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Soumitra Chowdhury
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Retail operation
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
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 processed 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
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
The operations strategic objectives Operations strategy The operations competitive role and position
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Inputs
Transformation process
Outputs
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Some inputs are transformed resources Some inputs are transforming resources
Transformed resources Materials Information Customers Input resources Transforming resources Facilities Staff
Transformation process
Customers
Outputs are products and services that add value for customers
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Aluminium smelting Specialist machine tool production Restaurant Information systems provider IKEA
Prt a Manger
Mixture of products and services Outputs that are a mixture of the tangible and the intangible
Management consultancy Mwagusi Safari Lodge Psychotherapy clinic Pure services Outputs that are exclusively intangible
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
A Typology of Operations
Low Volume High High
High
Variety
Low
High
Variation in demand
Low
High
Visibility
Low
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
A Typology of Operations
Implications
Low repetition Each staff member performs more of job Less systemization High unit costs
Implications
High repeatability Specialization Capital intensive Low unit costs
Low
Volume
High High
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
A Typology of Operations
Implications Implications
Well defined Routine Standardized Regular Low unit costs
High
Variety
Low
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
A Typology of Operations
Implications Implications
Changing capacity Anticipation Flexibility In touch with demand High unit costs
High
Variation in demand
Low
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
A Typology of Operations
Implications Implications
Short waiting tolerance Satisfaction governed by customer perception Customer contact skills needed Received variety is high High unit costs
High
Visibility
Low
Time lag between production and consumption Standardization Low contact skills High staff utilization Centralization Low unit costs
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Implications
Low repetition Each staff member performs more of job Less systemization High unit costs Flexible Complex Match customer needs High unit costs Changing capacity Anticipation Flexibility In touch with demand High unit costs Short waiting tolerance Satisfaction governed by customer perception Customer contact skills needed Received variety is high High unit costs
A Typology of Operations
Low Volume High High
Implications
High repeatability Specialization Capital intensive Low unit costs Well defined Routine Standardized Regular Low unit costs Stable Routine Predictable High utilization Low unit costs Time lag between production and consumption Standardization Low contact skills High staff utilization Centralization Low unit costs
High
Variety
Low
High
Variation in demand
Low
High
Visibility
Low
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Important to understand how different operations are positioned on the 4 Vs. Is their position where they want to be? Do they understand the strategic implications?
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Some interfunctional relationships between the operations function and other core and support functions
Engineering/ technical function
Understanding of the capabilities and constraints of the operations process
Analysis of new technology options Understanding of process technology needs New product and Accounting service ideas Provision and finance Understanding of the of relevant function capabilities and data Operations constraints of the Financial analysis operations process function for performance Market and decisions requirements Understanding of human resource needs Recruitment development and training Understanding Provision of systems for design, planning and of control, and improvement infrastructural and system needs
Marketing function
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Operations
Strategy
Strategy
Operations
Operations
Strategy
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Supporting
Driving
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
STAGE 1 Holding the Correct the organization back worst problems Internally neutral
Internally supportive
Externally supportive
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Suppliers
Continue business Develop supplier capability Provide transparent information
Customers
Appropriate product or service specification Consistent quality Fast delivery Dependable delivery Acceptable price
Shareholders
Economic value from investment Ethical value from investment
Employees
Continuous employment Fair pay Good working conditions Personal development
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
The Operations function can provide a competitive advantage through its performance at the five competitive objectives
Quality Being RIGHT Being FAST
Speed
Dependability
Being ON TIME
Flexibility
Cost
Being PRODUCTIVE
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Competitiveness
What do the terms quality, speed, dependability, flexibility and cost mean in the context of operations?
Which enables you to do things cheaply (cost advantage)? Which enables you to change what you do (flexibility advantage)? Which enables you to do things quickly (speed advantage)? Which enables you to do things on time (dependability advantage)? Which enables you to do things right (quality advantage)?
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Quality
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
a hospital?
Patients receive the most appropriate treatment Treatment is carried out in the correct manner Patients are consulted and kept informed Staff are courteous, friendly and helpful
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
an automobile plant?
