1.1
Pearson Education Ltd. Arnos Design
Chapter 1
Operations management
1.1
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.2
Key operations questions
In Chapter 1 – Operations management – Slack et. al.
identify the following key questions:
• What is operations management?
• Why is operations management important in all types
of organization?
• What is the input–transformation–output process?
• What is the process hierarchy?
• How do operations processes have different
characteristics?
• What are the activities of operations management?
1.2
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.3
Operations management defined
Operations management is the activity of
managing the resources which are devoted
to the production and delivery of products
and services.
1.3
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.4
Slack et al.’s model of operations management
Operation’s
performance
Transformed
resources
• Materials
• Information
• Customers
Input
resources
Transforming
resources
Operations
strategy
Design
Operations
management
Operations
strategy
Improvement
Output
products and Customers
services
Planning and
control
• Facilities
• Staff
1.4
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.5
Operations management is fashionable!
The consultancy services market – % of world
revenues of 40 largest consultancy firms
Financial
6
Organizational
design
11
Marketing/sales
2
Operations and process
management
31
Benefits/Actuarial
16
IT strategy
17
1.5
Corporate strategy
17
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.6
Operations management at IKEA
Design elegant
products which can be
flat-packed efficiently
Design a store layout
which gives smooth
and effective flow
Continually examine
and improve
operations practice
Site stores of an
appropriate size in
the most effective
locations
Maintain
cleanliness and
safety of storage
area
1.6
Ensure that the jobs
of all staff encourage
their contribution to
business success
Arrange for fast
replenishment of
products
Monitor and enhance
quality of service to
customers
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.7
They are all operations
Back office
operation in a bank
Kitchen unit
manufacturing
operation
Take-out / restaurant
operation
1.7
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.8
Operations are everywhere
Every service you consumed today (radio station, bus
service, lecture, etc.) has also been produced by an
operation.
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 produced by an operation.
Operations Managers create everything you buy, sit on,
wear, eat, throw at people and throw away.
1.8
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.9
The three basic functions of enterprises
Digital Stock
Pearson
Education Ltd.
Lord and
Leverett
1.9
Ford Motor
Company
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.10
Interfunctional relationships between operations
and other functions
Engineering/
technical
function
Understanding of
the capabilities and
constraints of the
operations process
Product/service
development
function
Analysis of new
technology options Understanding of
process technology
New product and
needs
Accounting
service ideas
Provision
Understanding of the
and finance
of relevant
capabilities and
function
data
constraints of the
Operations
Financial analysis
operations process
function
for performance
Market
and decisions
requirements
Understanding of human
resource needs
Understanding Provision of systems for
of infrastructural design, planning and
and system control, and improvement
Recruitment
needs
development
and training
Human
resources
function
1.10
Marketing
function
Information
technology
(IT) function
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.11
Prêt a Manger
‘High-end’ sandwich and snack retailer
Use only ‘wholesome’ ingredients
All shops have their own kitchens where fresh sandwiches
are prepared every day
Fresh ingredients are delivered early every morning
Same staff who serve you at lunch made the sandwiches
that morning
‘We don’t work nights, we wear jeans, we party…’
1.11
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.12
The three basic functions at Prêt a Manger
Product/
Service
development
Marketing
Promotional
activities,
market
research, etc.
1.12
Nutritional ‘mechanical’
and aesthetic design of
the sandwiches and
snacks
Operations
Design, location
and management
of stores and instore processes
and the network
that supplies them
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.13
Operations management in all types of organization
Automobile assembly factory – Operations
management uses machines to efficiently
assemble products that satisfy current
customer demands
1.13
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.14
Operations management in all types of organization (Continued)
Physician (General practitioner)
– Operations management uses
knowledge to effectively diagnose
conditions in order to treat real
and perceived patient concerns
1.14
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.15
Operations management in all types of organization (Continued)
Management consultant – Operations
management uses people to effectively
create the services that will address
current and potential client needs
1.15
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.16
Operations management in all types of organization (Continued)
Disaster relief
charity – Operations
management uses
ours and our partners’
resources to speedily
provide the supplies
and services that
relieve community
suffering
1.16
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.17
Operations management in all types of organization (Continued)
Advertising agency – Operations
management uses our staff’s knowledge
and experience to creatively present
ideas that delight clients and address
their real needs
1.17
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.18
Operations management uses…
machines
to
efficiently
assemble
products
to
effectively
diagnose
conditions
to treat real and
perceived patient
concerns
people
to
effectively
create
services that will
address current and
potential client
needs
ours and our
partners’
resources
to
speedily
provide
supplies and
services that relieve
community suffering
creatively
present
ideas that delight
clients and address
their real needs
knowledge
our staff’s
knowledge and
experience
1.18
to
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.19
Operations management is changing
The business environment is
