Lecture 2
Operations Management
Contents
1. Operations and Operations management
2. Evolution of operations management
3. Transformational model
4. Dimensions of operations process
5. Relationship between operations function with others
6. Link to the requirement of P1 for Assignment 1
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1. OPERATIONS AND OPERATIONS MANAGEMENT
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Operations and operations
management
• Operations as a function, meaning the part of the organization which
creates and delivers services and products for the organization’s
external customers
• Operations management is the activity of managing the resources
that create and deliver services and products.
• Operations managers need to cooperate with other functions to
ensure effective organizational performance.
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Operations management
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Role of Operations
• Operations management is just as important in small organizations as it
is in large ones. Irrespective of their size, all companies need to create
and deliver their service and products efficiently and effectively.
• Large companies may have the resources to dedicate individuals to
specialized tasks. Small companies may have exactly the same
operations management issues as large ones but they can be more
difficult to separate from the mass of other issues in the organization.
• Managing the operations in not-for-profit organizations (e.g. an animal
welfare charity, hospital, research organization or government
department) is essentially the same as in commercial organizations.
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Role of Operations
• Changes in the business environment have had a significant impact on
the challenges faced by operations managers such as:
• New technologies – In both manufacturing and service industries, process
technologies are changing so fast that it is difficult to predict exactly what their
effect will be
• Different supply arrangements – Markets have become more global, often
meaning a demand for a higher variety, or customized products and services.
• Increased emphasis on social and environmental issues – customers have been
developing an increased ethical and environmental sensitivity. This is leading to
operations having to change the way they create their products and services.
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Role of Operations
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Types of operations management
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Exercise
• Discuss the similarities and differences between two operations LEGOLAND
and LEGO
• Explain the important the operations function in the company (LEGOLAND
or LEGO)
(“LEGOLAND and LEGO both rely on their operations managers”
- Chapter 1 ,page 5)
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2. EVOLUTION OF OPERATIONS MANAGEMENT
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Evolution of operations
management
• Craft manufacturing – jobbing process
• Flexible specialisation – batch process
• Mass production – mass process
• Mass customisation - professional service
• Agile and Lean production
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Evolution of operations
management
Craft manufacturing – Jobbing process
• Jobbing processes also deal with
high variety and low volumes.
• Resources will process a series of
items but, although each one will
require similar attention, they may
differ in their exact needs.
• Many jobs will probably be ‘one-
offs’ that are never repeated.
• Skilled craftspeople produce goods
to meet the requirements of their
individual customers.
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Evolution of operations
management
Flexible specialisation – batching process
• Batch processes produce more than one
item at a time. So each part of the
process has periods when it is repeating
itself, at least while the ‘batch’ is being
processed.
• If the size of the batch is just two or
three items, it is little different to
jobbing.
• If the batches are large, and especially if
the products are familiar to the
operation, batch processes can be fairly
repetitive.
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Evolution of operations
management
Mass production – mass process
• Mass production involves producing
goods in high volume with low variety
– the opposite of craft manufacturing.
• Customers are expected to buy what
is supplied, rather than goods made
to their own specifications
• The activities of mass processes are
usually repetitive and largely
predictable.
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Evolution of operations
management
Mass customisation – professional service
• Mass customisation seeks to combine high volume, as in mass
production, with adapting products to meet the requirements of
individual customers
Source of photo: http://www.aalhysterforklifts.com.au
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Evolution of operations
management
Mass customisation – professional service
• Professional services are high-
contact processes where customers
spend a considerable time in the
service process.
• Professional services tend to be
people-based rather than
equipment-based, and usually staff
are given considerable discretion in
servicing customers.
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Evolution of operations
management
Agile - Lean production
• Lean production focuses on the
elimination of all forms of waste from
a production system.
• A focus on driving inventory levels
down also exposes inefficiencies,
reduces costs and cuts lead times
• Agile manufacturing emphasizes the
need for an organisation to be able to
switch frequently from one market-
driven objective to another
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3. TRANSFORMATIONAL MODEL
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Input – transformation - Output
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Input
• Transformed resource inputs to a process are materials, information
or customers.
• All processes have transforming resources of facilities (equipment,
technology, etc.) and people
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Input
• Transformed resource: Some operations have inputs of materials and
information and customers, but usually one of these is dominant.
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Input
• Front- and back-office transformation: parts of operation are those
processes that interact with/have little or no direct contact with
customers
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Output
• Products and services are different. Products are usually tangible
things whereas services are activities or processes.
• Some operations create and deliver just services and others just
products, but most operations combine both elements.
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Output
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Output
• Customers may be
an input to many
operations but
they are also the
reason for their
existence. They are
part of the process
- co-creation and
co-production.
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Process hierarchy
• A ‘process’ is an arrangement of resources and activities that
transform inputs into outputs that satisfy (internal or external)
customer needs.
• They are the ‘building blocks’ of all operations, and they form an
‘internal network’ within an operation.
• Each process is, at the same time, an internal supplier and an internal
customer for other processes.
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Process hierarchy
• At a more macro level, the
business itself is part of a whole
supply network, acquiring
services from creative agencies,
casting agencies and studios,
liaising with promotion agencies,
and serving its broadcasting
company customers.
Three levels of operations management
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Process hierarchy
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4. DIMENSIONS OF OPERATION PROCESS
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Operations process dimension (four Vs)
• The volume of their output.
• The variety of their output.
• The variation in the demand for their output.
• The degree of visibility that the creation of their output has for
customers.
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Typology of Operations and Processes
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5. RELATIONSHIP BETWEEN OPERATIONS FUNCTION
WITH OTHER FUNCTIONS
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Three core functions
• Marketing (including sales) function – which is responsible for
communicating the organization’s services and products to its
markets in order to generate customer requests
• Product/Service Development function – which is responsible for
coming up with new and modified services and products in order to
generate future customer requests
• Operations function – which is responsible for the creation and
delivery of services and products based on customer requests
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Three core functions
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Supporting functions
• Enable the core functions to operate effectively
• Include the accounting and finance function, the technical function,
the human resources function, and the information systems function,
etc.
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Relationship between Operations and other
functions
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6. LINK TO THE P1 OF ASSIGMENT 1
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P1 REQUIREMENT
Definition
Transformational model
Example
Four Vs
P1 Process dimensions
Application of four Vs
Core function
Relationship between
OP and other functions
Explanation
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Thank you
