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. Functional Level - focus on managing the organisations functional areas including operations, marketing, finance, HR, R&D Hills Steps for Developing an Operations Strategy 1. Define corporate objectives 2. Define operations objectives required to meet corporate objectives 3. Identify strategies that can be implemented to ensure achievement of the operations objectives 4. Evaluate strategy options to select the most appropriate strategy 5. Implement, evaluate and improve strategy Strategy Evaluation Phase in which strategies are reviewed, performance toward objectives is measured, corrective action is taken. If strategies are not well evaluated at the functional level, achieving the corporate strategy may be delayed or hindered. Product Service Lifecycle 1. Introduction Stage 2. Growth Stage 3. Maturity Stage 4. Decline Stage Top Down Perspective Strategy led - the Operations function will design its strategy to support the business strategy. Internal forces driven. Usually seen in mass production. Bottom Up Perspective Operations led - strategy development begins at a functional level not the corporate level. Usually seen in lean production. Activities of Operations Processes * Directing - providing direction for the overall strategy of the operations management function. * Designing - determining the physical form, shape and composition of the operations and processes. * Delivery - ensures products and services are delivered to the final customers. * Developing - making improvements to operations processes. SERVQUAL Model (Parasuraman) Identifies five gaps that service providers need to identify, measure and manage in order to minimise their occurance: 1. Knowledge Gap - mismatch between knowledge of customer expectations and what the customer expects. 2. Standards Gap - mismatch between quality standards of the provider and that of the customer. 3. Delivery Gap - mismatch between the service delivered and the service expected.