Introduction to Operations

Management

• Objectives of lecture:
– To understand what is operations management
– Describe the role of OM within the organisation
– To understand the relationship between operations
management and the division of labour
– To know the constitutive elements of an operation
system
– To discuss the difference between products and
services

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 What is Operations Management?
• OPERATIONS MANAGEMENT is the design
and operations of production/service systems
• Without operations management:
– A normal queue at a bank would take 1 to 2 hours …
– A 3 hours ferry crossing could require 9 hours, if not
several days!
– The Eurostar would take 15 hours to go from London to
Paris…
– Mail would rarely be delivered…
• In other words:
– Unless we could totally revise our every day’s
perceptions of time and performance…
– … we could not live in such a world

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 Contemporary Issues

• Shift in balance of power to consumers

– Achieving higher levels of productivity
• Creating higher quality products
• Delivering better customer service
• Achieving shorter delivery times
• Reducing labor and material costs
• Globalization of business and markets
• E-commerce
• From a primary sector to a secondary sector economy
• From a manufacturing to a service economy
• E-service economy
• Case of developing economies: can we leap-frog the
manufacturing stage?

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 International Division of Labour

Source: From Joseph E. Stiglitz, Principles of Micro-

economics, 2nd ed. (New York: W.W. Norton and MGT3303
Company, 1997), p. 58. Michel Leseure
The Value Chain and Its Support
Functions

Role of OM within an Organisation

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 Division of Labour

• The objective is to specialise jobs by reducing them to their

most elementary tasks
• Results from the simultaneous application of two principles
– horizontal division of labour
• (Smith, Babbage)
– vertical division of labour
• (Taylor, introduction of management science; Gilbreth, time and
motion studies)
• The vertical division of labour implies:
– A design and planning activity
– A control activity
– A co-ordination role for operations management

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The Transformation Process within
OM

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 Input-Transformation-Output
Relationships for Typical Systems

Components are also called resources

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 OM and the Service Industry

• Application of OM to Service Operations

– Batch cooking operations at McDonald’s
– Telephone Banking
– Call Centres

Service Product Good

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Most Products Are a “Bundle”
of Goods and Services

Exhibit 1.8
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 Differences Between
Goods and Services

• Goods • Services
– Tangible – Intangible
– Can be – Cannot be
inventoried inventoried
– No interaction – Direct interaction
between between
customer and customer and
process
process

1-6 MGT3303
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 Product Delivery Systems

• Manufacturing Processes - customer are

separate from the place of production both
geographically and in terms of time
– Exceptions: B2B transactions

Manufacturing
Materials Goods Customer
process

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 Service Delivery Systems

• There are two basic structures of

service delivery system.....
– 1. where customers participate
– 2. where customers' goods are processed

Goods
Service
Customer Customer Customer Service
delivery delivery
system system

Processed
Goods

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 Front & Back Office

Key feature of service industry. Nowadays front and back

offices are often separated geographically - and may even be
in different continents Front Office - Servers
Customers (receptionist / dispatcher /
cashier etc.) Back Office

Division of labour MGT3303

Michel Leseure
 Suggested Homework
• Is a public service (e.g. land registry, customs,
ONE) an operations system?
– How does it differ from a business operations
system?
• Question 1-2 p. 27
• Have the globalisation of operations taken place
yet in Morocco? How, Why, Examples?
• Question 1-8 p. 27
• Question 1-15 p. 27
• Case Problem 1.2 p. 29

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