Aims:-

Operations Management
• To give an understanding of strategic Operations
Management
Objectives :-
• Recognise the role of operations management
within the corporate strategic framework
• Analyse key performance objectives, their
relationship with the order-winning criteria and
how they contribute to the success of a business
• Appraise the strategic relationship between the
operations function and other main business
functions
© University of South Wales
 Operation Management
Can make or break an
organisation! – why?

Most business expect Operations

management to:-
Implement business strategy
Support business strategy
Drive business strategy

© University of South Wales

 What
Operations are:
“Concerned with all the activities involved in making
a product or providing a service. It is responsible for
the transformation of various kinds of inputs
into useful (and sometimes waste) outputs.”(Waters (1991).
Operations are All Around Us! (BBC, 2010)
“Virtually everything one touches, uses, and
consumes, and whatever one does is produced or
affected by one or more man-made transformations
processes: food, clothing, water, shelter,
money,...education” etc (Andrew & Johnson, 1982, p146)
Remember: To see more notes, and more revision tips, Clic on View; Clic on Notes Page

© University of South Wales

 The Transformation Model
…..Simplified

INPUTS OUTPUTS
Transformation

(“Buy (“Sell High”)

Low”)

4
Koutsoyiannis (1975, p67; 1979), Cox (2001a), Ramsay (2001, p39), Slack et al (2007) in James et al
(2009, p11)
© University of South Wales
 Micro-Operations, Processes & Systems
A System

A Process
An Operation

INPUTS Act as an internal customer and/or

5

OUTPUTS supplier to other micro operations

© University of South Wales
 Introduction to
Operations Management
• Ops Management as a Transformational Process
– “operations is a function that transforms INPUTS into
OUTPUTS of greater value”
• value needs to be added throughout this process
• value accumulates as material flows each of the operations
• value diminishes (costs) when operations stop, due to: -
– non production costs
– increased waste - (the more the cost) - conversely,
– reduced waste - more steeply value rises

© University of South Wales

 Introduction to
Operations Management
• Adding Value in the Transformational Process
– Some Ops Management objectives - to maximise: -
• Efficiency - (i.e.output of greater value than the sum of the
imputs)
• Effectivity
• Utilisation of the organisations resources
» capacity (machinery & equipment)
» money
» people Commonly known as
the 4 M’s
» materials
• Reduce (minimise) costs
© University of South Wales
 Introduction to
Operations Management
• Adding Value in the Transformational Process
– Ops management has a role in ALL businesses to CREATE
VALUE!
– the transformational process = value (supply) chain

Supplier Customer

Internal Suppliers & customers

S C S C S C S C S C S C
External Internal Environment Final
Supplier External Environment Customer
© University of South Wales
 Introduction to
Operations Management
• Ops Management as a Transformational Process
– the Transformational Process can be found in different
forms: -
• physical - as in manufacturing operations
• locational - as in transportation or warehouse operations
• exchange - as in retail operations
• physiological - as in heath care
• psychological - as in entertainment
• informational - as in communications

© University of South Wales

 Introduction to
Operations Management
• The Operations Function
– Activities in Ops Management include: -
– organising work
– selecting processes
– arranging layouts
– locating facilities
– designing jobs
– measuring performance
– controlling quality
– scheduling work
– managing inventory
– planning production
© University of South Wales
 Introduction to
Operations Management
Common issues or problems facing Ops Managers
• Time wasting • Lack of knowledge &
experience of market
• Crises Management expectations, products or
• Lack of co-ordination in systems services,
& processes • Tall bureaucratic structures
• “Wish lists” - over ambitious • lack of performance
promises to customers measurement
• Late delivery • Inappropriate management
• Lack of delegation style
• Poor motivation • poor functional integration
© University of South Wales
 A Model for Operations and
contribution
Stage 1 • Reactive
Internal neutrality • Limited contribution
Stage 2 • Benchmarks externally
External neutrality • Adopt practice of
competitors
Stage 3 • Aspire to be the best
Internally supportive • Continual improvement
Stage 4 • Operations as a
Externally supportive foundation
• Goal: to be one step
ahead
Source: Hayes and Wheelwright/Slack:37
© University of South Wales
 Increased operation capability >> Stage 4
Give an
operations
advantage
Increase strategic impact >>

