C hapter 1

1. Chapter 1 What is operations management?

2. Operations management defined Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services.

3. Marketing / sales 2 Financial 6 Organizational design 11 Operations and process management 31 Benefits / actuarial 16 Corporate strategy 17 IT strategy 17 The consultancy services market – % of world revenues of 40 largest consultancy firms The operations function is fashionable!

4. Kitchen unit manufacturing operation Back office operation in a bank Retail operation Take-out / restaurant operation They are all operations

5. Creating Customer Value

6. Design a store layout which gives smooth and effective flow Ensure that the jobs of all staff encourage their contribution to business success Design elegant products which can be flat-packed efficiently Site stores of an appropriate size in the most effective locations Continually examine and improve operations practice Monitor and enhance quality of service to customers Maintain cleanliness and safety of storage area Arrange for fast replenishment of products Operations management at IKEA

7. Outputs Inputs that transform inputs … into outputs All operations are transformation processes … Transformation process

8. Output products and services Some inputs are transformed resources Some inputs are transforming resources Transformed resources … Input resources Transformation process Customers Transforming resources … Outputs are products and services that add value for customers

9. Served and satisfied customers At Prêt a Manger Transformed resources … ? Input resources Transforming resources … ?

10. The output from most operations is a mixture of products and services Pure products – Outputs that are exclusively tangible Crude oil production Acme Whistles Aluminium smelting Specialist machine tool production Mixture of products and services – Outputs that are a mixture of the tangible and the intangible Prêt a Manger Restaurant IKEA Information systems provider Management consultancy Mwagusi Safari Lodge Pure services – Outputs that are exclusively intangible Psychotherapy clinic

11. Characteristics of Goods v Services Contrast the characteristic differences between Manufacturing and Services over the following factors:- Manufacturing <> Service Product Inventory Customer Contact Response times Markets Facilities Capital Labour Quality

12. Financial services An account management centre at a large retail bank Financial analyst advising a client at an investment bank Furniture manufacturing Craft production of reproduction ‘antique’ furniture Mass production of kitchen units Hotels Lobby of an international luxury hotel Value-for-money hotel Differences within sectors are often greater than the differences between sectors

13. Low Volume High High High Variety Low Variation in demand High Low Low High Visibility A Typology of Operations

14. Low repetition Each staff member performs more of job Less systemization High unit costs High repeatability Specialization Capital intensive Low unit costs Low Volume High High Well defined Routine Standardized Regular Low unit costs Flexible Complex Match customer needs High unit costs High Variety Low Stable Routine Predictable High utilization Low unit costs Changing capacity Anticipation Flexibility In touch with demand High unit costs Variation in demand High Low Time lag between production and consumption Standardization Low contact skills High staff utilization Centralization Low unit costs Short waiting tolerance Satisfaction governed by customer perception Customer contact skills needed Received variety is high High unit costs Low High Visibility A Typology of Operations Implications Implications

15. Mwagusi Safari Lodge Formule 1 Hotel Important to understand how different operations are positioned on the 4 V’s. Is their position where they want to be? Do they understand the strategic implications? 4 V’s profile of two operations Volume Low High High Variety Low Low High Variation Low High Visibility

16. Decisions in Operations Five major decision areas: • Process • Quality • Work force • Inventory • Capacity Schroeder Section 1.6 - page 16 Operations ManagementR G Schroeder, Operations Management, 4th edition,1993, McGraw Hill

17. Product/service development function Engineering/ technical function Accounting and finance function Operations function Marketing function Human resources function Information technology (IT) function Some interfunctional relationships between the operations function and other core and support functions Micro Environment

18. Case : Too Short The Day Analysis What is Giles trying to do ? What is Giles actually doing ? What are the problems within the organisation ? Recommendations What should Giles do ? What changes if any should the organisation make ? Identify the functions of a manager Identify the levels of management

19. Case : The Glastonbury Festival • 1 What is the role of an operations manager such as Michael Eavis in this situation? How does this change at different stages of the festival organisation? • List the different types of transformation processes involved in the festival activities within the classifications: Materials/Information/Customer • 3 Relate the 5 decision areas as outlined in R G Schroeder’s Operations Management, to the Glastonbury case.