Operation management

1. Jun 2021
INTRODUCTION
TO
OPERATIONS
MANAGEMENT
Emmanuel Hasford
GCTU

2. Emmanuel Hasford
GCTU Jun 2021
Introduction To Operations
Management
• Operations Management (OM)
– Defined as:
– The management of processes and systems that
create goods and provide services
– Operations include all activities directly related
to the production of goods and the provision of
services.

3. Operations Management
Activities
• Forecasting Demand & Production Budgeting
• Capacity Planning (Needed to push to keep
productivity & turnover up)
• Scheduling of Tasks/Jobs/Services
• Managing the Supply Chain
• Assuring Quality
• Locating Facilities
• Planning, Implementing & Appraising Projects

4. OM and the Organization
• There are three basic functions in an
organization
– Finance
– Operations
– Marketing
Supporting functions
Accounts, HR, PR, etc

5. Why Study OM?
• OM is at the heart of all businesses, be it
primary, secondary or tertiary
• At least 50% of all jobs are in OM related
areas
• All other functional business areas are
interrelated with OM activities

6. Production and OM Decisions
– Strategic Decisions
• These include decisions about which markets to
compete in, how does the company compete
• It covers products, processes, facilities etc with
long-term significance for the organization
– Operations Decisions
• What level of capacity to use
• Planning production to meet estimated demand
– The customer is the only source of revenue (and profits)
to the organization
– There is therefore the need to give value through
goods/services provided to meet customer requirement

7. Production and OM Decisions
– Control Decisions
• Planning and controlling operations
• Day-to-day activities of employees, quality of
products and services, production and other costs,
maintenance of resources etc
• The greatest enemy of the operations manager is
variability. Thus a greater part of the job is to
ensure consistency/conformity of service and/or
product

8. Operations Strategy
“Operations strategy is the total pattern
of decisions that shape the long-term
capabilities of any type of operation and
their contribution to overall strategy,
through the reconciliation of market
requirements with operations resources”
(Slack and Lewis, 2015, p. 24)

9. Operations Strategy
• The United States lauds strategies that are
short- term, because of the quarterly financial
reporting.
• There are mass production corporate strategies
targeting the US home market.
• There is lack of cooperation among US
companies
» The United States has lost competitive advantage
in textiles, shipbuilding and automobiles.
» the US is struggling to keep up with high tech
products (supercomputers, advanced machine
tools etc)

10. Operations Strategy
Japan in contrast to the United States is a small,
crowded, resource-poor country
– 127.5 million people
– string of islands with a small land mass
– The Japanese make do with little and avoid waste
Japanese Management avoids
– Idle inventories, which constitute waste of scarce
material resources, and, indirectly, energy for basic
material conversion and refining
– Storage of idle inventories, which wastes limited space
– Defective parts, subassemblies, and final products,
which are a waste of materials/energy

11. Elements of the Operations
Strategy
– Operations Strategy refers to what the company
does in terms of its managerial decisions about
• Products
• Technology
• Processes Used
• Resources (Human, material, tangible & intangible)
• Quality Standards Maintained
• Cost Levels
• Tasks Schedules and
• Delivery Times

12. Elements of the Operations
Strategy
– Positioning the production system
Product design, production processing system, finished goods
inventory for each product group
Two basic types of product design:
• Custom/customization
» refers to goods designed to individuals taste.
Many different products, small batches
» Requires flexibility and timely
delivery/outturn e.g.. Airbus 380, eCampus
for Regent University
• Standard products/standardization
– mass production; high volumes at low costs

13. Elements of the Operations
Strategy
– Two basic types of production processes:
– Product-focused
• line flow production, production
lines, assembly lines
• machines and workers are grouped
together
• high volume production of standard
products
• system is non-flexible

14. Elements of the Operations
Strategy
– Process-focused
» Each production department
performs a unique, specialized
task
» many unique products
» relatively light volumes
» flexibility of operations

15. Elements of the Operations
Strategy
• Relevance?
– The choice of Product/Process design is
determined by the business strategy
– e.g. at product introduction, the business must
choose between penetration and skimming
pricing strategy
– And ‘Kasapa’ said a chip cost less than $1
• Starter pack costs dropped from 1,200,000m cedis in
2003 to 15,000 cedis in 2006!

16. Elements of the Operations
Strategy
• Product/Service Plans
– Design, development and introduction of products
– Product life cycle?
– Current trends?
– Costs/budgets for product design and development is
increased (R&D)
– Continuously changing models, so there is the need for
flexible production systems
– Operations strategies call for ability to quickly turn out
new products

17. Elements of the Operations
Strategy
• Production Process and Technology
Plans
– how products will be produced, including
details of processes and facilities

18. Elements of the Operations
Strategy
– allocation of resources
• the basic assumption is that all resources
are limited
– facility plans
• Capacity
• location and
• layout

19. Productivity
Defined as: Output/Input
– Commonly used in relation to labor or resource
– Productivity measures are scorecards of effective
use of resources
– E.g. factor productivity, labor productivity
– Multifactor Productivity:
• Output / (Labor + materials + overheads)

20. Service Productivity
• Calls per minute
• Patients per Doctor
• Customers per Bank Teller
• Shoppers per Checkout Counter
• Spectators per Ticket Booth
• Students per Lecturer

21. Factors affecting productivity
• Methods/Technology
• Capital
• Time
• Quality
• Management

22. Productivity
• Improving Productivity
– Establish clear goals
– Develop measures for all operations
– Have a holistic/systemic view to determine
critical operations
– Get management to fully support the program

23. Lesson Recap
• What have you learned in this lesson?
– What is OM?
– How does it fit into the organization’s strategic
management?
– What are the major activities in Operations
Management?
– What is productivity & How can it be improved?
– What are the elements of the operations strategy?
– How does this course fit into your degree plan?