Operations and Information Systems

Management

Session 22
New Trends and Challenges

Circular Economy
Don't throw out that broken toaster:
it's key to our prosperity.
Redesigning the economy so that
all waste is reused or recycled
would be good for business.
China is already pushing the circular
economy. According to its 12th fiveyear plan covering 2011-15 China
will "plan, construct and renovate
various kinds of industrial parks
according to the requirements of the
circular economy".
http://www.newscientist.com/article/dn21532-nowaste-circulareconomy-is-good-business--ask-china.html

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Dr L Breen OISM

A general model of operations management

IMPACT OF
IS?

ENVIRONMENT

Operations
strategic
objectives

Operations
strategy

The operations
competitive role
and position

Input
transformed
resources
Materials
Information
Customers

Facilities
Staff
Input
transforming
resources

Design

Improvement
Output
products and
services

Input
resources

Customers

Planning and
control

ENVIRONMENT
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Dr L Breen OISM

The Strategic Role of the Operations Function

The 3 key attributes

of operations
Implementing

Operations Contribution
be Dependable
Operationalise strategy
explain Practicalities

Supporting

be Appropriate
Understand strategy
Contribute to decisions

Driving

be Innovative
provide Foundation of strategy
Develop long-term Capabilities

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Dr L Breen OISM

The strategic role of operations can be defined

by its aspirations (Hayes and Wheelwright)
Give an
Operations
Advantage
Link Strategy
With
Operations
Adopt best
Practice
Correct the
Worst
Problems

c
In

g
in
s
a
re

b
tri
n
co

Be as good
as
competitors

Be
clearly
the best
in the
industry

Externally
supportive

Internally
supportive
Externally
neutral

Stop holding
the
organization
back

STAGE 1

Internally
neutral
STAGE 2

The
ability
to
Implement
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n
tio

er
p
fo

Redefine the
industrys
expectations

ns
it o

STAGE 3

The ability
to
support
Strategy
Dr L Breen OISM

STAGE 4

The
ability
to
Drive strategy

The benefits of excelling

Minimum price, highest value

Cost
Quick
delivery

Dependable
delivery
Speed

Dependability

Minimum cost,
maximum value
Fast
throughput

Reliable
operation

Error-free
processes

Ability to
change

Quality

Flexibility

Error-free
products and
services

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Frequent new
products,
maximum
choice

Dr L Breen OISM

Operations provide competitive advantage

Effective use of
Satisfying customer needs
resources
Innovative use of facilities and resources
Building competences & capability
The environment is changing

o
o

Increased cost based competition

Higher quality expectations
Demands for better service
More choice and variety
Frequent new product introduction
Increased ethical sensitivity
Environmental impacts are more
transparent
More legal regulations
Greater security awareness

o
o
o
o
o
o
o
o
o
o

Globalization of operations networks

Technologies replacing manual jobs
Internet-based integration of operations
activities
Supply chain 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

Prompting responses such as

Slack, Chambers & Johnston e5

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Dr L Breen OISM

Broad strategic objectives for an operation applied to

stakeholder groups
Society

Increase employment
Enhance community well-being
Produce sustainable products
Ensure clean environment

Suppliers

Customers

Continue business
Develop supplier
capability
Provide transparent
information

Shareholders

Employees

Economic value from

investment
Ethical value from investment

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Appropriate product or
service specification
Consistent quality
Fast delivery
Dependable delivery
Acceptable price

Continues employment
Fair pay
Good working conditions
Personal development

Dr L Breen OISM

Five challenges for operations managers

Globalization

Social
responsibility

Environmental
responsibility
Operations
Managers

Knowledge
management

Technology

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Dr L Breen OISM

Responding to change
What internal and external changes will impact on
service/product provision and operational success? E.g.
.

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Dr L Breen OISM

10

 Terrorism
Economic Climate
Availability of resources
Government
Restructuring
Efficiencies?
The way forward?
How do we ensure that our operation is robust and
not vulnerable to threat?

