What is operations management? - mindran.com

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) 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.

2 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 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.

3 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 ..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 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.

4 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: 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: 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.

5 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) 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

6 CostsVarietyHighLowA Typology of OperationsImplicationsImplicationsChangi ng capacityAnticipationFlexibilityIn touch with 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 performs more of jobLess systemizationHigh unit costsHigh repeatabilitySpecializationCapital intensiveLow unit costsVolumeLowHigh14 VolumeImportant to understand how different operations are positioned on the 4 V their position where they want to be?

7 Do they understand the strategic implications?VarietyVariationVisibilityL owHighHighHighHighLowLowLowMwagusi Safari Lodge4 V s profile of two operationsFormule 1 HotelSome interfunctional relationships between the operations function and other core and support functionsEngineering/ technical functionAccounting and finance functionHuman resources functionInformation technology (IT) functionUnderstanding of the capabilities and constraints of the operations processNew product and service ideasUnderstanding of the capabilities and constraints of the operations processMarket requirementsFinancial analysis for performance and decisionsProvision of relevant dataRecruitment development and trainingUnderstanding of human resource needsAnalysis of new technology optionsUnderstanding of process technology needsProvision of systems for design, planning and control, and improvementUnderstanding of infrastructural and system needsMarketing functionProduct/service development functionOperations function15 Separate operations processesConventionally, organizational boundaries are drawn around functional processesCustomer needs fulfilledCustomer needsFunction 1 Function 2 Function 3 Function 4 Business processesSeparate operations processesBPR advocates reorganizing (reengineering)

8 Micro operations to reflect the natural customer-focused business processesFunction 1 Function 2 Function 3 Function 4 Customer needs fulfilledCustomer needsBusiness processes16 Example of how each micro operation contributes to the business processes which fulfil external needsSize of each micro operation s continuation to each processMarketing and SalesSet andpropsmanufactureEngineeringProduction unitsFinance and costingPreparing quotationsProgramme productionTechnical support contractsMusic videosPromotional and advertising contractsCustomer needsCustomer needs fulfilledBusiness processesKey Terms TestOperations managementThe activities, decisions and responsibilities of managing the production and delivery of products and functionThe arrangement of resources that are devoted to the production and delivery of products and managersThe staff of the organization who have particular responsibility for managing some or all of the resources which comprise the operation s Terms TestSupport functionsThe functions that facilitate the working of the core functions, for example, accounting and finance, human resources, definition of operationsAll the activities necessary for the fulfilment of customer process modelModel that describes operations in terms of their input resources, transforming processes and outputs of goods and Terms TestTransformed resourcesThe resources that are treated, transformed or converted in a process, usually a mixture of materials.

9 Information and resourcesThe transforming and transformed resources that form the input to resourcesThe resources that act upon the transformed resources, usually classified as facilities (the buildings, equipment and plant of an operation) and staff (the people who operate, maintain and manage the operation).18 Key Terms TestTangibilityThe main characteristic that distinguishes products (usually tangible) from services (usually intangible).Facilitating servicesServices that are produced by an operation to support its productsProducts that are produced by an operation to support its Terms TestProcessesAn arrangement of resources that produces some mixture of goods and networkThe network of supplier and customer operations that have relationships with an supplierProcesses or individuals within an operation that supply products or services to other processes or individuals within the Terms TestInternal customerProcesses or individuals within an operation that are the customers for other internal processes or individuals of operationsThe idea that all operations processes are made up of smaller operations processes.

10 End-to-end business processesProcesses that totally fulfil a defined external customer Terms TestBusiness process reengineeringThe philosophy that recommends the redesign of processes to fulfil defined external customer level or rate of output from a process, a key characteristic that determines process range of different products and services produced by a process, a key characteristic that determines process Terms TestSystemizationThe extent to which standard procedures are made degree to which processes, products or services are prevented from varying over contact skillsThe skills and knowledge that operations staff need to meet customer Terms TestFront-officeThe high-visibility part of an low-visibility part of an operation.