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Operations Management

8th edition

Part One

Directing the operation

Chapter 1 Operations Management

What is operations management?

Slack et al.’s model of operations management

In Chapter 1 – Operations management – Slack et al.

identify the following key questions…

 What is operations management?

 Why is operations management important in all types of

organization?

 What is the input-transformation-output process?

 What is the process hierarchy?

 How do operations and processes differ?

 What do operations managers do?

Key questions

Operations management is the activity

of managing the resources which are

devoted to the production and delivery of

products and services.

Operations management defined

Core functional

activities Internet service

provider (ISP)

Fast food

chain

International

aid charity

Furniture

manufacturer

Operations

Marketing

and sales

Product /

service

develop-

ment

Maintain hardware

software and

content

Implement new

links and services

Make

burgers, etc.

Serve

customers

Maintain

equipment

Give service

to the

beneficiaries

of the charity

Make

components

Assemble

furniture

Promote services

to users and get

registrations

Sell advertising

space

Advertise on

Devise

promotional

materials

Develop funding

contracts

Mail out

appeals for

donations

Advertise in

magazines

Determine

pricing policy

Sell to stores

Devise new

services and

commission

new information

content

Design

hamburgers,

pizzas, etc.

Design decor

for restaurants

Develop new

appeals

campaigns

Design new

assistance

programmes

Design new

furniture

Co-ordinate

with fashionable

colours

The activities of core functions in some organizations

The best way to start understanding the nature of

“Operations” is to look around you.

Everything you can see around you (except the flesh and

blood) has been produced by an operation.

Every service you consumed today (radio station, bus

service, lecture, etc.) has also been produced by an

operation.

Operations Managers create everything you buy, sit on,

wear, eat, throw at people, and throw away.

Operations are everywhere

‘High-end’ sandwich and snack retailer

Use only ‘wholesome’ ingredients

All shops have own kitchens which makes fresh

sandwiches every day

Fresh ingredients delivered early every morning

Same staff who serve you at lunch made the sandwiches

that morning

‘We don’t work nights, we wear jeans, we party… ’

Example – Pret A Manger

Source: Getty Images: Bloomberg / Chris Ratcliffe

Automobile assembly factory – Operations

management uses machines to efficiently

assemble products that satisfy current

customer demands

Operations management in all types of organization

Source: Shutterstock.com: Supergenijalac

Physician (General practitioner)

– Operations management uses

knowledge to effectively diagnose

conditions in order to treat real

and perceived patient concerns

Operations management in all types of organization

Source: Shutterstock.com: Stuart Jenner

Management consultant – Operations management uses people to effectively

create the services that will address

current and potential client needs

Operations management in all types of organization

Source: Shutterstock.com: Indianstockimages

Disaster relief

charity – Operations

management uses

ours and our partners’

resources to speedily

provide the supplies

and services that

relieve community

suffering

Operations management in all types of organization

Source: Getty Images: AFP / Romeo Gacad

Advertising agency – Operations

management uses our staff’s knowledge

and experience to creatively present

ideas that delight clients and address

their real needs

Operations management in all types of organization

Source: Alamy Images: Adrian Sherratt

machines

Operations management uses…

to efficiently assemble products

effectivelyknowledge to treat real and

perceived patient

concerns

diagnose

conditions to

people create services that will

address current and

potential client

needs

effectivelyto

ours and our

partners’

