Transcript Chapter 1: Operations Management

Prepared by: Sheena Ray
Definition of Operations
Management – Pg 4 ( Text Book)
 Operation Management: The activities, decisions
and responsibilities of managing production and
delivery of products and services.
 Operation function: The arrangement of resources
that are devoted to the production and delivery of
products and resources.
 Operations Managers are the people who have
particular responsibility for managing some or all of
the resources which compose the operations functions.
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Operations in the Organization
 The operations function is central to the organization
because it produces the goods and services which are its
reason for existing, but it is neither the only the nor the
most important function. It is however, one of the three
core functions of any organizations: These are:
 The marketing function
 The product/ service development function
 The operations function
In addition there are support functions which enable the
core functions to operate effectively:
 Accounting and Finance
 Human Resource Function
Table 1.1 – examples of core functions in some organisations
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The input-output transformation model for
operations (pg. 39 binder)
Transformed
Resources
•Materials
•Information
•Customers
Transforming
Resources
•Facilities
•Staff
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Transformation
Process
Goods
&
Services
Inputs and Outputs
 All operations produce products and services by changing
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inputs into outputs. They do this by using the input
transformation output process.
Operations are processes that take in a set of input
resources which are used to transform something, or are
transformed themselves, into outputs of products and
services.
Transformation process model –Model that describes
operations in terms of their input resources transforming
processes and out puts of goods and services.
Input resources: The transforming and transformed
resources that form the input to operations.
Outputs: Products and services
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Inputs to processes
 Transformed resources: The resources that are treated
transformed or converted in a process usually a
mixture of materials, information and customers.
 Transforming Resources: The resources that act upon
the transformed resources usually classified as
facilities (the building, equipments and plant of an
operation) and staff (the people who operate maintain
and manage the operation.
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Inputs to the Process
 Transformed resources
 Materials: Operations which process materials could do so to
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transform their physical properties ( shape or composition for
example). Most manufacturing operations are like this.
Information : Operations which process information could do so
to transform their informational properties (that is, the purpose
or form of the information) ; accountants do this.
Customers: Operations which process customers might change
their physical properties in a similar way to materials ,
processors, for example hairdressers or cosmetic surgeons.
Transforming Resources:
Facilities: the buildings , equipment, plant and process ,
technology of the operation
Staff: the people who operate maintain plan and manage the
operation.
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Outputs from the process
 All processes exist to produce products and services
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and although products and services are different, the
distinction can be subtle. Perhaps the most obvious
difference is in their respective tangibility.
Products are usually tangible and services usually
intangible.
Most operations produce both products and services.
Some are pure products with facilitating services and
some are pure services with facilitating services.
Services and Products are merging
All operations are service providers.
Refer to Figure 1.3
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Operation processes have different
characteristics
Although all operations are similar in that they all
transform input resources into output products and
services, they do differ in a number of ways, four of
which are particularly important.
 The volume of their output
 The variety of their output
 The variation in the demand for their output
 The degree of visibility which customers of the
production of the product or service.
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Operations have different
characteristics
 Volume: The level or rate of output from a process, a key
characteristic that determines process behavior. Example of high
volume production – Mc Donald’s operations. The first thing you
notice is the repeatability of the tasks people are doing and the
systemization of the work where standard procedures are set
down in a manual, with instructions on how each part of the job
should be carried out.
 Variety: The range of different products and services produced
by a process, a key characteristic that determines process
behavior.
 Variation: The degree to which the rate or level of output varies
from a process over time, a key characteristic in determining
process behavior.
 Visibility: The amount of value added activity that takes place in
the presence ( in reality or virtually) of the customer, also called
customer contact. Refer to case study on Pg 21 to 23.
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The activities of operations
management
 Understanding the operation’s strategic performance
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objectives.
Developing an operations strategy for the organization
Designing the operations products, services and
processes
Planning and Controlling the operation
Improving the performance of the operation
The social responsibilities of the operation
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Operations Objectives: 5
Performance objectives
 These are the five basic ‘performance objectives’ and
they apply to all types of operation.
Imagine that you are an operations manager in any
kind of business – a hospital administrator, for
example, or a production manager at a car plant,
what kinds of things are you likely to want to do
in order to satisfy customers and contribute to
competitiveness?
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Operations Objectives: 5
Performance objectives
 Quality – There are many different approaches to defining
this. We define it as consistent conformance to customers’
expectectations. You would want to do things right by
providing error free goods and services which are ‘fit for
their purpose’. This is giving a quality advantage to your
customers.
 Speed- The elapsed time between customers requesting
products or services and their receiving them. You would
want to do things fast, thus increasing the availability of
your goods and services and giving your customers a speed
advantage:
 Dependability : Delivering or making available products or
services when they were promised to the customer. You
would want to do things on time, this gives a
dependability advantage to its customers.
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5 performance Objectives:
 Flexibility: The degree to which an operations’ process can change what
it does, how it is doing it or when it is doing it. You would want to be
able to change what you do; that is , being able to vary or adapt the
operations’ activities to cope with unexpected circumstances or to give
customers individual treatment. Hence the range of goods and services
which you produce has to be wide enough to deal with all customer
possibilities. Either way, being able to change far enough and fast
enough to meet customer requirements gives a flexibility advantage to
your customers.
 Cost: You would want to do things cheaply; that is, produce goods and
services at a cost which enables them to be priced appropriately for the
market while still allowing for a return to the organization or , in a notfor- profit organization, give good value to the taxpayers or who ever is
funding the operation. When the organization is managing to do this,
it is giving a cost advantage to the customers.
 Refer to figure 2.4,2.5,2.6 ,2.7 ,2.8 – Comparison of the 5 objectives for a
Hospital , Automobile Plant, Bus company and Supermarket – it
highlights the different things the 5 performance objectives mean in
different operations
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