Chapter 21
The operations challenge
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
Five of the challenges for operations managers
Globalization
Environmental
responsibility
Corporate social
responsibility
Operations
strategy
Design
Improvement
Planning and
control
Technology
Knowledge
management
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Operations decisions have a corporate social responsibility
dimension
For example …
Product/service design – customer safety, recyclability of
materials, energy consumption
Network design – employment implications and environmental
impact of location
Layout of facilities – staff safety, disabled customer access
Process technology – staff safety, waste and product
disposal, noise pollution, fumes and emissions
Job design – workplace stress, unsocial working hours
Capacity planning and control – employment policies
Inventory planning and control – price manipulation
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Globalization
Decision area
Some globalization issues
Product/service design
Transferability of product/service design
Adaptation of design to fit culture and legislation
Network design
Location of global network of facilities
Ownership and capacity change legislation
Layout of facilities
Cultural reaction to work organization
Process technology
Serviceability and maintenance of technology
Skills availability
Job design
Cost of labour
Skills availability
Cultural reaction to work requirements
Planning and control
(including MRP, JIT and
project planning and
control)
Cultural reaction to necessity for planning
Cultural reaction to need for flexibility
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Globalization
Decision area
Some globalization issues
Capacity planning and
control
Differences in seasonality and demand patterns
Legislation on part-time or temporary work contracts
Legislation and cultural view of flexible working
Inventory planning and
control
Storage conditions and climatic sensitivity
Cost of capital and other storage cost differences
Supply chain planning
and control
Real cost of transportation
Differences in contractual arrangements
Supplier conformance to employment standards
Quality planning and
control and TQM
Cultural views of acceptable quality
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
Corporate social responsibility
‘CSR is the business contribution to our sustainable development
goals. Essentially it is about how business takes account of its
economic, social and environmental impacts in the way it operates –
maximising the benefits and minimising the downsides. Specifically,
we see CSR as the voluntary actions that business can take, over
and above compliance with minimum legal requirements, to address
both its own competitive interests and the interests of wider society.’
(UK Government)
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Corporate social responsibility
‘Corporate Social Responsibility … is listening and responding to the
needs of a company's stakeholders. This includes the requirements
of sustainable development. We believe that building good
relationships with employees, suppliers and wider society is the best
guarantee of long-term success. This is the backbone of our
approach to CSR.’ (Marks & Spencer, retailer)
‘[Our vision is to] … enable the profitable and responsible growth of
our airports. One of our six strategies to achieve that purpose is to
earn the trust of our stakeholders. Corporate responsibility is about
how we manage our social and environmental impacts as part of our
day to day business, in order to earn that trust.’ (BAA, airport
operator)
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Environmental burden (EB)
One way of demonstrating that operations, in a fundamental way, are
at the heart of environmental management is to consider the total
environmental burden (EB) created by the totality of operations
activities:
EB = P × A × T
where
P
=
the size of the population
A
=
the affluence of the population (a proxy
measure for consumption)
T
=
technology (in its broadest sense, the way
products and services are made and delivered,
in other words operations management)
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Some environmental considerations of operations
management decisions
Product/service design – recyclability of materials, energy consumption,
waste material generation
Network design – environmental impact of location, development of
suppliers in environmental practice, reducing transport-related energy
Layout of facilities – energy efficiency
Process technology – waste and product disposal, noise pollution, fume
and emission pollution, energy efficiency
Job design – transportation of staff to and from work, development in
environmental education
Planning and control (including MRP, JIT and project planning and control) –
material utilization and wastage, environmental impact of project
management, transport pollution of frequent JIT supply
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Some environmental considerations of operations
management decisions (continued)
Capacity planning and control – over-production waste of poor planning,
local impact of extended operating hours
Inventory planning and control – energy management of replenishment
transportation, obsolescence and wastage
Supply chain planning and control – minimizing energy consumption in
distribution, recyclability of transportation consumables
Quality planning and control and TQM – scrap and wastage of materials,
waste in energy consumption
Failure prevention and recovery – environmental impact of process failures,
recovery to minimize impact of failures
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Identifying waste minimization in packaging
Yes
Source: Awe Inspiring Images/Photographers Direct
Yes
Can
packaging
be reduced?
Reuse
Yes
Recycle
No
Is packaging
necessary?
No
Reduce
packaging
Eliminate
unwanted
packaging
Can
packaging
be reused?
Yes
No
Can
packaging
be recycled?
No
Minimize
packaging
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
ISO 14000
The ISO 14000 standard has a three-section environmental management
system that covers initial planning, implementation and objective assessment
ISO 14000 makes a number of specific
requirements:
✓a commitment by top-level management to environmental management
✓the development and communication of an environmental policy
✓the establishment of relevant and legal and regulatory requirements
✓the setting of environmental objectives and targets
✓the establishment and updating of a specific environmental programme,
or programmes, geared to achieving the objectives and targets
✓the implementation of supporting systems such as training, operational
control and emergency planning
✓regular monitoring and measurement of all operational activities
✓a full audit procedure to review the workings and suitability of the system
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Key Terms Test
Globalization
The extension of operations supply chains to cover the whole
world.
Environmental protection
Activities and decisions in operations management that
minimize the negative impact of processes, products and
services on the environment.
ISO 14000
An international standard that guides environmental
management systems and covers initial planning,
implementation and objective assessment.
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Key Terms Test
Disruptive technologies
Technologies which in the short term cannot match the
performance required by customers but may improve
faster than existing technology to make that existing
technology redundant.
Processes
An arrangement of resources that produces some
mixture of products and services.
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007