resources

speedily provide supplies and

services that relieve

community suffering

our staff’s

knowledge and

experience

creatively ideas that delight

clients and address

their real needs

presentto

The business environment is

changing, for example…

Prompting operations responses, for

example…

 Increased cost-based competition

 Higher quality expectations

 Demands for better service

 More choice and variety

 Rapidly developing technologies

 Frequent new product/service

introduction

 Increased ethical sensitivity

 Environmental impacts are more

transparent

 More legal regulation

 Greater security awareness

Globalization of operations networking

Information-based technologies

Internet-based integration of operations

activities

Supply chain management

Customer relationship management

Flexible working patterns

Mass customization

Fast time-to-market methods

Lean process design

Environmentally sensitive design

Supplier ‘partnership’ and development

Failure analysis

Business recovery planning

Operations management is changing

Operations input resources and outputs

Predominantly

processing inputs of

materials

Predominantly

processing inputs of

information

Predominantly

processing inputs of

customers

All manufacturing

operations

Mining companies

Retail operations

Warehouses

Postal services

Container shipping line

Trucking companies

Accountants

Bank headquarters

Market research

company

Financial analysts

News service

University research unit

Telecoms company

Hairdressers

Hotels

Hospitals

Mass rapid transports

Theatres

Theme parks

Dentists

Examples of dominant transformed resource inputs

Figure 1.4

Changes in the business environment are

shaping a new operations agenda

Most operations produce products and services

Operation Some of the operation’s

inputs

Some of the operation’s

processes

Some of the

operation’s outputs

Airline Aircraft

Pilots and air crew

Ground crew

Passengers and freight

Check passengers in

Board passengers

Fly passengers and freight

around the world

Care for passengers

Transported

passengers and freight

Department

store

Products for sale

Sales staff

Information systems

Customers

Source and store products

Display products

Give sales advice

Sell products

Customers and

products ‘assembled’

together

Police Police officers

Computer systems

Information systems

Public (law-abiding and

criminals)

Crime prevention

Crime detection

Information gathering

Detaining suspects

Lawful society, public

with a feeling of

security

Frozen food

manufacturer

Fresh food

Operators

Processing technology

Cold storage facilities

Source raw materials

Prepare food

Freeze food

Pack and freeze food

Frozen food

Some operations described in terms of their processes

The supply network-flow between operations

Broadcasting

company

Promotion

agency Studios

Casting

agency

Creative

agency

The programme

and video

supply network

Programme

/ video

maker

The

programme

and video

operation

The operation-flow between processes

Example of analysis at three levels (1 of 3)

The supply network-flow between

operations

Programme

and video

operation

Example of analysis at three levels (2 of 3)

The operation-flow between processes

Production

unit

Set and props

manufacture

Engineer

-ing

Marketing

and sales

Finance and

accounting Post

production

The programme and

video operation

The supply network-

flow between

operations Programme

and video

maker

Example of analysis at three levels (3 of 3)

The operation-

flow between

processes

Set and props

manufacture

Set

design Props

acquisition

Set

construction Set

finishing

The ‘Set and

props

manufacturing’

process

Table 1.4

Some examples of processes in non-operations functions

Two ‘end-to-end’ business processes

High

Implications

• Low repetition

• Each staff member performs more of each task

• Less systemization

• High unit costs

Implications

• High repeatability

• Specialization

• Capital intensive

• Low unit costs

VolumeLow High

A typology of operations and processes (1 of 4)

The implications of high and low Volume in operations and

processes…

High

Implications

• Flexible

• Complex

• Match customer needs

• High unit costs

Implications

• Well defined

• Routine

• Standardized

• Regular

• Low unit costs

VarietyHigh Low

A typology of operations and processes (2 of 4)

The implications of high and low Variety in operations and

processes…

High

Implications

• Changing capacity

• Anticipation

• Flexibility

• In touch with demand

• High unit costs

Implications

• Stable

• Routine

• Predictable

• High utilization

• Low unit costs

Variation in

demand High Low

A typology of operations and processes (3 of 4)

The implications of high and low Variation in operations and

processes…

High

Implications

• Short waiting tolerance

• Satisfaction governed by customer perception

• Customer contact skills needed

• Received variety is high

• High unit costs

Implications

• Time lag between production and consumption

• Standardization

• Low contact skills

• High staff utilization

• Centralization

• Low unit costs

VisibilityHigh Low

A typology of operations and processes (4 of 4)

The implications of high and low Visibility in operations and

processes…

It is important to understand how different operations are

positioned on the four Vs.

Is their position where they want to be?

Do they understand the strategic implications of their position?

Slack et al.’s general model of operations

management

To be a great Operations Manager you need to…

• Enjoy getting things done – Operations management is about doing things.

• Understand customer needs – Operations management is about

understanding what ‘value’ means for customers.

• Communicate and motivate – Operations managers must be ‘people people’.

• Learn all the time – Operations management is about learning, because

without learning there can be no improvement.

• Commit to innovation – Operations management is about being creative,

imaginative, and (sometimes) unconventional.

• Know your contribution – Operations management is about contributing to

the effective working of other functions.

• Be capable of analysing – Operations management is about evaluating

decisions.

• Keep cool under pressure – Operations managers need to be able to remain

calm no matter what problems occur.