Contextualizing Operations Management Royston E Morgan  [email_address]
Objectives Session <ul><li>Defining Operations Management </li></ul><ul><li>Examining Performance Objectives </li></ul><ul...
BA's new business class only plane  Jessops shares suspended ahead of winding-up Vodafone & Orange announces UK iPhone deal
Why OM is important <ul><li>Effective OM a clear source of competitive advantage </li></ul><ul><li>Plays a part in shaping...
Contextualising operations….. <ul><li>Operations management is an organisation-wide concern </li></ul><ul><li>Should be vi...
Defining Operations Management <ul><li>The management of the conversion of inputs into outputs </li></ul>
The input-transformation-output Model Transformed Resources Materials Information Customers Transforming Resources Facilit...
The Input Output Model Transformation Process Buns Patties Salad Car parking Staff Payment system Shop facilities Hamburge...
 
Application – Input Output Model <ul><li>Identify  the  inputs, transformation process and desired outputs of each operati...
The performance objectives drive the configuration options Quality Speed Flexibility Reliability Cost
McLaren
Assess McLaren over the Five Dimensions  <ul><li>Where are they placing emphasis? </li></ul><ul><li>How does the way they ...
Key point <ul><li>Order of performance objectives influences the configuration of Operations </li></ul><ul><ul><li>Sets th...
A focus on a key dimensions can give competitive advantage Speed Minimum price, highest value Quick delivery Dependable  d...
Core Competences <ul><li>A core competence is a specific resource or capability that an organisation sees as being central...
A core competency can take various forms <ul><li>Technical and subject matter know-how. </li></ul><ul><li>Expertise in a p...
A core competence is relative to other organisations <ul><li>Provides fundamental basis of added value and competitive edg...
Scaling competences Monitor Core Non Core Question Ability Competitors to follow or replicate Traceable benefit to custome...
Assess McLaren, McDonalds, Sainsbury's  over the Core Competence framework  <ul><li>Identify the operational core capabili...
Service & Manufacturing Operations <ul><li>Services – essentially intangible outputs </li></ul><ul><li>Manufacturing opera...
Front Office & Backroom Operations <ul><li>Activities which involve the customer are generally undertaken within a ‘front-...
Reflection <ul><li>For MacDonald's and Sainsbury's identify the key front and back office operational processes? </li></ul>
Viewing Operations as Strategic
Operations strategy - definition <ul><li>Operations strategy is the total pattern of decisions which shape the long term c...
‘ Fit’ operations resources to market requirements ‘fit’ Operations Capabilities Operations Performance Objectives Operati...
Operations Management v Operations Strategy
The role of operations is defined by its aspirations (Hayes and Wheelwright) Stop holding Organisation back Be as good as ...
position (with justification) the following organisations using the 4 stages of the H&W model
The operations strategy matrix Quality Performance objectives Resource Usage Market Competitiveness Decision areas Speed D...
Operational Improvement Model (Platt/Gregory) Assessment of the market demands, quality, delivery and service requirements...
Using the Passport Agency ‘Fiasco’ Case <ul><li>Use the Platts-Greggory model to show what might have been! </li></ul>
In operations strategy ‘fit’ is the alignment between market and operations capability Market requirements  Level of opera...
Virgin Trains and Nissan positioned in relation to market requirements and operations capabilities Market requirements  Le...
Key issue with fit is sustainability <ul><li>Achieving fit over time = sustainability </li></ul><ul><li>Strategies should ...
Sustainability
Sustainable improvement implies simultaneous extension/improvement of market requirements and operations capabilities Mark...
Reflection <ul><li>What are the practical implications of engineering a ‘simultaneous’ improvement? </li></ul><ul><li>How ...
Risk <ul><li>The less certain and predictable it is for an operation to reposition itself on either of the two axes, the m...
Level of market requirements  Level of operations resource capability Line of fit External operational risk  (Market needs...
Flight for Survival case <ul><li>In your groups analyse this case using concepts from the first session </li></ul><ul><li>...
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2010 s1-operations managementsession1intro

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Slides for the lecture series in Operations Management I took at Kingston University London

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2010 s1-operations managementsession1intro

