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Introduction to Operation Management

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Introduction to Operation Management

Introduction to Operation Management


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  • 1. Introduction to Operation Management
    By: Ot Chan Dy, BE & Msc.
    Instructor, Management Institute of Cambodia
  • 2. After finish this chapter…
    Explain what is “process”
    Describe OM as function
    Differentiate of VA, SVA, NVA
    Describe trends and challenges in managing operation
    Identify some decisions make by operation manager
  • 3. Contents
    Operation Management as Process
    Value Chain Management
    What is operation management?
    Scope of responsibility of operation manager
    Trends and challenges in OM
  • 4. Operation Management as Process
    Operation Management deal with PROCESS that produce “Goods” & “Service”
    ?
    in put
    Out put
    ?
    Add value
  • 5. Operation Management as Process
    PROCESS should be design with according to customer “Needs” and “Wants”
    Customer
    Internal
    External
  • 6. Operation Management as Process
    Manufacturing vs. Service Process
    Process
    The main differences between the two:
    Nature of their output
    Degree of customer contact
    Services: 80% of job in business
    Manufacturing: without it there will be “products”
  • 7. Operation Management as Process
    Manufacturing and Service is difficult to distinguish
    Total Customer Offering
    Automobile is not just manufacture a car but also provide after sale service like arrange finance, offering warranties and guarantees.
    Computer industry, customer is paying both hardware and software but after sale service is very important like help-line for troubleshooting.
    Therefore, operation management should not see as manufacturing vs. service BUT as joint effort in the whole supply chain to provide total customer satisfaction.
  • 8. Operation Management as Process
    Manufacturing and Service some other example:
    The product is intangible for service operation
    Is this still true?
    Service companies speak a lot about their “products” “intangible” become “tangible”
    Service can not be kept in the stock? Let’s examine the cases
    In “tangible” services business such as the Pizza Company, KFC, Lucky Burger, the supporting elements of the service (supplies) is clear and will be kept in stock.
    Pachem dental clinic must have their doctors ready to provide service to customers, therefore “kept stock”
    Some products can not be stock that long i.e. perishable foods BUT even CD music can last for years, it is not advised to keep it that long.
  • 9. Operation Management as Process
    Manufacturing and Service some other example:
    Service vary and can not be mass-produce
    Depend on where and how we view the service. KFC is consider service but still can produce large volume and diverse types
    There is high customer contact
    It is estimated that there is less than 5 min contact between passengers and flight attendances from Phnom Penh to Singapore
    Crown (Cambodia) spend a lot of time visiting their customers
    The introduction of ATM machines by ANZ and other banks has reduce tremendous amount of contact between customer and bankers.
  • 10. Operation Management as Process
    Manufacturing and Service some other example:
    Customers participate in the service
    Not really necessary and always the case! With IT system customer could check in without having to see the counter staffs, therefore reduce check in time process for air transport companies.
    Facilities are located near to customers
    That was really in the past! Still true for some cases…
    With modernization of IT, Angkor Home Hotel in Siem Reap can be book from Tokyo, Operation Management books can be bought from Amazon.com and have it ship straight to office door in Phnom Penh.
  • 11. Operation Management as Process
    Manufacturing and Service some other example:
    Quality is difficult to measure and depends on the server
    In services industry, time is an important dimension in measure quality – speed and reliability of response are measurable and quantifiable…
    Gone in 60 seconds! By McDonald fast food chain… vs. long line up of Lucky Burger, KFC, Pizza Company… during peak time!
  • 12. Operation Management as Process
    The service management system
    External environment
    Internal environment
    The way service concept is delivered.
    5. Service Delivery System
    3. Service Image
    1. Culture & Philosophy
    Who we target for?
    Where we choose to be and not to be?
    Specification that describe the benefit offered by service.
    4. Service Concept
    2. Market Segment
    Service Management System (Norman, 2000)
  • 13. Operation Management as Process
    Manufacturing and Service – the key points
    • It is not always helpful when trying to manage operation by making a total distinction between service and manufacturing
    • 14. Manufacturing and service is about the collaboration activities in providing customers the goods or services
    • 15. The effort should use to distinction between input that manufacturing & service process (materials & customers)
    • 16. Remember: materials do notthink or act for themselves while customers can and do. Service companies that forget this would die soon…
  • Contents Map
    Operation Management as Process
    Value Chain Management
    What is operation management?
    Scope of responsibility of operation manager
    Trends and challenges in OM
  • 17. Value Chain Management
    What is value chain?
    Process must add value to their customers
    Activities that are necessary for adding values
    Therefore, It is about value chain management!!! See: Value Innovation
  • 18. Value Chain Management
    It is about management of “value added activities” in the whole supply chain (supply chain management)
    Processes are resource consumer , therefore its activities of converting input to output must be examine carefully. They should value added!
