OPERATION

MANAGEMENT
Lecture 2 + Lecture 3
Chapter 1 (Slack)
(Introduction To Operation Management)
 OPERATIONS MANAGEMENT IN ALL TYPES OF ORGANIZATION
▪ Automobile assembly factory
Operations management uses machines to efficiently assemble products that satisfy current customer
demands.
▪ Physician (General practitioner)
Operations management uses knowledge to effectively diagnose conditions in order to treat real and
perceived patient concerns
▪ Management consultant
Operations management uses people to effectively create the services that will address current and
potential client needs
▪ Disaster relief charity
Operations management uses ours and our partners’ resources to speedily provide the
supplies and services that relieve community suffering
▪ Advertising agency
Operations management uses our staff’s knowledge and experience to creatively
present ideas that delight clients and address their real needs
 OPERATIONS MANAGEMENT IS CHANGING
The business environment is changing, for
example:
▪ Increased cost-based competition
▪ Higher quality expectations
▪ Demands for better service
▪ More choice and variety
▪ Rapidly developing technologies
▪ Frequent new product/service introduction
▪ Increased ethical sensitivity
▪ Environmental impacts are more transparent
▪ More legal regulation
▪ Greater security awareness
Prompting operations responses, for example:
▪ Globalization of operations networking
▪ Information-based technologies
▪ Internet-based integration of operations
▪ activities
▪ Supply chain management
▪ Customer relationship management
▪ Flexible working patterns
▪ Mass customization
▪ Fast time-to-market methods
▪ Lean process design
▪ Environmentally sensitive design
▪ Supplier ‘partnership’ and development
▪ Failure analysis
▪ Business recovery planning
OPERATIONS INPUT RESOURCES AND OUTPUTS
 INPUT-TRANSFORMATION-OUTPUT PROCESS
INPUTS TO THE PROCESS
Transformed resources – resources that are treated, transformed or converted in
the process. They are a mixture of
▪ Materials
▪ Information
▪ Customers
Transforming resources – these are the resources which act upon the transformed
resources. They are two types:
▪ Facilities
▪ Staff
INPUT-TRANSFORMATION-OUTPUT PROCESS
WITHIN THE PROCESS

▪ Materials processing –transforms material’s physical properties, location,

possession or materials are stored.

▪ Information processing– transforms information properties, possession, location

or information is stored.

▪ Customer processing – transforms customer’s physical properties, location,

physiological state, psychological state or store (accommodate) customers.
INPUT-TRANSFORMATION-OUTPUT PROCESS
OUTPUTS FROM THE PROCESS

▪ Outputs from process can be differentiate between products and service based
organization – tangibility of products and intangibility of services

▪ Most operations produce both products and services

▪ Services and products are merging – all operations are

service providers who may produce products as a means of
serving customers.
THE OUTPUT FROM MOST TYPES OF OPERATION IS A MIXTURE OF
GOODS AND SERVICES
Pure goods
• Tangible

Crude oil production

• Can be stored

Aluminium smelting
• Production precedes
consumption

Specialist machine tool

• Low customer contact
• Can be transported

manufacturer
• Quality is evident

Restaurant

Computer systems
services

Management
• Intangible

Psychotherapy clinic
consultancy
• Cannot be stored
• Production and
consumption are
simultaneous
• High customer contact
• Cannot be transported
• Quality difficult to judge
Pure services
WHAT DO OPERATIONS MANAGERS DO?
▪ Directing: the overall nature and strategy of the operation
▪ Designing: operation’s services, products and processes
▪ Delivery: Plan and control process
▪ Developing: process performance
WHY OPERATION MANAGEMENT IS IMPORTANT?
▪ Reduce costs of producing products and service by being efficient.
▪ Increase revenue by increasing customer satisfaction through good quality and
service.
▪ Reduce need for investment by increasing the effective capacity of the operation
and by being innovative in how it uses its physical resources
▪ Enhance innovation by building a solid base of operations skills and knowledge
within the business.
Design house partnerships at
Concept Design Services