  1. 1. Contextualizing Operations Management Royston E Morgan [email_address]
  2. 2. Objectives Session <ul><li>Defining Operations Management </li></ul><ul><li>Examining Performance Objectives </li></ul><ul><li>Introducing Transformation Models </li></ul><ul><li>Brief overview core competences and their place in operations management </li></ul><ul><li>Exploring concept of operational fit </li></ul><ul><li>Applying the above to exercises and a Case history. </li></ul>
  3. 3. BA's new business class only plane Jessops shares suspended ahead of winding-up Vodafone & Orange announces UK iPhone deal
  4. 4. Why OM is important <ul><li>Effective OM a clear source of competitive advantage </li></ul><ul><li>Plays a part in shaping strategic direction </li></ul><ul><li>Matters to all sectors of the economy </li></ul><ul><li>All managers are operations managers </li></ul><ul><li>Operations should be viewed in light of the extended supply network </li></ul><ul><li>OM is about managing processes </li></ul>
  5. 5. Contextualising operations….. <ul><li>Operations management is an organisation-wide concern </li></ul><ul><li>Should be viewed as strategic </li></ul><ul><li>Clearly influenced by competitive positioning </li></ul><ul><li>Is ever-changing </li></ul><ul><li>Concerns services and manufacturing activities </li></ul>
  6. 6. Defining Operations Management <ul><li>The management of the conversion of inputs into outputs </li></ul>
  7. 7. The input-transformation-output Model Transformed Resources Materials Information Customers Transforming Resources Facilities Staff Input Output Goods & Services Transformation Process
  8. 8. The Input Output Model Transformation Process Buns Patties Salad Car parking Staff Payment system Shop facilities Hamburger Ambience Service Ease of use Minimal waste Payment Enjoyment
  9. 10. Application – Input Output Model <ul><li>Identify the inputs, transformation process and desired outputs of each operation </li></ul>Check each output and input are traceable via the process
  10. 11. The performance objectives drive the configuration options Quality Speed Flexibility Reliability Cost
  11. 12. McLaren
  12. 13. Assess McLaren over the Five Dimensions <ul><li>Where are they placing emphasis? </li></ul><ul><li>How does the way they configure their operations support their overall positioning </li></ul>
  13. 14. Key point <ul><li>Order of performance objectives influences the configuration of Operations </li></ul><ul><ul><li>Sets the relative importance and focus of operational improvement </li></ul></ul>
  14. 15. A focus on a key dimensions can give competitive advantage Speed Minimum price, highest value Quick delivery Dependable delivery Error-free products and services Frequent new products, maximum choice Cost Speed Quality Reliability Flexibility Minimum cost, maximum value Reliable operation Ability to change Error-free processes Fast throughput
  15. 16. Core Competences <ul><li>A core competence is a specific resource or capability that an organisation sees as being central to the way it succeeds. </li></ul><ul><li>A core competence fulfils three criteria: </li></ul><ul><ul><li>Provides a direct benefit to a customer and is a process that adds value to the product or service. </li></ul></ul><ul><ul><li>It is not easy for a competitor to replicate. </li></ul></ul><ul><ul><li>It can be leveraged widely to many products and markets (has scope) </li></ul></ul>
  16. 17. A core competency can take various forms <ul><li>Technical and subject matter know-how. </li></ul><ul><li>Expertise in a particular business (or technology) process </li></ul><ul><ul><li>Note the cumulative nature of technology competence. </li></ul></ul><ul><li>Deep knowledge in a particular market or product trajectory (is an aspect of collective learning) </li></ul><ul><ul><li>e.g. lighting for Philips </li></ul></ul><ul><li>Possession of a particular market entrance or relationship with suppliers and/or clients. </li></ul><ul><li>Pivotal position in the supply chain </li></ul>
  17. 18. A core competence is relative to other organisations <ul><li>Provides fundamental basis of added value and competitive edge. </li></ul><ul><li>Found in added value parts and operational processes of organisations. </li></ul><ul><li>Involves coordination and integration of technologies and processes. </li></ul><ul><li>No more than about six core competences in an organisation. </li></ul><ul><li>Need to keep these close as they form the basis of survival in the competitive environment. </li></ul>
  18. 19. Scaling competences Monitor Core Non Core Question Ability Competitors to follow or replicate Traceable benefit to customer Easy Hard Low High