All assembly is to specification Product is reliable All parts are made to specification The product is attractive and blemish-free
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
a bus company?
The buses are clean and tidy The buses are quiet and fume-free The timetable is accurate and user-friendly Staff are courteous, friendly and helpful
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
a supermarket?
The store is clean and tidy Dcor is appropriate and attractive Goods are in good condition Staff are courteous, friendly and helpful
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Quality
Quality has several meanings. The two most common are Quality as the specification of a product or service
e.g. Lower Hurst Farm produces organic meat raised exclusively on its own farm
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Quality
Irrespective of a product or services specification quality, producing it so it conforms to its specification consistently brings benefits to any operation Externally it enhances the product or service in the market, or at least avoids customer complaints Internally it brings other benefits to the operation: It prevents errors slowing down throughput speed It prevents errors causing internal unreliability and low dependability It prevents errors causing wasted time and effort, therefore saving cost
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Quality
External and internal benefits Cost Speed Dependability
Quality
On-specification products and services
Flexibility
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
a hospital?
The time between requiring treatment and receiving treatment is kept to a minimum The time for test results, X-rays, etc. to be returned is kept to a minimum
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
an automobile plant?
The time between dealers requesting a vehicle of a particular specification and receiving it is minimized The time to deliver spares to service centres is minimized
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
a bus company?
The time between a customer setting out on the journey and reaching his or her destination is kept to a minimum
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
a supermarket?
The time for the total transaction of going to the supermarket, making the purchases and returning is minimized Goods are immediately available
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Speed
Speed again has different interpretations, externally and internally Externally it means the elapsed time between a customer asking for a product or service and getting it (in a satisfactory condition) It often enhances the value of the product or service to customers Internally it brings other benefits to the operation: It helps to overcome internal problems by maintaining dependability It reduces the need to manage transformed resources as they pass through the operation, therefore saving cost
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Speed
External and internal benefits
Short delivery lead-time
Quality
On-specification products and services
Flexibility
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
a hospital?
The proportion of appointments that are cancelled is kept to a minimum Keeping appointment times Test results, X-rays, etc. are returned as promised
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
an automobile plant?
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
a bus company?
Keeping to the published timetable at all points on the route Constant availability of seats for passengers
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
a supermarket?
Predictable opening hours Proportion of goods out of stock kept to a minimum Keeping to reasonable queuing times Constant availability of parking
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Dependability
Externally it enhances the product or service in the market, or at least avoids customer complaints Internally it brings other benefits to the operation: It prevents late delivery slowing down throughput speed It prevents lateness causing disruption and wasted time and effort, therefore saving cost
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Dependability
External and internal benefits
Short delivery lead-time
Quality
On-specification products and services
Flexibility
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Flexibility
Flexibility has several distinct meanings but is always associated with an operations ability to change Change what ? The products and services it brings to the market Product/service flexibility The mix of products and services it produces at any one time Mix flexibility The volume of products and services it produces Volume flexibility The delivery time of its products and services Delivery flexibility
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
a hospital?
Introducing new treatments Providing a wide range of treatments The ability to adjust the number of patients treated The ability to reschedule appointments
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
an automobile plant?
The introduction of new models A wide range of options The ability to adjust the number of vehicles manufactured The ability to reschedule manufacturing priorities
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
a bus company?
The introduction of new routes and excursions A large number of locations served The ability to adjust the frequency of services The ability to reschedule trips
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
a supermarket?
The introduction of new lines A wide range of goods stocked The ability to adjust the number of customers served The ability to get out-of-stock items
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Flexibility
External and internal benefits
Short delivery lead-time
Quality
On-specification products and services
Flexibility
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
a hospital?
Staff costs
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
an automobile plant?
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
a bus company?
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
a supermarket?
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Cost
The cost of producing products and services is obviously influenced by many factors such as input costs, but two important sets are The 4 Vs: volume variety variation visibility The internal performance of the operation in terms of quality speed dependability flexibility
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Cost
External and internal benefits
Short delivery lead-time Low price, high margin, or both
Quality
On-specification products and services
Flexibility
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Operations strategy
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
What is strategy?