    A business is profitable if the value it creates exceeds the cost of performing the value activities (Porter, 2001)
    Core processes
  • 19. The Value Chain (Porter, M. 2001)
    A company’s value chain is a system of interdependent activities which are connected by linkages.
    Linkages exist when the way in which one activity is performed affects the cost or effectiveness of other activities. Therefore need to be trade-off & coordination!
  • 20. Contents Map
    Operation Management as Process
    Value Chain Management
    What is operation management?
    Scope of responsibility of operation manager
    Trends and challenges in OM
  • 21. Definition of Operation Management
    Systematic design, direction, and control of process that transforming input into product/service for external & internal customers
    In large organization, operation is usually responsible for the actual transformation of input into services & products.
    Therefore, it is consisted of series of small operation which work as function.
    Some firms do not own the function but “contracting”
    Most of senior level executive have their work experience in operation i.e. VP Operation or Production, Chief Operation Officer (COO)
    Typical report function to COO include Customer Service, Production, Logistic, QA, Inventory, Maintenance & Reliability etc.
  • 22. Contents Map
    Operation Management as Process
    Value Chain Management
    What is operation management?
    Scope of responsibility of operation manager
    Trends and challenges in OM
  • 23. Scope of responsibility of OM
    Decision COO makes both Strategic and Tactics
    Decision making process:
  • 24. Scope of responsibility of OM
    Strategic vs. Tactics decision
    Strategic decision include:
    Development of new capabilities
    Maintaining of existing ones
    Process design
    Value chain linkage development
    KPIs development (finance and non finance matrices)
    Tactics decision include:
    Process improvement
    Performance measurement & management (see: Kaplan & Norton, Davenport-analytical performance management)
    Managing projects
    Planning
    Inventory
    Supplement docs: The three level of decision making
  • 25. Scope of responsibility of OM
    2 Principles must be kept in mind as COO:
    Must design and operate processes deal with Quality, Technologies, and staffing issues
    Each part of organization has its own identity
  • 26. Contents Map
    Operation Management as Process
    Value Chain Management
    What is operation management?
    Scope of responsibility of operation manager
    Trends and challenges in OM
  • 27. Trends & Challenges in managing operation
    Productivity
    Global competition
    Technologies changes
    Environmental issues
    Ethical
    Diversity
  • 28. Trends & Challenges in managing operation
    Productivity
    Four strategies to consider:
  • 29. Trends & Challenges in managing operation
    Global competition
    It is agreed that to “prosper & survive” business have to view customers, suppliers, facilities location, and competitor in global terms
    Feature articles:
    “What it take to compete in flat world”
    “Global competition for resources”
  • 30. Trends & Challenges in managing operation
    Technological changes:
    Thus, the first and critical point about why we fail to see the need for change stems from the fact that we stand blinded by the light of successful past mental maps (Black & Gregerson,2008).
    Feature articles:
    “strategy & the internet”
    “It is all start with ones”
    “How information gives you competitive advantages”
    LFC vs KFC
  • 31. Trends & Challenges in managing operation
    Environmental issues:
    Companies that persist in treating climate change solely as a corporate social responsibility issue, rather than a business problem, will risk the greatest consequences (Porter & Reinhardt, 2007).
    Feature articles:
    “business climate and climate business”
    “Impact of Climate Changes on future business strategy adoption”
    “Virtual Matrix of Corporate Social Responsibility”
  • 32. Trends & Challenges in managing operation
    Business ethic:
    Raising the bar of rules or standards governing the conduct of doing business
    Feature articles:
    http://en.wikipedia.org/wiki/Business_ethics
    http://www.scu.edu/ethics/
  • 33. Trends & Challenges in managing operation
    Workplace diversity:
    Managing diversity is comprehensive process for creating work environment that includes everyone
    There is single recipe for success!
    Feature articles:
    Harvard Business Review on “Managing Diversity”
    Harvard Business Review on “Culture Changes”
    Diversity as strategy – Harvard Business Review
    Diversity at workplace: benefits , challenges, and required material tools
  • 34. Trends & Challenges in managing operation
    Feature articles: “5 Competitive Forces that Shape Strategy”
  • 35. Question…
    ?
  • 36. Class activities
    Objectives:
    To get deeper understand of business present & future trends & challenges
    Increase level of competences in business research
    Team work in practices
    Business presentation skill
    Topics:
    Productivity improvement challenges
    Globalization – The competition for resources. Try to answer “why companies are competing with everyone from everywhere for everything?
    Climate changes – threats and opportunities for business in the future (to include case studies)
    Management of workplace diversity
    Using Service Management Model developed by Norman, compare service offer by The Pizza Company, Lucky Burger, KFC, Pizza World, and Soksabby.
  • 37. Class activities
    Team
    A – Lead by:
    Member:
    B – Lead by:
    Member:
    C – Lead by:
    Member:
    D – Lead by:
    Member:
    E – Lead by:
    Member:
    Requirements:
    Paper works > 14 pages
    Presentation 20 – 30 min
    Q&A < 15 min
    Each team member must present
    To be effective
    Deadline must Be set