CHAPTER 1 – OPERATIONS AND PROCESSES
The OPERATIONS FUNCTION is the part of the organisation that produces
products or services.
PROCESSES also produce product and services, but on a smaller scale. They
are the COMPONENT PARTS of operations.
Through operations and processes the INPUTS (materials, information,
customers etc) are transformed into OUTPUTS (products and services).
TRANSFORMING RESOURCES (people, machines etc) are used in the
process.
A PROCESS PERSPECTIVE means understanding the business in terms of all
their individual processes. It is a valuable way of describing and analysing a
business on three levels:
1. The central OPERATIONS function of the business
2. The higher and more strategic level of the SUPPLY NETWORK
3. The lower and more operational level of INDIVIDUAL PROCESSES
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264679619 Anne Aantjes
, Operations and processes CONTRIBUTE to the strategic impact of the
business in 5 ways:
1. COST – keeping cost under control
2. REVENUE – e.g. providing service and quality to enhance the ability to
generate revenue
3. RISK – aim to reduce risk, increase resilience
4. INVESTMENT – aim to achieve the best Return On Investment (ROI)
5. CAPABILITIES – laying down the capabilities as a long-term for future
competitiveness
Processes DIFFER in the 4 Vs:
1. VOLUME – e.g. high, low, economies of scale
2. VARIETY – flexibility required based on variety of expectations
(qualitative)
3. VARIATION – flexibility required based on level of demand
(quantitative)
4. VISIBILITY – processes that add value while customer is ‘present’
(manage perceptions)
IMPLICATIONS
Four main Operations Management activities:
1. DIRECTING the overall strategy of the operation
2. DESIGNING the operation’s product, services and process
3. Planning and control process DELIVERY
4. DEVELOPING process performance – continuous improvement
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264679619 Anne Aantjes
,CHAPTER 2 – OPERATIONS STRATEGY
OPERATIONS STRATEGY is the pattern of decisions and actions that shapes
the long-term vision, objectives and capabilities of the operation and its
contribution to overall strategy. It should:
1. Provide a VISION for how the operation’s resources can contribute
to success
2. Define the exact meaning of the operation’s PERFORMANCE
OBJECTIVES
QUALITY – doing things right, error-free goods/services, fit
for purpose
SPEED – fast, minimising time between request and
fulfilment
DEPENDABILITY – on time, keeping to promises
FLEXIBILITY – ability to change / vary / adapt / customize /
innovate
COST – cheaply, enabling appropriate pricing, allowing for a
return
3. Identify the STRATEGIC DECISIONS that help the operation
achieve its objectives
DESIGN – concerned with design of operations and
processes
DELIVERY – concerned with planning / controlling the
delivery of prod/serv.
DEVELOPMENT – concerned with development of
operations performance
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264679619 Anne Aantjes
, 4. Reconcile STRATEGIC DECISION with PERFORMANCE
OBJECTIVES
Combining the two perspectives of the:
1) Market requirements
2) Operations performance objectives
Diagram of the two perspectives
BUSINESS MODEL OPERATING MODEL
Broadly analogous to the Business High-level design of the organisation
Strategy that defines the structure and style
With emphasis on ‘how’ to achieve the
which enables it to meet its business
intended strategy as well as what the
objectives.
strategy should be.
CORE ELEMENTS: CORE ELEMENTS:
Proposition, segments, channels, KPI’s, core financial structure,
relationships, capabilities, accountabilities, organisational
configuration of activities, partners, structure, systems and technology,
revenue streams and cost structure. process responsibilities and
interactions, key knowledge and
competence.
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264679619 Anne Aantjes
The OPERATIONS FUNCTION is the part of the organisation that produces
products or services.
PROCESSES also produce product and services, but on a smaller scale. They
are the COMPONENT PARTS of operations.
Through operations and processes the INPUTS (materials, information,
customers etc) are transformed into OUTPUTS (products and services).
TRANSFORMING RESOURCES (people, machines etc) are used in the
process.
A PROCESS PERSPECTIVE means understanding the business in terms of all
their individual processes. It is a valuable way of describing and analysing a
business on three levels:
1. The central OPERATIONS function of the business
2. The higher and more strategic level of the SUPPLY NETWORK
3. The lower and more operational level of INDIVIDUAL PROCESSES
1 | Page
264679619 Anne Aantjes
, Operations and processes CONTRIBUTE to the strategic impact of the
business in 5 ways:
1. COST – keeping cost under control
2. REVENUE – e.g. providing service and quality to enhance the ability to
generate revenue
3. RISK – aim to reduce risk, increase resilience
4. INVESTMENT – aim to achieve the best Return On Investment (ROI)
5. CAPABILITIES – laying down the capabilities as a long-term for future
competitiveness
Processes DIFFER in the 4 Vs:
1. VOLUME – e.g. high, low, economies of scale
2. VARIETY – flexibility required based on variety of expectations
(qualitative)
3. VARIATION – flexibility required based on level of demand
(quantitative)
4. VISIBILITY – processes that add value while customer is ‘present’
(manage perceptions)
IMPLICATIONS
Four main Operations Management activities:
1. DIRECTING the overall strategy of the operation
2. DESIGNING the operation’s product, services and process
3. Planning and control process DELIVERY
4. DEVELOPING process performance – continuous improvement
2 | Page
264679619 Anne Aantjes
,CHAPTER 2 – OPERATIONS STRATEGY
OPERATIONS STRATEGY is the pattern of decisions and actions that shapes
the long-term vision, objectives and capabilities of the operation and its
contribution to overall strategy. It should:
1. Provide a VISION for how the operation’s resources can contribute
to success
2. Define the exact meaning of the operation’s PERFORMANCE
OBJECTIVES
QUALITY – doing things right, error-free goods/services, fit
for purpose
SPEED – fast, minimising time between request and
fulfilment
DEPENDABILITY – on time, keeping to promises
FLEXIBILITY – ability to change / vary / adapt / customize /
innovate
COST – cheaply, enabling appropriate pricing, allowing for a
return
3. Identify the STRATEGIC DECISIONS that help the operation
achieve its objectives
DESIGN – concerned with design of operations and
processes
DELIVERY – concerned with planning / controlling the
delivery of prod/serv.
DEVELOPMENT – concerned with development of
operations performance
3 | Page
264679619 Anne Aantjes
, 4. Reconcile STRATEGIC DECISION with PERFORMANCE
OBJECTIVES
Combining the two perspectives of the:
1) Market requirements
2) Operations performance objectives
Diagram of the two perspectives
BUSINESS MODEL OPERATING MODEL
Broadly analogous to the Business High-level design of the organisation
Strategy that defines the structure and style
With emphasis on ‘how’ to achieve the
which enables it to meet its business
intended strategy as well as what the
objectives.
strategy should be.
CORE ELEMENTS: CORE ELEMENTS:
Proposition, segments, channels, KPI’s, core financial structure,
relationships, capabilities, accountabilities, organisational
configuration of activities, partners, structure, systems and technology,
revenue streams and cost structure. process responsibilities and
interactions, key knowledge and
competence.
4 | Page
264679619 Anne Aantjes