  19. 20. Assess McLaren, McDonalds, Sainsbury's over the Core Competence framework <ul><li>Identify the operational core capabilities that give them an ‘edge’ </li></ul>
  20. 21. Service & Manufacturing Operations <ul><li>Services – essentially intangible outputs </li></ul><ul><li>Manufacturing operations – essentially tangible outputs </li></ul>
  21. 22. Front Office & Backroom Operations <ul><li>Activities which involve the customer are generally undertaken within a ‘front-office’ environment </li></ul><ul><li>Operations that need not be seen by the customer are undertaken in a ‘backroom’ environment </li></ul>
  22. 23. Reflection <ul><li>For MacDonald's and Sainsbury's identify the key front and back office operational processes? </li></ul>
  23. 24. Viewing Operations as Strategic
  24. 25. Operations strategy - definition <ul><li>Operations strategy is the total pattern of decisions which 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 </li></ul><ul><li>(Slack & Lewis, 2008, p18) </li></ul>
  25. 26. ‘ Fit’ operations resources to market requirements ‘fit’ Operations Capabilities Operations Performance Objectives Operations Strategy Decision Areas Market Positioning Competitor Activity Market Segmentation Understand markets Define competitive position State market requirements in terms of operations performance objectives Make strategic operations decisions … to enhance core capabilities
  26. 27. Operations Management v Operations Strategy
  27. 28. The role of operations is defined by its aspirations (Hayes and Wheelwright) Stop holding Organisation back Be as good as competitors Be best in industry Redefine Industry expectations Increasing contribution operations STAGE 1 STAGE 2 STAGE 3 STAGE 4 Ability to support strategy Ability to drive strategy Give an operations advantage Correct worst problems Link strategy with operations Adopt best practice Externally supportive Internally supportive Externally neutral Internally neutral Ability to implement strategy
  28. 29. position (with justification) the following organisations using the 4 stages of the H&W model
  29. 30. The operations strategy matrix Quality Performance objectives Resource Usage Market Competitiveness Decision areas Speed Dependability Flexibility Cost The operations strategy matrix Capacity Supply Network Process Technology Development and Organisation Operations strategy
  30. 31. Operational Improvement Model (Platt/Gregory) Assessment of the market demands, quality, delivery and service requirements AS IS assessment of organisation’s capabilities in capacity, service and delivery capability TO BE Gap Analysis and improvement objectives identified STAGE 1 STAGE 2 STAGE 3 STEP Analysis + market requirements Integration of running initiatives
  31. 32. Using the Passport Agency ‘Fiasco’ Case <ul><li>Use the Platts-Greggory model to show what might have been! </li></ul>
  32. 33. In operations strategy ‘fit’ is the alignment between market and operations capability Market requirements Level of operations resource capability Line of fit Alignment between market and operations capability X Y
  33. 34. Virgin Trains and Nissan positioned in relation to market requirements and operations capabilities Market requirements Level of operations resource capability Line of fit Nissan Virgin Trains
  34. 35. Key issue with fit is sustainability <ul><li>Achieving fit over time = sustainability </li></ul><ul><li>Strategies should adapt to changes in operations capabilities and/or market requirements </li></ul>
  35. 36. Sustainability
  36. 37. Sustainable improvement implies simultaneous extension/improvement of market requirements and operations capabilities Market requirements Level of operations resource capability Extension of market requirements Sustainable improvement Improvements in operations capabilities
  37. 38. Reflection <ul><li>What are the practical implications of engineering a ‘simultaneous’ improvement? </li></ul><ul><li>How might we do this? </li></ul>
  38. 39. Risk <ul><li>The less certain and predictable it is for an operation to reposition itself on either of the two axes, the more likely is deviation from the line of fit and therefore the greater the exposure to risk </li></ul>
  39. 40. Level of market requirements Level of operations resource capability Line of fit External operational risk (Market needs exceeding current level of capability means risk of failing to satisfy the market) Internal operational risk (excess capability for current market needs means risk of unexploited capabilities) B A
  40. 41. Flight for Survival case <ul><li>In your groups analyse this case using concepts from the first session </li></ul><ul><li>Present your findings </li></ul>

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