Stage 3
Link strategy
& operations

Stage 2
Adopt best
practice

Stage 1
Correct the
worst problems
External Internally Externally
Internal
neutral supportive supportive
neutral
© University of South Wales
 Management ‘Buzz Words’
• Objective - “Hard” & “Soft”
• Finance - (ROI)
• Market - (Customers)
• “Production” (Efficiency, Effectiveness)
• People (H.R. - Utilisation, Training, Development)
• Environment - (inside & outside the organisation)
• Strategy
• a way of meeting the objectives; a direction, a plan - in the
medium & the long term
• Tactic
• a way of meeting the objective in the short-term
© University of South Wales
 Management ‘Buzz Words’
• Policy
• a way of doing things within the organisation - a set of
guidelines
– e.g.’s of policies?
– Objectives, Strategies, Policies & Tactics
• these are cascaded down to the employees from: -
– the corporate level - (long term) through the: -
– tactical or business unit level - (medium term)to the: -
– operational level -(short term)

© University of South Wales

 Types of objectives
• “Hard” • “Soft”
– Measurable – Non Measurable
– Quantitative – Qualitative
– Objective – Subjective
• Examples: - • Examples: -
– Productivity – Job satisfaction
– Output – Morale & Motivation
– Turnover – Attitudes
– Sickness – Contribution
– Labour turnover – Team Work
– Market share – Mood
– Number of faults – Culture
– Number of rejects
– Stock turnover
© University of South Wales
 The Four Vs
Slack et al (2007)

For each operation, each of the Four Vs will vary

between ‘high’ and ‘low’.
Volume (of demand from customers)
Variety (of tasks performed to create product/service)
Variation (in demand from customers, over time)
(of staff from the point of view of the customers
Visibility / the amount of customer contact)

17
© University of South Wales
 Slack’s Performance Objectives for
Operations Management
5 Key performance objectives:
• Quality – consistent conformance to customer
expectations
• Speed – elapsed time between customer request and
receiving goods/service
• Dependability – delivering when promised to customer
• Flexibility – degree operation processes can change –
what, how, when!
• Cost – doing things at low cost – pass cost advantage to
customers

Can use Polar charts to analysis organisations ‘actual’

against ‘required’ performance Slack et al 2007:39
© University of South Wales
 Strategy & Competitive Advantage
Organisations can compete towards one (or more) of Slack et al’s
(2007) Five Performance Objectives
* Quality – “Doing things Right”
* Speed – “Doing things Fast”
* Dependability – “Doing things On Time!”

* Flexibility – “Doing things Differen l ” t y

* Cost – Doing things Cheaply

19

© University of South Wales

 Performance Objectives and
the Polar Diagram
Cost

Speed
Dependability

Quality Flexibility

Current performance Future

of the operation performance of
the operation
20 Adapted from Slack et al (2007) in James et al (2009)
© University of South Wales
 Operations Strategy
• Top –down
• Bottom –up
• Market Requirements
• Operations resource
capabilities

© University of South Wales

 Strategy
• Order Winning Factors
• Qualifying Factors
• Less Important Factors

© University of South Wales

 Operations Resource Perspective
• Resource constraints and
capabilities
• Intangibles resources
• Structural and
infrastructural decisions

© University of South Wales

•
References
Slack, N., Chambers, S. and Johnston, R. (2007) Operations Management, 5th Edition, Pearson
Education.
• Krajewski, L.J, Ritzman, L.P., and Malhotra, M.K., (2007), Operations Management, 8th Edition,
Pearson: Prentice Hall.
• Brown, S., Bessant, J., Jones, P and Lamming, R., (2005) Strategic Operations Management.
Butterworth-Heinemann. ISBN 0-7506-63197
• Goldratt, E.M. & Cox, J. The Goal – ISBN 0-566-07418-4
• Waters, D. (1991) An Introduction to Operations Management. Addison Wesley.
• Andrew, C.G. and Johnson, G.A. (1982). The crucial importance of production and operations
management. The academy of Management Review, Vol. 7, No. 1, pp. 143-147.
• Koutsoyiannis, A. (1975) Modern Microeconomics. London: Macmillan
• Ramsay, C.R., Grant, A.M., Wallace, S.A. Garthwaite, P.H., Monk, A.F. and Russell, I.T. (2001).
Statistical assessmen to fthe learning vurves of health technologies. Health Technology
Assessment, Vol. 5, No. 12, pp 1-79.
• Hayes, R.H., and Wheelwright. S.C. (1984) Restoring our Competitive Edge: Competing
Through Manufacturing. New York: John Wiley & Sons.

© University of South Wales