1. Chapter 1
What is operations management?

2. Operations management defined
Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services.

3. The operations function is fashionable!
The consultancy services market – % of world revenues of 40 largest consultancy firms
Marketing / sales 2
Operations and process management 31
Corporate strategy 17
IT strategy
Benefits / actuarial 16
Organizational design 11
Financial 6
The operations function is fashionable!

4. They are all operations
Back office operation in a bank
Kitchen unit manufacturing operation
They are all operations
Retail operation
Take-out / restaurant operation

5. Creating Customer Value

6. Operations management at IKEA
Design a store layout which gives smooth and effective flow
Design elegant products which can be flat-packed efficiently
Ensure that the jobs of all staff encourage their contribution to business success
Site stores of an appropriate size in the most effective locations
Continually examine and improve operations practice
Monitor and enhance quality of service to customers
Maintain cleanliness and safety of storage area
Arrange for fast replenishment of products

7. The three basic functions at Prêt a Manger
Nutritional ‘mechanical’ and aesthetic design of the sandwiches and snacks
Product / Service Development
Design, location
and management of stores and in-store processes and the network that supplies them
Marketing
Operations
Promotional activities, market research, etc.

8. All operations are transformation processes …
Inputs
that transform inputs …
Outputs
into outputs
Transformation process

9. Some inputs are transformed resources
Some inputs are transforming resources
Transformed resources …
Output products and services
Input resources
Transformation process
Customers
Transforming resources …
Outputs are products and services that add value for customers

10. Served and satisfied customers
At Prêt a Manger
Transformed resources … ?
Served and satisfied customers
Input resources
Transforming resources … ?

11. The output from most operations is a mixture of products and services
Pure products – Outputs that are exclusively tangible
Crude oil production
Acme Whistles
Aluminium smelting
Specialist machine tool production
Prêt a Manger
Mixture of products and services – Outputs that are a mixture of the tangible and the intangible
Restaurant
IKEA
Information systems provider
Management consultancy
Mwagusi Safari Lodge
Pure services – Outputs that are exclusively intangible
Psychotherapy clinic

12. Characteristics of Goods v Services
Contrast the characteristic differences between Manufacturing and Services over the following factors:-
Manufacturing <> Service
Product
Inventory
Customer Contact
Response times
Markets
Facilities
Capital
Labour
Quality

13. Furniture manufacturing
Differences within sectors are often greater than the differences between sectors
Financial services
An account management centre at a large retail bank
Financial analyst advising a client at an investment bank
Furniture manufacturing
Mass production of kitchen units
Craft production of reproduction ‘antique’ furniture
Hotels
Value-for-money hotel
Lobby of an international luxury hotel

14. A Typology of Operations
High
Volume
Low
Variety
High
Low
Variation in demand
High
Low
Visibility
High
Low

15. A Typology of Operations
Implications
Implications
High
Low repetition
Each staff member performs more of job
Less systemization
High unit costs
High repeatability
Specialization
Capital intensive
Low unit costs
Volume
Low
Flexible
Complex
Match customer needs
High unit costs
Well defined
Routine
Standardized
Regular
Low unit costs
Variety
High
Low
Changing capacity
Anticipation
Flexibility
In touch with demand
High unit costs
Stable
Routine
Predictable
High utilization
Low unit costs
Variation in demand
High
Low
Visibility
High
Low
Short waiting tolerance
Satisfaction governed by customer perception
Customer contact skills needed
Received variety is high
High unit costs
Time lag between production and consumption
Standardization
Low contact skills
High staff utilization
Centralization
Low unit costs

16. 4 V’s profile of two operations
Low
Volume
High
Mwagusi Safari Lodge
Formule 1 Hotel
High
Variety
Low
High
Variation
Low
High
Visibility
Low
Important to understand how different operations are positioned on the 4 V’s.
Is their position where they want to be?
Do they understand the strategic implications?

17. Decisions in Operations
Five major decision areas:
Process
Quality
Work force
Inventory
Capacity
Schroeder Section page 16
Operations Management R G Schroeder, Operations Management, 4th edition,1993, McGraw Hill

18. Product/service development function
Some interfunctional relationships between the operations function and other core and support functions
Engineering/ technical function
Accounting and finance function
Human resources function
Information technology (IT) function
Marketing function
Product/service development function
Operations function
Micro Environment

19. Case : Too Short The Day Analysis Recommendations
What is Giles trying to do ?
What is Giles actually doing ?
What are the problems within the organisation ?
Recommendations
What should Giles do ?
What changes if any should the organisation make ?
Identify the functions of a manager
Identify the levels of management

20. Case : The Glastonbury Festival
1 What is the role of an operations manager such as Michael Eavis in this situation? How does this change at different stages of the festival organisation?
List the different types of transformation processes involved in the festival activities within the classifications: Materials/Information/Customer
3 Relate the 5 decision areas as outlined in R G Schroeder’s Operations Management, to the Glastonbury case.