsValue-for-money hotelLobby of an international luxury hotel11A Typology of OperationsVariation in demand HighLowVisibilityHighLowVarietyHighLowHi ghVolumeLowHighA Typology of OperationsImplicationsImplicationsHighLo w repetitionEach staff member performs more of jobLess systemizationHigh unit costsHigh repeatabilitySpecializationCapital intensiveLow unit costsVolumeLowHigh12A Typology of OperationsImplicationsImplicationsFlexib leComplexMatch customer needsHigh unit costsWell definedRoutineStandardizedRegularLow unit costsVarietyHighLowA Typology of OperationsImplicationsImplicationsChangi ng capacityAnticipationFlexibilityIn touch with

9 DemandHigh unit costsStableRoutinePredictableHigh utilizationLow unit costsVariation in demand HighLow13A Typology of OperationsImplicationsImplicationsVisibi lityHighLowShort waiting toleranceSatisfaction governed by customer perceptionCustomer contact skills neededReceived variety is highHigh unit costsTime lag between production and consumptionStandardizationLow contact skillsHigh staff utilizationCentralizationLow unit costsA Typology of OperationsImplicationsImplicationsChangi ng capacityAnticipationFlexibilityIn touch with demandHigh unit costsStableRoutinePredictableHigh utilizationLow unit costsVariation in demand HighLowVisibilityHighLowShort waiting toleranceSatisfaction governed by customer perceptionCustomer contact skills neededReceived variety is highHigh unit costsTime lag between production and consumptionStandardizationLow contact skillsHigh staff utilizationCentralizationLow unit costsFlexibleComplexMatch customer needsHigh unit costsWell definedRoutineStandardizedRegularLow unit costsVarietyHighLowHighLow repetitionEach staff member

10 Performs more of jobLess systemizationHigh unit costsHigh repeatabilitySpecializationCapital intensiveLow unit costsVolumeLowHigh14 VolumeImportant to understand how differ