Operations Management, Slack
Chapter 1 Operations Management
Operations management: activity of managing the resources which are
devoted to the production and delivery of products and services.
Operations function: part of the organization that is responsible for this
activity.
In a company there are three core functions:
- Marketing (incl sales): responsible for communicating the products/services
to its markets in order to generate customer requests for service
- Product/service development: responsible for creating new and modified
products and services in order to generate future customer requests for
service
- Operations: responsible for fulfilling customer requests for service
throughout the production and delivery of products and services
There are also support functions:
- Accounting and finance: provides info to help economic decision making
and manages the financial resources
- Human Resources: recruits & develop the staff + looking for their welfare
In a transformation process model resources (transforming and transformed
resources) are input which transform something or itself into output of
goods(tangible) and services(intangible).
Transformed resources: Treated/transformed/converted in process. Mixture of:
- Materials: change their physical properties (shape/composition), location
(delivery company), possession (retail operations) or store materials
(warehouses)
- Information: transform informational properties (purpose/form info
accountants), possession (market research companies sell info), store info
(library) or location (telecommunication comp)
- Customers: change physical properties (hairdressers), store (hotel),
location (airlines) or psychological state (hospital, entertainment services)
Transforming resources: act upon transformed resources. Two types:
- Facilities: Building, equipment, plant and process technology
- Staff
Supply network: Network of supplier and customer relations that have
relationships with organization
Internal supplier: Processes or individuals within an operation that supply
products or services to other processes/individuals
Internal customer: Processes/individuals within operation who are customers
for other internal processes or individual outputs.
Hierarchy of operations: idea that all operations processes are made up of
smaller processes.
Two meanings of ‘operation’:
- as a function: part of organization which produces the products and
services for the organization’s external customers
- as an activity: management of processes within any of organization’s
functions
Four dimensions of operations processes:
- Volume: Level or rate of output from a process, determines process
behaviour. Repeatability and systemization (McDonald’s). Low unit costs
- Variety: Range of different products/services produced by a process,
determines customer behaviour. flexibility
, - Variation: degree to which the rate or level of output varies from a
process over time, determins behavior. F.e. variation in demand in resort
(summer/winter)
- Visibility: Customer contact process exposure.
Importance of operations management:
- Can reduce costs, being efficient
- Increase revenue
- Reduce amount of investment (capital employed) necessary to produce
required type and quantity of products/services
- Provide basis for future innovation
Chapter 2 The strategic role and objectives of operations
Three roles for business strategy:
- Implementing: Operation puts strategy into practice.
- Supporting: Developing capabilities which allow the organization to
improve and refine its strategic goals
- Driving strategy: giving strategy a unique and long-term advantage.
Four stages of operations contribution:
- Stage 1 Internal neutrality: Poorest level of contribution. Holding company
back from competing effectively. Goal to be ignored. Attempts to improve
by ‘avoiding making mistakes’.
- Stage 2 External neutrality: Compare with other companies to get an
overview
- Stage 3 Internally Supportive: Best in their market. Gaining clear view of
company’s competitive or strategic goals & supporting it by developing
appropriate operations resources.
- Stage 4 Externally supportive: Innovative creative proactive company (one
step ahead of other companies) which sees the operations function as
providing the foundation for its competitive success. Look to the long term.
Five performance objectives:
- Quality: Consistent conformance to customers’ expectations. (no mistakes
are made) Reduces costs, because of speed and increases dependability.
- Speed: Time between customers requesting products/services and
receiving them reduces inventory and risks.
- Dependability: Delivering products/services when they were promised to
customer. Saves time and money. & gives stability.
- Flexibility: degree to which an operation’s process can change what it
does, how it is doing it or when it is doing it. speeds up response, saves
time, maintains dependability
Four types of flexibility
o Product/service: ability to introduce new/modified products/services
o Mix: ability to produce a wide range/mix of products/services
o Volume: ability to change its level of output or activity to produce
different quantities or volumes of products/services over time
o Delivery: ability to change timing of delivery of products/services
- Cost: Keeping costs as low as possible.