Strategic decisions means those decisions which Are widespread in their effect on the organization to which the strategy refers Define the position of the organization relative to its environment Move the organization closer to its long-term goals.
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Operations strategy
Bottom-up perspective
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Business strategy
Operational experience
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Business strategy
What is the mission? What are the strategic objectives of the firm? How to compete?
Functional strategy
How to contribute to the strategic objectives? How to manage the functions resources?
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Introduction
Likely order Product/service winners characteristics, performance or novelty Likely Quality qualifiers Range Dominant Flexibility operations Quality performance objectives
Growth
Availability of quality products/services Price Range Speed Dependability Quality
Maturity
Low price Dependable supply Quality Range Cost Dependability
Decline
Low price
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Performance objectives Then, the operations will need to excel at these ...
Cost Quality Speed Dependability Flexibility (products and services) Flexibility (mix) Flexibility (volume and/or delivery)
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Operations strategy is the decisions which shape the longterm capabilities of the companys operations and their contribution to overall strategy through the on-going reconciliation of market requirements and operations resources
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Operations resources
Market requirements
What you DO
to maintain your capabilities and satisfy markets
Strategic reconciliation
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
The challenge of operations strategy formulation An operations strategy should be: Appropriate ... Comprehensive ... Coherent ... Consistent over time ...
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Trade-offs
Do you want it good, or do you want it Tuesday? No such thing as a free lunch. You cant have an aircraft which flies at the speed of sound, carries 400 passengers and lands on an aircraft carrier. Operations are just the same. (Skinner) Trade-offs in operations are the way we are willing to sacrifice one performance objective to achieve excellence in another.
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Image up
Inventory down
Revenue up
Perceived quality is governed by the gap between customers expectations and their perceptions of the product or service
Gap Customers perceptions of the product or service Customers Customers expectations perceptions of the for the product or product or service service
Gap Customers expectations for the product or service Customers perceptions of the product or service
Expectations = perceptions
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Gap 1
Gap 2
Gap 3
Gap 4
Marketing
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Quality
Quality of conformance faithfulness with which the operation agrees with design
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Operations improvement
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Composite Customer performance Agility Resilience satisfaction measures Generic operations Cost Quality Dependability Speed Flexibility performance measures Transaction Defects per Mean time Customer Time to costs query time unit market between Some detailed failures Labour Order lead time Product performance Level of productivity customer range Lateness Throughput measures complaints complaints time Machine efficiency Scrap level
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Learning and growth performance measures To achieve strategic impact, how will we build capabilities over time?
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
IMPROVEMENT PRIORITIES
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Order-winning objectives
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
2 consistently clearly better than our nearest competitors? 3 consistently marginally better than our nearest competitors?
4 often marginally better than that of most competitors? Same as es s competitors es 5 about the same as that of most competitors? roc rp
r ila Sim ustome s C ion ctat e exp
Worse than es 7 usually marginally worse than that of our main competitors? s c competitors es o 8 usually worse than that of most competitors? r pr
r ila Sim ustome s n C tatio ec exp
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
GOOD
better
2 3
EXCESS ? APPROPRIATE
c f ac o und bo it abil ept y
than
PERFORMANCE
COMPETITORS
AGAINST
same as
5 6 7 8 9 9 8
r owe L
X
worse than
BAD
qualifying
IMPORTANCE CUSTOMERS
FOR
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Innovation
Short-term, dramatic Short-term, dramatic Large steps Large steps Intermittent Intermittent Abrupt, volatile Abrupt, volatile Few champions Few champions Individual ideas & effort Individual ideas & effort Scrap and rebuild Scrap and rebuild New inventions/theories New inventions/theories Large investment Large investment Low effort Low effort Technology Technology Profit Profit Effect Pace Timeframe Change Involvement Approach Mode Spark Capex Maintenance Focus Evaluation
Kaizen
Long-term, undramatic Long-term, undramatic Small steps Small steps Continuous, incremental Continuous, incremental Gradual and consistent Gradual and consistent Everyone Everyone Group efforts, systematic Group efforts, systematic Protect and improve Protect and improve Established know-how Established know-how Low investment Low investment Large effort Large effort People People Process Process
