Introduction to Operations Management

1. Introduction to Operations Management • Objectives of lecture: • To understand what is operations management • Describe the role of OM within the organisation • To understand the relationship between operations management and the division of labour • To know the constitutive elements of an operation system • To discuss the difference between products and services

2. What is Operations Management? • OPERATIONS MANAGEMENT is the design and operations of production/service systems • Without operations management: • A normal queue at a bank would take 1 to 2 hours … • A 3 hours ferry crossing could require 9 hours, if not several days! • The Eurostar would take 15 hours to go from London to Paris… • Mail would rarely be delivered… • In other words: • Unless we could totally revise our every day’s perceptions of time and performance… • … we could not live in such a world

3. Contemporary Issues • Shift in balance of power to consumers • Achieving higher levels of productivity • Creating higher quality products • Delivering better customer service • Achieving shorter delivery times • Reducing labor and material costs • Globalization of business and markets • E-commerce • From a primary sector to a secondary sector economy • From a manufacturing to a service economy • E-service economy • Case of developing economies: can we leap-frog the manufacturing stage?

4. International Division of Labour Source: From Joseph E. Stiglitz, Principles of Micro-economics, 2nd ed. (New York: W.W. Norton and Company, 1997), p. 58.

5. The Value Chain and Its Support Functions Role of OM within an Organisation

6. Division of Labour • The objective is to specialise jobs by reducing them to their most elementary tasks • Results from the simultaneous application of two principles • horizontal division of labour • (Smith, Babbage) • vertical division of labour • (Taylor, introduction of management science; Gilbreth, time and motion studies) • The vertical division of labour implies: • A design and planning activity • A control activity • A co-ordination role for operations management

7. The Transformation Process within OM

8. Input-Transformation-OutputRelationships for Typical Systems Components are also called resources

9. OM and the Service Industry • Application of OM to Service Operations • Batch cooking operations at McDonald’s • Telephone Banking • Call Centres Service Good Product

10. Most Products Are a “Bundle” of Goods and Services Exhibit 1.8

11. Goods Tangible Can be inventoried No interaction between customer and process Services Intangible Cannot be inventoried Direct interaction between customer and process Differences Between Goods and Services 1-6

12. Manufacturing Materials Goods Customer process Product Delivery Systems • Manufacturing Processes - customer are separate from the place of production both geographically and in terms of time • Exceptions: B2B transactions

13. Goods Service Service Customer Customer Customer delivery delivery system system Processed Goods Service Delivery Systems • There are two basic structures of service delivery system..... • 1. where customers participate • 2. where customers' goods are processed

14. Front Office - Servers(receptionist / dispatcher / cashier etc.) Customers Back Office Front & Back Office Key feature of service industry. Nowadays front and back offices are often separated geographically - and may even be in different continents Division of labour

15. Suggested Homework • Is a public service (e.g. land registry, customs, ONE) an operations system? • How does it differ from a business operations system? • Question 1-2 p. 27 • Have the globalisation of operations taken place yet in Morocco? How, Why, Examples? • Question 1-8 p. 27 • Question 1-15 p. 27 • Case Problem 1.2 p. 29