operation management chapter 1

1. Alex Hill and Terry
Hill

2. Managing Operations
Alex Hill and Terry
Hill

3. Learning
objectives
• Explain ROLE of operations management in an
organisation
• Appreciate the dimensions that make up the
operations management TASK
• Identify where the operations management
FUNCTION fits within an organisation
• Illustrate the crucial role of operations management in
organiational SUCCESS

4. Lecture outline
• INTRODUCTION
• What operations management DO?
• Variations in the operations management ROLE
• SERVICES vs MANUFACTURING
• Critical REFLECTIONS
• SUMMARY

5. What does Operations Management
do?
Manages PEOPLE, MATERIALS,
RESOURCES and DELIVERY
SYSTEMS
To deliver SERVICES and
PRODUCTS
that have been sold to
CUSTOMERS

6. > KEY IDEA
Operations delivers the SERVICES and
PRODUCTS that have been sold to
CUSTOMERS

7. > KEY IDEA
Operations delivers services and
products to customers by MANAGING
the PEOPLE, MATERIALS, RESOURCES
and DELIVERY SYSTEMS involved

8. CASE 1.1 KEY OPERATIONS TASKS

9. CASE 1.1 KEY OPERATIONS TASKS
Cafe Garment manufacturer
• DESIGNING products
• Making PRODUCTS
• Delivering SERVICES
• Managing CAPACITY
• SCHEDULING
operations
• Managing INVENTORY
• Managing QUALITY
• Managing SUPPLY
CHAIN
• IMPROVING operations
• SAME

10. What does Operations Management
dHoo?w operations management fits into an
organisation
ORGANISATIONS NEED TO
• SELL services or products to
customers
• DESIGN services or products
• PURCHASE materials and/or
services
• DELIVER the services or products
to meet customer needs
• ACCOUNT for the cash or credit
transactions involved in the above

11. What does Operations Management
dHoo?w operations management fits into an
organisation
OPERATIONS IS RESPONSIBLE FOR
• SELLING services or products to
customers
• DESIGNING services or products
• PURCHASING materials and/or
services
• DELIVERING the services or
products to meet customer needs
• ACCOUNTING for the cash or
credit transactions involved in the
above

12. What does Operations Management
dHoo?w operations management fits into an
organisation

13. What does Operations Management
do?
The role of operations management
Manages PEOPLE, MATERIALS,
RESOURCES and DELIVERY
SYSTEMS
To deliver SERVICES and
PRODUCTS
that have been sold to
CUSTOMERS

14. What does Operations Management
dThoe? role of operations management
CONTENT STYLE
• DAY-TO-DAY
role
• STRATEGIC
role
• INTERNAL
role
• EXTERNAL
role

15. > KEY IDEA
DAY-TO-DAY role of operations include:
• Managing within BUDGETS
• SCHEDULING
• SERVING customers
• Meeting OUTPUT targets
• Communicating with other
FUNCTIONS

16. > KEY IDEA
STRATEGIC role of operations include:
• Supporting market ORDER-WINNERS
and QUALIFIERS
• Making company COMPETITIVE

17. CASE 1.2
OPERATIONS TASKS
AT PORTIOLI’S
SANDWICH AND
COFFEE BAR
1.What are its MARKET
order-winners and
qualifiers?
2.How must it manage
OPERATIONS to support
its market?

