What Is Operations Management?

Part one
Slide 1.1
Introduction
Chapter 1
Operations management
Source: Shutterstock.com/toria
What is operations management?

Slack, Brandon-Jones and Johnston, Operations Management PowerPoints on the Web, 7th edition © Nigel Slack, Alistair Brandon-Jones and Robert Johnston 2014
Slide 1.2
Slack et al’.s model of operations management

What is
operations Topic
management covered in
? this chapter
Operations Operations
performance strategy
Direct
Operations
Design management Develop
Deliver
Figure 1.1 This chapter examines operations management
Slide 1.3
Key operations 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 processes have different
characteristics?
What do operations managers do?
Slide 1.4
Operations management defined
Operations management is the activity

of managing the resources which are
devoted to the production and delivery
of products and services.
Slide 1.5
They are all operations

Kitchen unit
Back office operation in a manufacturing operation
bank
Source:Shutterstock/Turner
Source: Nigel Slack
Retail operation
Take-out/restaurant operation
Source: Nigel Slack

Source: Nigel Slack
Slide 1.6
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.
Slide 1.7
The three basic functions of enterprises
Product/service
development
Marketing Operations
Slide 1.10
Interfunctional relationships
Engineering/ Product/service
technical Understanding of development
the capabilities and
function constraints of the function
operations process
Analysis of new
technology options Understanding of
process technology
needs New product and
Accounting service ideas
and finance Provision Understanding of the
of relevant capabilities and
function data
Operations constraints of the
Financial analysis function operations process
for performance
and decisions Market
requirements Marketing
Understanding of function
human resource needs Understanding Provision of systems for
of infrastructural design, planning and
Recruitment and system control and improvement
development needs
and training
Human Information
resources technology
function (IT) function
Figure 1.2 The relationship between the operations function and other core and support functions of the
organization
Slide 1.11
The activities of core functions in some organizations

Core functional Internet service Fast food chain International aid Furniture
activities provider (ISP) charity manufacturer
Maintain hardware, Make burgers, Give service to Make

software and content etc. the beneficiaries components
Implement new links Serve customers of the charity Assemble
Operations
and services Maintain furniture
equipment
Promote services Advertise on TV Develop funding Advertise in

to users and get Devise contracts magazines
Marketing registrations promotional Mail out appeals Determine pricing
and sales Sell advertising space materials for donations policy
Sell to stores
Devise new Design Develop new Design new

Product/serv services and hamburgers, appeals furniture
ice develop- commission new pizzas, etc. campaigns Coordinate with
ment information content Design decor for Design new fashionable
restaurants assistance colours
programmes
Table 1.1 The activities of core functions in some organizations

Slide 1.12
Operations management in all types of organization
Automobile assembly factory – operations

management uses machines to efficiently
assemble products that satisfy current
customer demands
Source: Nataliya Hora /Shutterstock.com
Slide 1.13

(Continued)
Physician (General practitioner) –
operations management uses
knowledge to effectively diagnose
conditions in order to treat real and
perceived patient concerns
Source: Shutterstock/PT Images
Slide 1.14

(Continued)
Management consultant – operations
management uses people to effectively
create the services that will address
current and potential client needs
Source: Shutterstock/Diego cervo
Slide 1.15

(Continued)
Disaster relief
charity – operations
management uses
ours and our partners’
resources to speedily
provide the supplies
and services that
relieve community
suffering
Source: Shutterstock/Zurijeta
Slide 1.16

(Continued)
Advertising agency – operations
management uses our staff’s knowledge
and experience to creatively present
ideas that delight clients and address
their real needs
Source: Shutterstock/Luciano Mortula
Slide 1.18
Operations management is changing

The business environment is Prompting operations responses, for
changing, for example… example…
 Increased cost-based competition  Globalization of operations networking
 Information-based technologies
 Higher quality expectations
 Co-creation of service
 Demands for better service  Internet-based integration of operations
 More choice and variety activities
 Supply chain management
 Rapidly developing technologies  Customer relationship management
 Frequent new product/service  Flexible working patterns
introduction  Mass customization
 Increased ethical sensitivity  Fast time-to-market methods
 Lean process design
 Environmental impacts are more
transparent  Environmentally sensitive design
 Supplier ‘partnership’ and development
 More legal regulation
 Failure analysis
 Greater security awareness  Business recovery planning
Table 1.2 Changes in the business environment are shaping a new operations agenda
Slide 1.19
All operations are input-transformation-output processes
Inputs Transformation process Outputs
Slide 1.20
Operations input resources and outputs
Transformed
resources
• Materials
• Information
• Customers
Input Output
resources
Transformation process products and Customers
services
Transforming
resources
• Facilities
• Staff Outputs are products and services
that add value for customers
Figure 1.4 All operations are input–transformation–output processes
Slide 1.21
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
Table 1.3 Dominant transformed resource inputs of various operations
Slide 1.22
Most operations produce products and services