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
The plandocheckact (or Deming) improvement cycle, and the definemeasureanalyzeimprovecontrol (or DMAIC) six sigma improvement cycle
Define Plan Do Control Measure
Act
Check
Improve
Analyze
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Define identify the problem, define requirements and set the goal Measure gather data, refine problem and measure inputs and outputs
Analyze develop Improve develop improvement ideas, problem hypotheses, identify root causes test, establish and validate solution, and hypotheses measure results
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Performance
Time
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Continuous improvement
Performance
Time
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Continuous improvement
PDCA cycle repeated to create continuous improvement
Performance
Time
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Combined improvement
Performance
Time
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Quality Quality + dependability Quality + dependability + speed Quality + dependability + speed + flexibility Quality + dependability + speed + flexibility + cost
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Source: Eurotunnel
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Failures inside the operation Supply failures Design failures Facilities failures Staff failures Customer failures
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Failure management
Prevention
Mitigation
Recovery
Normal operation
Failure
Severity of consequence
Effect on customer
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Discover
Act
Learn
Plan
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Total quality management can be viewed as a natural extension of earlier approaches to quality management
Makes quality central and strategic in the organization Broadens the organizational responsibility for quality Solves the root cause of quality problems Prevents out of specification products and services reaching market Quality is strategic Teamwork Staff empowerment Involves customers and suppliers Quality systems Quality costing Problem solving Quality planning Statistics Process analysis Quality standards Error detection Rectification
Inspection
Quality control
Quality assurance
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
The internal customersupplier concept involves understanding the relationship between processes
Process 1
Process 6
Between each process, the requirements of the customer process must be understood and met by the 'supplier process
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Includes all parts of the organization Includes all staff of the organization
Source: Corbis/Richard T Nowitz
Includes consideration of all costs Includes every opportunity to get things right Includes all the systems that affect quality Never stops
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Primary activities
1108
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Primary Activities
Inbound Logistics. Here goods are received from a company's suppliers. They are stored until they are needed on the production/assembly line. Goods are moved around the organisation. Operations. This is where goods are manufactured or assembled. Individual operations could include room service in an hotel, packing of books/videos/games by an online retailer, or the final tune for a new car's engine. Outbound Logistics. The goods are now finished, and they need to be sent along the supply chain to wholesalers, retailers or the final consumer.
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Primary Activities
Marketing and Sales. In true customer orientated fashion, at this stage the organisation prepares the offering to meet the needs of targeted customers. This area focuses strongly upon marketing communications and the promotions mix. Service. This includes all areas of service such as installation, after-sales service, complaints handling, training and so on.
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Support Activities
Procurement. This function is responsible for all purchasing of goods, services and materials. The aim is to secure the lowest possible price for purchases of the highest possible quality. They will be responsible for outsourcing (components or operations that would normally be done in-house are done by other organisations), and ePurchasing (using IT and web-based technologies to achieve procurement aims).
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Support Activities
Technology Development. Technology is an important source of competitive advantage. Companies need to innovate to reduce costs and to protect and sustain competitive advantage. This could include production technology, Internet marketing activities, lean manufacturing, Customer Relationship Management (CRM), and many other technological developments.
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Support Activities
Human Resource Management (HRM). Employees are an expensive and vital resource. An organisation would manage recruitment and s election, training and development, and rewards and remuneration. The mission and objectives of the organisation would be driving force behind the HRM strategy. Firm Infrastructure. This activity includes and is driven by corporate or strategic planning. It includes the Management Information System (MIS), and other mechanisms for planning and control such as the accounting department.