18. CASE 1.2
OPERATIONS TASKS AT PORTIOLI’S
SANDWICH AND COFFEE BAR
Question Answer
ORDER-WINNERS
QUALIFIERS
• Product DESIGN
• Product RANGE
• QUALITY conformance
• Delivery SPEED
• PRICE

19. CASE 1.2
OPERATIONS TASKS AT PORTIOLI’S
SANDWICH AND COFFEE BAR
Manage
operations
Order-winners
Qualifiers
Product
design
Produc
t range
Quality
conforman
ce
Deliver
y
speed
Pric
e
Manage SUPPLY
CHAIN
Manage QUALITY
Manage CAPACITY
Manage INVENTORY
DELIVER services and
products

20. What does Operations Management
dThoe? role of operations management

21. What does Operations Management
do?
The role of operations management
MANAGE
• Large COST centre
• PEOPLE
• TECHNOLOGY
• SHORT and LONG
term
Links THINKING and
DOING ends of the
business

22. > KEY IDEA
Managers need to THINK and WORK in:
• SHORT-TERM
• LONG-TERM

23. What does Operations Management
dThoe? role of operations management

24. > KEY IDEA
Operations:
• CONTRIBUTES to gaining FIRST sale
• PROCURES SECOND sale

27. What does Operations Management
dInop?uts and outputs

28. What does Operations Management
dInop?uts and outputs

29. CASE 1.3
OPERATIONS -
A KEY ROLE IN THE
RETAIL CHAIN
1.What makes the
STORE MANAGER a
classic operations
manager?
2.Assess the size of the
OPERATIONS TASK
and its financial impact
3.How is the store a key
LINK in the supply
chain?

30. CASE 1.3 OPERATIONS - A KEY ROLE IN THE
RETAIL SUPPLY CHAIN
Question Answer
STORE MANAGER
is a classic
operations
manager
OPERATIONS
TASK size and
financial impact
Key LINK in supply
chain
• Manages large COST centre
• Manages large number of PEOPLE
• Manages SHORT-TERM and LONG-TERM
• Manages TECHNOLOGY
• Manages COMPLEXITY
• SALES REVENUE - £1M per week
• COSTS - 700 part and full-time staff
• PROFITS - meet sales and cost
budgets
• Links hundreds of SUPPLIERS
to hundreds of CUSTOMERS

31. What does Operations Management
do?
Task of the operations manager
Restaurant
Modern
Times
(1936)
Factory
Dinner
Rush
(2000)

32. What does Operations Management
do?
Task of the operations manager
Film clip Factory
Film
Title
Director
(year)
Modern Times
Charles Chaplin (1936)
Clip Start
Finish
00:01:53
00:06:03
What clip shows Charlie Chaplin working on a production line
within a factory
Key learning
objective
How an operation transforms inputs into
outputs
The order-winners and qualifiers for a high
volume factory producing a narrow range of
standard products

33. What does Operations Management
do?
Task of the operations manager
Film clip Restaurant
Film
Title
Director
(year)
Dinner Rush
Bob Giraldi (2000)
Clip Start
Finish
00:58:58
01:02:44
What clip shows
The chef producing a special one-off dish for a
restaurant critic who is having dinner in the
restaurant
Key learning
objective
How an operation transforms inputs into
outputs (and the difference between services
and manufacturing)
The order-winners and qualifiers for a low
volume, design-led restaurant offering high
levels of service

34. What does Operations Management
do?
Task of the operations manager
Operations
process Factory Restaurant
Type of
ORGANISATION
ROLE of the
operations
function
TASK of the
operations
manager

35. What does Operations Management
do?
For each film:
•What type of ORGANISATION is
represented?
•What is the ROLE of the operations
function?
•What is the TASK of the operations
manager?

36. What does Operations Management
do?
Task of the operations manager
Operations
process Factory Restaurant
Type of
ORGANISATION
ROLE of the
operations
function
TASK of the
operations
manager
• MANUFACTURING
• HIGH volume
• HIERARCHICAL
• CENTRALISED
• LOW empowerment
• MAKE products
• DELIVER products
• Manage SUPPLIERS
• Manage PROCESS
• Manage COST
• Manage TECHNOLOGY
• Manage PEOPLE
• Co-ordinate ACTIVITIES
• SERVICE
• LOW volume
• TEAM based
• DECENTRALISED
• HIGH empowerment
• MAKE food
• SERVE customers
• Manage SUPPLIERS
• SAME

