The basic building blocks of operations management

Processes, operations and supply networks.

In this lecture, we will identify the three basic building blocks of operations management and use an example to show the relationship between these
building blocks. The three basic building blocks are:

PROCESSES, OPERATIONS and SUPPLY NETWORKS

If we consider our example of the farmer who produces rapeseed oil.

We have identified that the farmer is engaged in a production OPERATION – from preparing the land, to sowing the seed to harvesting the rapeseed.

This OPERATION is made of a number of individual PROCESSES such as:

 Ploughing the land

 Raking the land
 Sowing the seed
 Crop spraying to keep the harvest free from weeds and insects
 Harvesting the seed

We could also say that these PROCESSES are OPERATIONS in their own right.

For example the sowing the seed operation breaks down into the following processes:

 Arrange for the availability of a tractor and sowing machine

 Set these devices up read to sow
 Procure the seeds
 Load the hopper with seeds
 Sow the seeds.

We can also regard the farmer’s sowing and harvesting operation as part of a wider set of OPERATIONS which involves other businesses. The farmer will
need to procure his seed and equipment from suppliers and he will sell on the harvested rapeseed to a processing businesses which creates the oil from the
seed, through pressing and refining. The oil is then sold to a number of types of business who use it for different purposes. All of these OPERATIONS can
also be broken down into separate PROCESSES.
 Rapeseed oil is used:

 As a vegetable oil for cooking

 In Cattle Feed
 As Bio Diesel Fuel

The total set of OPERATIONS involved in supplying seed, sowing and harvesting, processing and producing specific rapeseed oil products involves many
businesses and is known as the SUPPLY NETWORK.

SUPPLY NETWORK FOR THE PRODUCTION OF RAPESEED OIL

Production &
Seed distribution of
vegetable oil

Land Sowing Spraying Harvesting Processing seed to Production and

oil distribution of
Cattle Feed

Equipment/labour Production and

Distribution of
Bio-diesel fuel

We can see that in this SUPPLY NETWORK certain businesses are customers of other businesses and certain businesses are suppliers to others.
The FARMER is a CUSTOMER of the SEED SUPPLIER and EQUIPMENT SUPPLIER

The PROCESSOR/REFINER is a CUSTOMER of the FARMER

The VEGETABLE OIL PRODUCER AND SUPPLIER is a CUSTOMER of the PROCESSOR/REFINER

Support and Other functions as OPERATIONS

We have talked about Operations Management as being concerned with the creation and delivery of services and products.

What about the support functions used by a business such as HR, Finance, Legal and IT? Where do these feature with respect to Operations Management?

What about other the other key features in a business such as Marketing and Sales or Research and Development?

These functions and key features are OPERATIONS in their own right and supply services to the business which is a CUSTOMER for these services.

A business is effectively the internal customer of its HR, Finance and IT Services. In small businesses these service operations are often provided through
OUTSOURCING.

Similarly Marketing and Sales and Research and Development are OPERATIONS, which provide specific key services for the business – they are really an
integral part of the business and less likely to be outsourced.

So the SUPPLY NETWORK for a business can include INTERNAL as well as EXTERNAL CUSTOMERS.

©Chris West 2015