Productivity = output from the operation / input to the operation
single factor productivity = output from the operation / one input to the
operation
Chapter 1 Operations Management
Operations management: activity of managing the resources which are
devoted to the production and delivery of products and services.
Operations function: part of the organization that is responsible for this
activity.
In a company there are three core functions:
- Marketing (incl sales): responsible for communicating the products/services
to its markets in order to generate customer requests for service
- Product/service development: responsible for creating new and modified
products and services in order to generate future customer requests for
service
- Operations: responsible for fulfilling customer requests for service
throughout the production and delivery of products and services
There are also support functions:
- Accounting and finance: provides info to help economic decision making
and manages the financial resources
- Human Resources: recruits & develop the staff + looking for their welfare
In a transformation process model resources (transforming and transformed
resources) are input which transform something or itself into output of
goods(tangible) and services(intangible).
Transformed resources: Treated/transformed/converted in process. Mixture of:
- Materials: change their physical properties (shape/composition), location
(delivery company), possession (retail operations) or store materials
(warehouses)
- Information: transform informational properties (purpose/form info
accountants), possession (market research companies sell info), store info
(library) or location (telecommunication comp)
- Customers: change physical properties (hairdressers), store (hotel),
location (airlines) or psychological state (hospital, entertainment services)
Transforming resources: act upon transformed resources. Two types:
- Facilities: Building, equipment, plant and process technology
- Staff
Supply network: Network of supplier and customer relations that have
relationships with organization
Internal supplier: Processes or individuals within an operation that supply
products or services to other processes/individuals
Internal customer: Processes/individuals within operation who are customers
for other internal processes or individual outputs.
Hierarchy of operations: idea that all operations processes are made up of
smaller processes.
Two meanings of ‘operation’:
- as a function: part of organization which produces the products and
services for the organization’s external customers
- as an activity: management of processes within any of organization’s
functions
Four dimensions of operations processes:
- Volume: Level or rate of output from a process, determines process
behaviour. Repeatability and systemization (McDonald’s). Low unit costs
- Variety: Range of different products/services produced by a process,
determines customer behaviour. flexibility
, - Variation: degree to which the rate or level of output varies from a
process over time, determins behavior. F.e. variation in demand in resort
(summer/winter)
- Visibility: Customer contact process exposure.
Importance of operations management:
- Can reduce costs, being efficient
- Increase revenue
- Reduce amount of investment (capital employed) necessary to produce
required type and quantity of products/services
- Provide basis for future innovation
Chapter 2 The strategic role and objectives of operations
Three roles for business strategy:
- Implementing: Operation puts strategy into practice.
- Supporting: Developing capabilities which allow the organization to
improve and refine its strategic goals
- Driving strategy: giving strategy a unique and long-term advantage.
Four stages of operations contribution:
- Stage 1 Internal neutrality: Poorest level of contribution. Holding company
back from competing effectively. Goal to be ignored. Attempts to improve
by ‘avoiding making mistakes’.
- Stage 2 External neutrality: Compare with other companies to get an
overview
- Stage 3 Internally Supportive: Best in their market. Gaining clear view of
company’s competitive or strategic goals & supporting it by developing
appropriate operations resources.
- Stage 4 Externally supportive: Innovative creative proactive company (one
step ahead of other companies) which sees the operations function as
providing the foundation for its competitive success. Look to the long term.
Five performance objectives:
- Quality: Consistent conformance to customers’ expectations. (no mistakes
are made) Reduces costs, because of speed and increases dependability.
- Speed: Time between customers requesting products/services and
receiving them reduces inventory and risks.
- Dependability: Delivering products/services when they were promised to
customer. Saves time and money. & gives stability.
- Flexibility: degree to which an operation’s process can change what it
does, how it is doing it or when it is doing it. speeds up response, saves
time, maintains dependability
Four types of flexibility
o Product/service: ability to introduce new/modified products/services
o Mix: ability to produce a wide range/mix of products/services
o Volume: ability to change its level of output or activity to produce
different quantities or volumes of products/services over time
o Delivery: ability to change timing of delivery of products/services
- Cost: Keeping costs as low as possible.
Productivity = output from the operation / input to the operation
single factor productivity = output from the operation / one input to the
operation