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Operations in practice
Michael Dell started in 1984 by cutting out the middle man and delivering computers direct to the customer Using its direct selling methods, Dell went on to become the number one computer maker There are many reasons for Dells success but most of them come from the way Dell configures its supply networks
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Retailer
Retailer
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Shopping mall
Maintenance services
Direct supply Information
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Benefits of looking at the whole supply chain include It helps an understanding of competitiveness It helps to identify the significant links in the network It helps focus on long-term issues
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Balance Should excess capacity be used to supply other companies? Raw material suppliers Assembly operation
Component maker
Wholesaler
Retailer
Extent Narrow process span Extent Wide process span Direction Upstream vertical integration Direction Downstream vertical integration
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
No
Yes
Yes
Yes
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Examples of supply-side factors that vary with location, influencing costs labour costs land costs energy costs transportation costs community factors The operation
Examples of demand-side factors that vary with location, influencing customer service/revenue labour skills suitability of site image convenience for customers
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Capacity can either lead or lag demand Inventory can be used to smooth out the peaks Spare capacity can be used to supply other operations The danger of this is that the original operation may receive a lower level of service
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Capacity
Volume
Demand
Volume
Demand Capacity
Time
Time
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Capacity
Volume
Demand
Time
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Source: Arup
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Control is
understanding what is actually happening in the operation deciding whether there is a significant deviation from what should be happening (if there is deviation) changing resources in order to affect the operations activities
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
PLANNING
Days/weeks/months
Time horizon
Hours/days
CONTROL
Makes interventions to resources to correct deviations from plans Ad hoc consideration of operations objectives
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Dependent and independent demand Dependent demand e.g. input tyre store in car plant
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
P:D ratios
Resource to order Dependent demand Each product or service is large compared with total capacity of the operation
Make to order
Make to stock
Independent demand
Each product or service is small compared with total capacity of the operation
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
When to do things?
Scheduling
Loading
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Quality losses
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Finite loading
Infinite loading
A B Work centre
A B Work centre
1 2 3 s k 4 ee 5 W
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Gantt chart showing the schedule for jobs at each process stage
Process stage Week 12 Week 13
Job B
Week 14
Week 15
Week 16
Job D
Week 17
Week 18
Job E
Job C
Pre-coding
Job W
Job A Job X
Job B Job A
Job C Job B
Job D
Coding
Job C
Job Y Job Z
Job X
Job A
Job B
Job Y
Job X
Job A
Job B
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
FORECAST OR
Work centre
Work centre
Work centre
Work centre
DEMAND
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Input
Operation or process
Output
Monitor
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Objective To provide an appropriate amount of capacity at any point in time The appropriateness of capacity planning in any part of the operation can be judged by its effect on Costs Revenue Working capital Service level
Source: British Airways London Eye
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Aggregated output
Forecast demand
Time
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Aggregate capacity of an aluminium producer: tonnes per month ignores types of alloy, gauge and batch variations
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Causes of seasonality
Climatic
Festive
Behavioural
Political
Financial
Social
Source: Alamy/Medical-on-line
Construction materials Beverages (beer, cola) Foods (ice-cream, Christmas cake) Clothing (swimwear, shoes) Gardening items (seeds, fertilizer) Fireworks
Travel services Holidays Tax processing Doctors (influenza epidemic) Sports services Education services
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
DEMAND
DEMAND
TIME
When demand uncertainty is high, the risks to service level of underprovision of capacity are high
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Design capacity
Effective capacity 168 hours per week 109 hours per week
Utilization=
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Demand Capacity
Demand Capacity
Demand Capacity
Level capacity
Chase demand
Demand management
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Ways of reconciling capacity and demand How do you cope with fluctuations in demand?