12/04/16

Dr L Breen OISM

11

Resilient operations
We define resilience as the ability of a system to return to its original state
or move to a new, more desirable state after being disturbed. Implicit in this
definition is the notion of flexibility, and given that the desired state may be
different from the original, adaptability earns a place in our thinking too.
(Christopher and Peck, 2004)
In this work we use risk in line with common usage in the sense that it
relates to supply chain vulnerability, as at risk: vulnerable; likely to be lost or
damaged.
Resilience implies flexibility and agility. Its implications extend beyond
process redesign to fundamental decisions on sourcing and the
establishment of more collaborative supply chain relationships based on far
greater transparency of information.

12/04/16

Dr L Breen OISM

12

Risk Management
What is risk?
Supply risk is defined as the potential occurrence of an incident or
failure to seize opportunities with inbound supply, the outcome
of which results in a financial loss for the firm (Zsidisin et al,
2006).

The essence of risk management lies in

maximising the areas where we have some
control over the outcome while minimising the
areas where we have absolutely no control
over the outcome and the linkage between
effect and cause is hidden from us.
Peter Bernstein - Against the Gods (Buck and Riches 1999)
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Dr L Breen OISM

13

Category of Risk

Drivers of Risk

Disruptions

Natural disaster
Labour dispute
Supplier bankruptcy
War and terrorism
Dependency on a single source of supplier as well as the capacity and
responsiveness of alternative suppliers

Delays

High capacity utilisation at supply source

Inflexibility of supply source
Poor quality or yield at supply source
Excessive handling due to border crossings or to change in transportation modes

Systems

Forecast

Inaccurate forecasts due to long lead times, seasonality, product variety, short-life
cycles, small customer base
Bullwhip effect or information distortion due to sales promotions, incentives, lack of
supply-chain visibility, and exaggerations of demand in times of product shortage

Intellectual
property

Vertical integration of supply chain

Global outsourcing and markets

Procurement

Exchange rate risk

Percentage of a key component or raw material procured from a single source
Industry wide capacity utilisation
Long-term versus short-term contracts

Information infrastructure breakdown

System integration or extensive systems networking
E-commerce

Chopra
and Sodhi 2004. Pg 54
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Dr L Breen OISM

14

Supply Risk Sources

Financial instability or financial failure of a supplier

ineffective management in the supplier firm
problems in electronically sharing information with suppliers
suppliers incorrectly interpreting our requirements
natural disasters or acts of God affecting suppliers operations
political instability/ war affecting suppliers operations
long physical distances between buyer and suppliers
inability to influence suppliers
lack of alternative suppliers
inability of supplier to meet increases in required volumes (>20%)
new or unproven product/process technology being used by suppliers
transportation disruptions with inbound supply channels
variability in transportation times with inbound supply channels
possibility of suppliers putting your firm on allocation
incoming product quality problems
labour/management problems at suppliers
suppliers exiting market on short notice
supply disruptions in the second tier
currency rate fluctuations
material price fluctuations
pass-through pricing (costs transferred from suppliers increasing price).

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Dr L Breen OISM

(Zsidisin et al,

15

Operations strategies have an ethical dimension

Product/service design - customer safety, recyclability of
materials, energy consumption.
Network design - employment implications and environmental
impact of location.
Layout of facilities - staff safety, disabled customer access.
Process technology - staff safety, waste and product disposal,
noise pollution, fumes and emissions.
Job design - workplace stress, unsocial working hours.
Capacity planning and control - employment policies.
Inventory planning and control - price manipulation.
Corporate and Social Responsibility
All of the above - The right thing to do or Greenwash???
Dr L Breen OISM

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16

Corporate and Social Responsibility

Slack,
Chambers & Johnston e6
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Dr L Breen OISM

18

These organisations tend to have

impressive business results, financial
and non-financial (employee/customer
satisfaction,market share)
They are often quoted as benchmarking
organisations, their approaches being
imitated by others and they accumulate
a range of accolades and
service/quality awards.
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Dr L Breen OISM

19

The characteristics of WC
organisations at a corporate level
include:
Great leadership
Clear vision
Clarity of concept
Supportive culture
A well-developed strategy
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Dr L Breen OISM

20

These organisations are set apart by:

Willingness to listen
Continuous process development
Responsiveness
can do attitude
Big and little thinking
Supportive and committed staff
Excellent performance management
Lack of complacency

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Dr L Breen OISM

21