Introduction To Operations

Slack, Chambers and Johnston, Operations Management 5
th
Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Chapter 1
What is operations management?
th
Operations management is the activity
of managing the resources which are
devoted to the production and delivery of
products and services.
Operations management defined
th
The operations function is fashionable!
The consultancy services market % of world
revenues of 40 largest consultancy firms

Marketing / sales
2
Operations and process
management
31
Corporate strategy
17
IT strategy
17
Benefits / actuarial
16
Organizational
design
11
Financial
6
th
They are
all
operations
Back office operation
in a bank
Kitchen unit
manufacturing
operation
Retail operation
Take-out / restaurant
operation
th
Creating Customer Value
th
Design a store layout
which gives smooth
and effective flow
Design elegant
products which can be
flat-packed efficiently
Site stores of an
appropriate size in
the most effective
locations
Maintain cleanliness
and safety of storage
area
Arrange for fast
replenishment of
products
Monitor and enhance
quality of service to
customers
Continually examine
and improve
operations practice
Ensure that the jobs of
all staff encourage
their contribution to
business success
Operations management at IKEA
th
All operations are transformation processes
Transformation process
Inputs
that transform inputs
Outputs
into outputs
th
Transformed
resources

Transforming
resources

Customers
Output
products
and
services
Input
resources
Some inputs are transformed resources
Some inputs are transforming resources
Outputs are products and services that add
value for customers
Transformation process
th
Transformed
resources

?
Served and
satisfied
customers
Input
resources
Transforming
resources

?
At Prt a Manger
th
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
intangible
Prt a Manger
Acme Whistles
Mwagusi Safari Lodge
Crude oil production
Aluminium smelting
Specialist machine tool
production
Restaurant
Information systems provider
Management consultancy
Psychotherapy clinic
Pure products Outputs
that are exclusively
tangible
Pure services Outputs
that are exclusively
intangible
IKEA
th
Characteristics of Goods v Services
Product
Inventory
Customer Contact
Response times
Markets
Facilities
Capital
Labour
Quality
Contrast the characteristic differences between Manufacturing and
Services over the following factors:-
Manufacturing <> Service
th
Differences within sectors are often greater than the
differences between sectors
Financial services
An account
management centre at
a large retail bank
Financial analyst
advising a client at an
investment bank
Furniture manufacturing
Mass production of
kitchen units
Craft production of
reproduction
antique furniture
Hotels
Value-for-money
hotel
Lobby of an
international
luxury hotel
th
A Typology of Operations
Variation in
demand
High Low
Visibility High Low
Variety High Low
High Volume Low
High
th
A Typology of Operations
Implications Implications
Changing capacity
Anticipation
Flexibility
In touch with demand
High unit costs
Stable
Routine
Predictable
High utilization
Low unit costs
Variation in
demand
High Low
Visibility High Low
Short waiting tolerance
Satisfaction governed by
customer perception
Customer contact skills
needed
Received variety is high
High unit costs
Time lag between
production and
consumption
Standardization
Low contact skills
High staff utilization
Centralization
Low unit costs
Flexible
Complex
Match customer needs
High unit costs
Well defined
Routine
Standardized
Regular
Low unit costs
Variety High Low
High
Low repetition
Each staff member
performs more of job
Less systemization
High unit costs
High repeatability
Specialization
Capital intensive
Low unit costs
Volume Low
High
th
Volume
Important to understand how different operations are positioned
on the 4 Vs.
Is their position where they want to be?
Do they understand the strategic implications?
Variety
Variation
Visibility
Low
High
High
High
High
Low
Low
Low
Mwagusi
Safari Lodge
4 Vs profile of two operations
Formule 1
Hotel
th
Decisions in Operations
Process
Quality
Work force
Inventory
Capacity

Five major decision areas:
Schroeder Section 1.6 - page 16
Operations Management R G Schroeder, Operations Management, 4
th
edition,1993, McGraw Hill
th
Some interfunctional relationships between the operations
function and other core and support functions
Engineering/
technical
function
Accounting
and finance
function
Human
resources
function
Information
technology
(IT) function
Marketing
function
Product/service
development
function
Operations
function
Micro Environment
th
Case : Too Short The Day
Analysis
What is Giles trying to do ?

What is Giles actually doing ?

What are the problems within the
organisation ?
Recommendations
What should Giles do ?

What changes if any should the organisation make ?

Identify the functions of a manager

Identify the levels of management
th
Case : The Glastonbury Festival
1 What is the role of an operations manager
such as Michael Eavis in this situation?
How does this change at different stages
of the festival organisation?

2 List the different types of transformation
processes involved in the festival
activities within the classifications:
Materials/Information/Customer

3 Relate the 5 decision areas as outlined in
R G Schroeders Operations Management,
to the Glastonbury case.

Introduction To Operations

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