Pure products –outputs
Crude oil production
that are exclusively
tangible
Acme whistles
Aluminium smelting
Specialist machine tool

production
Mixture of products and
Prèt a manger services – outputs that
Restaurant are a mixture of the
tangible and intangible
IKEA
Information systems provider
Management consultancy
Pure services – outputs
Mwagusi Safari
that are exclusively
Psychotherapy clinic Lodge
intangible
The output from most operations is a mixture of products and services. Some general examples are
Figure 1.5
shown here together with some of the operations featured as examples in this chapter
Slide 1.23
Operations can be analyzed at three levels

Flow between operations
The level of the supply network
Flow between processes
The level of the operation
The level of the process

Flow between resources
Operations and process management requires analysis at three levels: the supply network,
Figure 1.6
the operation and the process
Slide 1.24
Some operations described in terms of their processes

Operation Some of the operation’s Some of the operation’s Some of the operation’s
inputs processes outputs
Airline Aircraft Check passengers in Transported passengers
Pilots and air crew Board passengers and freight
Ground crew Fly passengers and freight around
Passengers and freight the world
Care for passengers
Department Products for sale Source and store products Customers and products
store Sales staff Display products ‘assembled’ together
Information systems Give sales advice
Customers Sell products
Police Police officers Crime prevention Lawful society, public with
Computer systems Crime detection a feeling of security
Information systems
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 operations described in terms of their processes
Slide 1.25
A typology of operations and processes

The four Vs...
Low Volume High

High
High Variety Low
High Variation in demand Low
High Visibility Low
Slide 1.26
A typology of operations and processes (Continued)

The implications of high and low Volume in operations and
processes...
Implications Implications
• Low repetition
• Each staff
member Low Volume High • High
performs more of repeatability
each task • Specialization
• Less
systemization • Capital intensive
• High unit costs • Low unit costs
Figure 1.8 A typology of operations
Slide 1.27
The implications of high and low Variety in operations and

processes...
• Flexible • Well defined

• Complex High Variety High
Low • Routine
• Match customer • Standardized
needs • Regular
Slide 1.28
The implications of high and low Variation in operations and

processes...
• Changing • Stable
capacity Variation in
High High
Low • Routine
• Anticipation demand
• Predictable
• Flexibility
• High utilization
• In touch with
• Low unit costs
demand
• High unit costs
Slide 1.29

The implications of high and low Visibility in operations and
processes...
• Short waiting • Time lag
tolerance High Visibility High
Low between
• Satisfaction production and
governed by consumption
customer • Standardization
perception • Low contact skills
• Customer contact
skills needed • High staff
utilization
• Received variety
is high • Centralization
Slide 1.31
Slack et al.’s general model of operations management
Transformed Direct
resources Steering
• Materials operations and
• Information processes
• Customers
Operations
Design Develop
management Output
Shaping Improving the Value-
Input processes, products
resources operation’s added for
products and and
capabilities customers
services services
Deliver
Transforming
Planning and
resources
controlling
• Facilities ongoing
• Staff operations
Figure 1.10 A general model of operations management
Slide 1.32
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
Slack, Brandon-Jones and Johnston, Operations Management PowerPoints on the Web, 7 edition © Nigel Slack, Alistair Brandon-Jones and Robert Johnston 2014
cool under pressure – operations managers need to be able to
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Part one

What is operations management?

Slack et al’.s model of operations management

Figure 1.1 This chapter examines operations management

Key operations questions

What is operations management?

Operations management defined

Operations management is the activity

They are all operations

Source: Nigel Slack

Operations are everywhere

The best way to start understanding the nature of

Every service you consumed today (radio station, bus

Operations managers create everything you buy, sit on,

The three basic functions of enterprises

The activities of core functions in some organizations

Maintain hardware, Make burgers, Give service to Make

Promote services Advertise on TV Develop funding Advertise in

Devise new Design Develop new Design new

Table 1.1 The activities of core functions in some organizations

Operations management in all types of organization

Automobile assembly factory – operations

Source: Nataliya Hora /Shutterstock.com

Operations management in all types of organization

Source: Shutterstock/PT Images

Operations management in all types of organization

Source: Shutterstock/Diego cervo

Operations management in all types of organization

Operations management in all types of organization

Source: Shutterstock/Luciano Mortula

Operations management is changing

All operations are input-transformation-output processes

Inputs Transformation process Outputs

Operations input resources and outputs

Figure 1.4 All operations are input–transformation–output processes

Examples of dominant transformed resource inputs

All manufacturing Accountants Hairdressers

Table 1.3 Dominant transformed resource inputs of various operations

Most operations produce products and services

Specialist machine tool

Operations can be analyzed at three levels

The level of the supply network

Flow between processes

The level of the operation

The level of the process

Some operations described in terms of their processes

Table 1.4 Some operations described in terms of their processes

A typology of operations and processes

Low Volume High

High Variety Low

High Variation in demand Low

High Visibility Low

A typology of operations and processes (Continued)

Figure 1.8 A typology of operations

A typology of operations and processes (Continued)

The implications of high and low Variety in operations and

• Flexible • Well defined

Figure 1.8 A typology of operations