Operation Management

1. Chapter 1
BBT2435| TOUR OPERATION MANAGEMENT
Prepared by KAMELIA CHAICHI

2. 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
organizational SUCCESS

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

4. OPERATIONS FUNCTION/
Value-Added Process
Inputs
Transformation/
Conversion
process
Outputs
Feedback

5. What does Operations Management do?
Manages PEOPLE, MATERIALS,
RESOURCES and DELIVERY
SYSTEMS
Operations management is set of activities
that creates value in the form of goods and
services by transforming inputs into outputs.
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
> KEY IDEA
Operations delivers services and products to
customers by MANAGING the PEOPLE,
MATERIALS, RESOURCES and DELIVERY
SYSTEMS involved

7. CASE 1.1 KEY OPERATIONS TASKS

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

9. How 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

10. How 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

11. • Manufacturing and service organizations differ chiefly
because manufacturing is goods-oriented and service is
act-oriented.
• The differences involve the following:
- Degree of customer contact
- Uniformity of input
- Labor content of jobs
- Uniformity of outputs
- Measurement of productivity
- Production and delivery
- Quality assurance
- Amount of inventory
- Evaluation of work
- Ability to patent design

12. Characteristics Goods Services
Customer contact Low High
Uniformity of inputs High Low
Uniformity of outputs High Low
Output Tangible Intangible
Measurement of productivity Easy Difficult
Opportunity to correct quality problems before delivery
High Low
to customer
Inventory Much Little
Evaluation Easier More difficult
Patentable Usually Not usually

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

16. Order Winners and Order Qualifiers
• Order Qualifier: The level of a product characteristic(s) that
allow a product to be considered for selection . in other words
• Order qualifiers are the basic criteria that permit the firm’s
products to be considered as candidates for purchase by
customers
• Order Winner: The level of a product characteristic(s)
that drive the customer decision to select a product . in
other words Order winners are the criteria that
differentiate the products and services of one firm
from another

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
Question Answer
ORDER-WINNERS
QUALIFIERS
• Product DESIGN
• Product RANGE
• QUALITY
• Delivery SPEED
• PRICE
Manage
operations
Manage SUPPLY
CHAIN
Manage QUALITY
Manage CAPACITY
Manage INVENTORY
DELIVER services and
products

19. The role of operations management

20. The role of operations management
> KEY IDEA
Operations:
• CONTRIBUTES to gaining FIRST sale
• PROCURES SECOND sale

21. MANAGE
• Large COST centre
• PEOPLE
• TECHNOLOGY
• SHORT and LONG term
Links THINKING and DOING
ends of the business
> KEY IDEA
Managers need to THINK and WORK in:
• SHORT-TERM
• LONG-TERM

23. Inputs and outputs

26. 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?

27. 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 - $ per week
• COSTS - $ part and full-time staff
• PROFITS - meet sales and cost budgets
• Links hundreds of SUPPLIERS to
hundreds of CUSTOMERS

28. Task of the operations manager
Restaurant
Modern
Times
(1936)
Factory
Dinner
Rush
(2000)
•What is the ROLE of the operations function?
•What is the TASK of the operations manager?

29. Task of the operations manager
Film clip Factory
Fil
m
Title
Director
(year)
Modern Times
Charles Chaplin (1936)
Cli
p
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
Film clip Restaurant
Fil
m
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

30. 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?
Operations
process
Factory Restaurant
Type of
ORGANISATION
ROLE of the
operations
function
TASK of the
operations
manager

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

32. Variations 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

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

34. Variations in output - services versus products

35. > KEY IDEA
The operations OUTPUT can be:
•SERVICES (intangible) and/or
•PRODUCTS (tangible) Variations in output - services
versus products

36. 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?

37. 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

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

39. > KEY IDEA
SERVICES are CONSUMED as they’re provided
whereas most PRODUCTS can be made in advance
and STORED
• Class Activity
• Choose any business
• Identify the business operation (use the add value
perspective)
• Identify the characteristics

40. 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
organization's SUCCESS

41. Summary
• 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

42. > REFRENCE BOOK
-Tourism: Operations and Management, 1/e
Sunetra Roday, Archana Biwal & Vandana Joshi
25 Mar 2009
-Essential Operations Management ,Alex Hill and
Terry Hill