38. Variations in the operations management
rVoalreiations in complexity
DEPENDING ON
• SIZE of organisation
• Service or product VOLUMES
• RANGE of services or products
sold
• TECHNOLOGY required to deliver
them
• Number of operations IN-HOUSE
•What is being PROCESSED

39. > KEY IDEA
Operations may PROCESS:
• CUSTOMERS
• CUSTOMER SURROGATES
• INFORMATION and/or
• PRODUCTS

40. Variations in the operations management
rVoalreiations in complexity

41. Variations in the operations management
rVoalreiations in output - services versus products

42. > KEY IDEA
The operations OUTPUT can be:
•SERVICES (intangible) and/or
•PRODUCTS (tangible)

43. Variations in the operations management
rVoalreiations in output - services versus products

44. CASE 1.4
A CUP OF COFFEE -
PRODUCT OR
SERVICE?
1.Why is HOTEL COFFEE
more expensive?
2.How does your LAST
CUP of coffee compare
with a hotel cup?

45. CASE 1.4
A CUP OF COFFEE - PRODUCT OR
SERVICE?
Question Answer
Why is HOTEL
COFFEE more
expensive?
How does your
LAST CUP of
coffee compare
with a hotel cup?
• Product DESIGN
• Service DESIGN
• Product RANGE
• Able to CUSTOMISE Product
• Hotel ENVIRONMENT
• LOWER specification

46. Variations in the operations management
rVoalreiations in output - services versus products
DEPENDING ON
• Nature of the OFFERING
• Level of CUSTOMER involvement
• Operations CAPACITY
• ORGANISATIONAL arrangements
• QUALITY control
• COMPETITIVE environment

47. > KEY IDEA
SERVICES are CONSUMED as they’re
provided whereas most PRODUCTS
can be made in advance and STORED

48. Critical
reflections
• Operations manager’s ROLE is both:
- Demanding, challenging, absorbing and
satisfying; and
- Frustrating and complex
• DAY-TO-DAY task requires physical effort
• Difficult to BALANCE day-to-day and
strategic role
• Good management of operations is key to
an organisation’s SUCCESS

49. Critical
reflections

50. Summar
y • Different SECTORS
- Services vs Manufacturing
• TASK of operations manager is the
same
- Different focus
• Operations TRANSFORMS
- Inputs into outputs that are sold to
customers
• Critical to overall SUCCESS of an
organisation
- Manages 60-70% of people, assets and
costs

51. Revision
questions
1 Which of the following is typically NOT the
responsibility of the operations function:
a) Managing the supply chain
b) Selling services and products to
customers
c) Converting inputs into outputs that are
then sold to customers

52. Revision
questions
1 Which of the following is typically NOT the
responsibility of the operations function:
a) Managing the supply chain
b) Selling services and products to
customers
c) Converting inputs into outputs that are
then sold to customers

53. Revision
questions
2 Typical inputs into an operations process are:
a) Materials, people, energy, capital and
information
b) Services, products and information
c) Performance measurement and control

54. Revision
questions
2 Typical inputs into an operations process are:
a) Materials, people, energy, capital and
information
b) Services, products and information
c) Performance measurement and control

55. Revision
questions
3 Services are:
a) Tangible items purchased by individuals or
organisations for subsequent use
b) Intangible items that are consumed as
they are delivered
c) Both a) and b)

56. Revision
questions
3 Services are:
a) Tangible items purchased by individuals or
organisations for subsequent use
b) Intangible items that are consumed as
they are delivered
c) Both a) and b)

57. Revision
questions
4 Which of the following affects the size of the
operations task:
a) The number of people involved in the
operations process
b) The number of assets involved in the
operations process
c) Both a) and b)

58. Revision
questions
4 Which of the following affects the size of the
operations task:
a) The number of people involved in the
operations process
b) The number of assets involved in the
operations process
c) Both a) and b)

59. TCOAOS ES FHOORR TTU TTHOER IAL
DAY