MAN 205 OPERATIONS MANAGEMENT

Chapter 1

OPERATIONS MANAGEMENT
IBU
International Burch University

Lecturer: Ensar Mekić

Slides have been prepared based on the book Operations Management

(Slack, N., Chambers, S. & Johnston, R., 2013) to support the implementation of the course.
What is operations management?
Slack et al.’s model of operations management
Key questions

In Chapter 1 – Operations management – Slack et al.

identify the following key questions…

❑ What is operations management?

❑ Why is operations management important in all types of
organization?
❑ What is the input-transformation-output process?
❑ What is the process hierarchy?
❑ How do operations and processes differ?
❑ What do operations managers do?
Operations management defined

Operations management is the activity

of managing the resources which are
devoted to the production and delivery of
products and services.
The activities of core functions in some organizations
Core functional Internet service Fast food International Furniture
activities provider (ISP) chain aid charity manufacturer
Maintain hardware Make Give service Make
software and burgers, etc. to the components
Operations content Serve beneficiaries Assemble
Implement new customers of the charity furniture
links and services Maintain
equipment
Promote services Advertise on Develop funding Advertise in
to users and get TV contracts magazines
Marketing
registrations Devise Mail out Determine
and sales
Sell advertising promotional appeals for pricing policy
space materials donations Sell to stores
Devise new Design Develop new Design new
Product / services and hamburgers, appeals furniture
service commission pizzas, etc. campaigns Co-ordinate
develop- new information Design decor Design new with fashionable
ment content for restaurants assistance colours
programmes
Operations are everywhere

The best way to start understanding the nature of

“Operations” is to look around you.

Everything you can see around you (except the flesh and
blood) has been produced by an operation.

Every service you consumed today (radio station, bus

service, lecture, etc.) has also been produced by an
operation.

Operations Managers create everything you buy, sit on,

wear, eat, throw at people, and throw away.
Example – Pret A Manger

‘High-end’ sandwich and snack retailer

Source: Getty Images: Bloomberg / Chris Ratcliffe

Use only ‘wholesome’ ingredients

All shops have own kitchens which makes fresh
sandwiches every day
Fresh ingredients delivered early every morning

Same staff who serve you at lunch made the sandwiches

that morning
‘We don’t work nights, we wear jeans, we party… ’
Operations management in all types of organization

Automobile assembly factory – Operations

management uses machines to efficiently
assemble products that satisfy current
customer demands

Source: Shutterstock.com: Supergenijalac

Operations management in all types of organization

Physician (General practitioner)

– Operations management uses
knowledge to effectively diagnose
conditions in order to treat real
and perceived patient concerns Source: Shutterstock.com: Stuart Jenner
Operations management in all types of organization
Management consultant – Operations
management uses people to effectively
create the services that will address
current and potential client needs

Source: Shutterstock.com: Indianstockimages

Operations management in all types of organization
Disaster relief
charity – Operations
management uses
ours and our partners’
resources to speedily
provide the supplies
and services that
relieve community
suffering

Source: Getty Images: AFP / Romeo Gacad

Operations management in all types of organization
Advertising agency – Operations
management uses our staff’s knowledge
and experience to creatively present
ideas that delight clients and address
their real needs
Source: Alamy Images: Adrian Sherratt
Operations management uses…
machines to efficiently assemble products

diagnose to treat real and

knowledge to effectively perceived patient
conditions
concerns

people to effectively create services that will

address current and
potential client
needs

ours and our to speedily provide supplies and

partners’ services that relieve
resources community suffering

our staff’s to creatively present ideas that delight

knowledge and clients and address
experience 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
Examples of dominant transformed resource inputs

Predominantly Predominantly Predominantly

processing inputs of processing inputs of processing inputs of
materials information customers

All manufacturing Accountants Hairdressers

operations Bank headquarters Hotels
Mining companies Market research Hospitals
Retail operations company Mass rapid transports
Warehouses Financial analysts Theatres
Postal services News service Theme parks
Container shipping line University research unit Dentists
Trucking companies Telecoms company
Figure 1.4
Changes in the business environment are
shaping a new operations agenda
Most operations produce products and services
Some operations described in terms of their processes
Operation Some of the operation’s Some of the operation’s Some of the
inputs processes operation’s outputs
Airline Aircraft Check passengers in Transported
Pilots and air crew Board passengers passengers and freight
Ground crew Fly passengers and freight
Passengers and freight around the world
Care for passengers
Department Products for sale Source and store products Customers and
store Sales staff Display products products ‘assembled’
together
Information systems Give sales advice
Customers Sell products
Police Police officers Crime prevention Lawful society, public
Computer systems Crime detection with a feeling of
Information systems security
Public (law-abiding and Information gathering
criminals) Detaining suspects
Frozen food Fresh food Source raw materials Frozen food
manufacturer Operators Prepare food
Processing technology Freeze food
Cold storage facilities Pack and freeze food
Table 1.4
Some examples of processes in non-operations functions
A typology of operations and processes (1 of 4)

The implications of high and low Volume in operations and

processes…

Implications Implications

• Low repetition
• Each staff member Low Volume High • High repeatability
performs more of High
• Specialization
each task
• Capital intensive
• Less systemization
• Low unit costs
• High unit costs
A typology of operations and processes (2 of 4)

The implications of high and low Variety in operations and

processes…

Implications Implications

• Flexible • Well defined

• Complex High Variety High
Low • Routine
• Match customer • Standardized
needs • Regular
• High unit costs • Low unit costs
A typology of operations and processes (3 of 4)

The implications of high and low Variation in operations and

processes…

Implications Implications

• Changing • Stable
capacity Variation in
High High
Low • Routine
• Anticipation demand
• Predictable
• Flexibility
• High utilization
• In touch with
demand • Low unit costs
• High unit costs
A typology of operations and processes (4 of 4)

The implications of high and low Visibility in operations and

processes…

Implications Implications

• Short waiting • Time lag between

tolerance production and
High Visibility Low
High
• Satisfaction consumption
governed by • Standardization
customer • Low contact skills
perception
• High staff
• Customer contact utilization
skills needed
• Centralization
• Received variety is
high • Low unit costs
• High unit costs
It is important to understand how different operations are
positioned on the four Vs.

Is their position where they want to be?

Do they understand the strategic implications of their position?

Slack et al.’s general model of operations
management
To be a great Operations Manager you need to…
• Enjoy getting things done – Operations management is about doing things.
• Understand customer needs – Operations management is about
understanding what ‘value’ means for customers.
• Communicate and motivate – Operations managers must be ‘people people’.
• Learn all the time – Operations management is about learning, because
without learning there can be no improvement.
• Commit to innovation – Operations management is about being creative,
imaginative, and (sometimes) unconventional.
• Know your contribution – Operations management is about contributing to
the effective working of other functions.
• Be capable of analysing – Operations management is about evaluating
decisions.
• Keep cool under pressure – Operations managers need to be able to remain
calm no matter what problems occur.
THANK YOU FOR YOUR
ATTENTION

Slides have been prepared based on the book

Operations Management
(Slack, N., Chambers, S. & Johnston, R., 2013)