CIPS L5M9 Operations Management LO1

CIPS L5M9 Operations Management LO1 Operations Management The processes of managing the resources and processes involved in the acquisition and transformation of inputs and the distribution of outputs. Five Key Performance Dimensions / Performance Objectives - Slack and Brandon-Jones 1. Quality 2. Speed 3. Dependability 4. Flexibility 5. Cost Quality Producing products and services that satisfy customer needs. Speed Ensuring a short lapse of time between when orders are made and fulfilled. Dependability Producing products that are reliable and consistent. Flexibility Adapting to changes in demand or marketplace changes. Cost Producing products and services at minimum cost. Operation Smallest divisible piece of work or activity within an organisation. CREATING FLOW Production Methods 1. Make to Order - craft production. Does not commence until an order has been received. 2. Mass Production - make to stock - low variety / high volume 3. Mass Customisation / Late Customisation - mix between made to order and mass production. Products standardised to a certain point e.g. Dell I T O Input - Transformation - Output The market is the point in which an output transforms into an input Input * Materials * Information * Customers Transformation * Facilities * Staff * Infrastructure e.g. road, rail, air * IT * Marketing Four V's 1. Volume - quantity of products / services produced 2. Variety - of products / services produced 3. Visibility - of the process to customers 4. Variation - changes in demand for products / services Order Qualification Competitive standards that make an organisations products viewed as fit for purpose by customers Order Winning Standards that separate the products from on organisation to another Hayes & Wheelwrights 4 Stages of Operations Readiness 1. Internal Neutrality 2. External Neutrality 3. Internally Supportive 4. Externally Supportive Internal Neutrality Operations function makes a minimal contribution to the overall corporate strategy. Stage 1 - correct the worst problem External Neutrality Operations function compares itself with similar businesses or organisations. Actively keeping pace with comparable companies in the same industry. Stage 2 - adopt best practice Internally Supportive Operations management function delivers the best capabilities to the organisation, contributing to the organisations overall competitive strategy. Stage 3 - link strategy with operations Externally Supportive Operations management function delivers competitive advantage through its capabilities and performance. Stage 4 - give an operations advantage Operations Manager Directly responsible for strategic, operating and control decisions. Indirectly responsible for decisions from other functional areas such as IT, Marketing etc. 10 Key Operations Aspects that Operations Managers Make Decisions on 1. Product or service selection and design 2. Process selection and planning 3. Facility location 4. Plant layout 5. Production planning and control 6. Quality control 7. Materials management 8. Capacity management 9. Inventory management 10. Maintenance and replacement Functional Areas in an Organisation (All functional areas within an organisation have dealings with operations management) * HR * Finance * Procurement * IT * Production * Marketing / Sales Intermittent Processes Processes used by an organisation when different products require different production arrangements. Continuous Operations Processes used by an organisation to produce one or a few standardised products in high volumes. Operations Strategies Corporate Level - for the entire organisation, providing the 'big picture' of how the company will achieve its aims. Business Level - focus on the direction a business unit will take to achieve it's goals and objectives. The business level strategy defines how best the capabilities of a business unit can be exploited to position it competitively within the market.