Absorb demand
Level capacity
Change demand
Demand management
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Source: Corbis/Photocuisine
Third-party work
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Change demand
Source: Empics
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Supply chain management is concerned with the flow of information as well as the flow of products and services
Upstream flow of customer requirements Flow between processes Long-term plans and requirements Market research information Individual orders Payment Potential new products and services Flow between processes Consumer
Products and services New products and services Delivery information Payment request / Credit
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Second-tier supplier
First-tier supplier
First-tier customer
Supply side
Information flow Physical flow
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
The purchasing function brings together the operation and its suppliers
Suppliers Prepare quotation for specification, price, delivery, etc. Purchasing function
Requests
The operation Request for products and services Receive products and services Demand from customer s
Quotations
Order
Supply to customer s
Deliver
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Vertically integrated operation Traditional supply management Partnership supply management Long-term virtual operation Type of inter-firm contact Close few suppliers
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Attitudes
Sharing success Multiple points of contact Few relationships Information transparenc y
Dedicated assets
Actions
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
so improved forecasts
Improved profitability
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Supply chains with different end objectives need to be managed in different ways
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Mismatch
Mismatch
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
The key principle of lean operations is relatively straightforward to understand: it means moving towards the elimination of all waste in order to develop an operation that is faster and more dependable, produces higher quality products and services and, above all, operates at low cost.
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Synonyms
continuous flow manufacture high value-added manufacture stockless production low-inventory production fast-throughput manufacturing lean manufacturing Toyota production system short cycle time manufacturing
Source: Corbis/Denis Balihouse
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
stage A
stage B
stage C
JIT approach
orders stage A deliveries stage B deliveries orders stage C
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
fewer stoppages lower capacity utilization, but low inventory so problems are exposed and solved no surplus production goes into inventory
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
JIT definitions
JIT aims to meet demand instantly, with perfect quality and no waste
More fully: Improved overall productivity and elimination of waste Cost-effective production and delivery of only the necessary quantity of parts at the right quality, at the right time and place, while using a minimum amount of facilities, equipment, materials and human resources JIT is dependent on the balance between the suppliers flexibility and the users flexibility JIT is accomplished through the application of elements that require total employee involvement and teamwork A key philosophy of JIT is simplification
Source: Empics
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
The lean philosophy of operations is the basis for JIT techniques that include JIT methods of planning and control
The lean philosophy of operations
Eliminate waste Involve everyone Continuous improvement
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
The 5 Ss
Sort (Seiri) Eliminate what is not needed and keep what is needed. Straighten (Seiton) Position things in such a way that they can be easily reached whenever they are needed. Shine (Seiso) Keep things clean and tidy; no refuse or dirt in the work area. Standardize (Seiketsu) Maintain cleanliness and order perpetual neatness. Sustain (Shitsuke) Develop a commitment and pride in keeping to standards.
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Inventory level
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Types of waste:
over-production waiting time transport process inventory motion defective goods influencing the throughput efficiency
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
productivity problems
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Small machines
The conventional Western approach is to purchase large machines to get economies of scale. These often have long, complex set-ups, and make big batches, quickly creating waste.
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Using several small machines rather than one large one allows simultaneous processing, is more robust and is more flexible
JIT small machines approach:
easy to move (layout) quick set-up flexible scheduling options cheaper tooling planned maintenance easier fewer set-ups needed emphasis: flexibility economies of scope
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Source: Provided by the Sea W: FS Project, Nasa/Goddard Space Flight Center and ORBIMAGE
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Improvement
Knowledge management
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Globalization
Decision area Product/service design Network design Layout of facilities Process technology Job design Some globalization issues Transferability of product/service design Adaptation of design to fit culture and legislation Location of global network of facilities Ownership and capacity change legislation Cultural reaction to work organization Serviceability and maintenance of technology Skills availability Cost of labour Skills availability Cultural reaction to work requirements Cultural reaction to necessity for planning Cultural reaction to need for flexibility
Planning and control (including MRP, JIT and project planning and control)
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Globalization
Decision area Capacity planning and control Inventory planning and control Some globalization issues Differences in seasonality and demand patterns Legislation on part-time or temporary work contracts Legislation and cultural view of flexible working Storage conditions and climatic sensitivity Cost of capital and other storage cost differences
Supply chain planning and Real cost of transportation control Differences in contractual arrangements Supplier conformance to employment standards Quality planning and controlCultural views of acceptable quality and TQM Cultural views of participation in improvement groups Safety Failure prevention and recovery Maintenance support Cultural attitude to risk Flexibility of response to failure
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Yes
No
No
Minimize packaging
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007