changing, for example:
• Increased cost-based competition
Prompting operations responses, for
example:
• Globalization of operations networking
•
Higher quality expectations
• Information-based technologies
•
Demands for better service
• Internet-based integration of operations
activities
•
More choice and variety
• Supply chain management
•
Rapidly developing technologies
•
Frequent new product/service
introduction
• Mass customization
•
Increased ethical sensitivity
• Lean process design
•
Environmental impacts are more
transparent
• Environmentally sensitive design
•
More legal regulation
• Failure analysis
•
Greater security awareness
1.19
• Customer relationship management
• Flexible working patterns
• Fast time-to-market methods
• Supplier ‘partnership’ and development
• Business recovery planning
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.20
All operations are input–transformation–output processes
Inputs
1.20
Transformation process
Outputs
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.21
Operations input resources and outputs
Transformed
resources
• Materials
• Information
• Customers
Input
resources
Transformation process
Output
products and Customers
services
Transforming
resources
• Facilities
• Staff
1.21
Outputs are products and services
that add value for customers
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.22
Inputs and outputs at Prêt a Manger
Transformed
resources
• Ingredients
• Packaging
• Customers
Input
resources
Served and
satisfied
customers
Customers
Transforming
resources
• Equipment
• Fittings
• Staff
1.22
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.23
Example of analysis at three levels
The supply network – Flow between operations
Studios
Casting
agency
Creative
agency
Promotion
agency
Programme/
video
maker
Broadcasting
company
A programme
and video
supply network
The operation – Flow between processes
The
programme
and video
operation
1.23
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.24
Most operations produce products and services
Crude oil production
Aluminium smelting
Acme Whistles
Specialist machine tool
production
Prèt a Manger
Restaurant
Information systems
provider
IKEA
Management consultancy
Psychotherapy clinic
1.24
Mwagusi Safari
Lodge
Pure products –
Outputs that are
exclusively tangible
Mixture of products and
services – Outputs that
are a mixture of the
tangible and intangible
Pure services –
Outputs that are
exclusively intangible
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.25
Operations can be analyzed at three levels
Flow between operations
The level of the supply network
Flow between processes
The level of the operation
The level of the process
Flow between resources
1.25
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.26
Operations can be analyzed at three levels (Continued)
Operations management is
concerned with the flow of
transformed resources
between operations,
processes, where
Flow between operations
Flow between processes
External operations interact
with internal processes to form
the external supply network
Flow between resources
1.26
Processes form an internal
‘supply network’ and
become each others
customers and suppliers
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.27
Example of analysis at three levels (Continued)
The supply network – Flow between operations
Programme
and video
maker
The operation – Flow between processes
Engineer
-ing
Marketing
and sales
Finance and
accounting
Production
unit
Post
production
Set and props
manufacture
The programme and video operation
1.27
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.28
Example of analysis at three levels (Continued)
The supply network – Flow between operations
Programme
and video
maker
The operation – Flow between processes
Set and props
manufacture
The ‘Set and
props
manufacturing
’ process
1.28
Set
design
Set
construction
Props
acquisition
Set
finishing
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.29
The television and video company divided into
two ‘end-to-end’ business processes
End-to-end process for programme production
Engineering
Programme
marketing and
sales
Programme finance
and accounting
Programme
production unit
Programme and
video maker
Programme set and
props manufacture
Programme
post
production
End-to-end process for music video production
Music video
marketing and
sales
1.29
Music video
finance and
accounting
Music video set
and props
manufacture
Music video
production
unit
Music video
post
production
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.30
All functions use processes to provide service
Human
resources
Operations
Marketing
Information
systems
Finance
Sales
Any organization
Pearson Education Ltd. Naki Kouyioumtzis
1.30
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.31
Differences within sectors are often greater than the
differences between sectors
Financial services
An account
management centre at
a large retail bank
Financial analyst
advising a client at an
investment bank
Pearson Education Ltd. MindStudio
Furniture manufacturing
Mass production of
kitchen units
Hotels
Value-for-money
hotel
Photodisc. Life File. Emma Lee
1.31
Craft production of
reproduction
‘antique’ furniture
Pearson Education Ltd. Rob Judges
Lobby of an
international
luxury hotel
Photodisc. Photolink. Jack Star
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.32
A typology of operations and processes
The 4 Vs
1.32
Low
Volume
High
High
High
Variety
Low
High
Variation in demand
Low
High
Visibility
Low
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.33
A typology of operations and processes (Continued)
The implications of high and low Volume in operations and
processes
Implications
• Low repetition
• Each staff member
performs more
of each task
• Less systemization
• High unit costs
1.33
Implications
Low
Volume
High
• High repeatability
• Specialization
• Capital intensive
• Low unit costs
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.34
A typology of operations and processes (Continued)
The implications of high and low Variety in operations and
processes
Implications
• Flexible
• Complex
• Match customer
needs
• High unit costs
1.34
Implications
High
Variety
High
Low
• Well defined
• Routine
• Standardized
• Regular
• Low unit costs
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.35
A typology of operations and processes (Continued)
The implications of high and low Variation in operations and
processes
Implications
• Changing
capacity
• Anticipation
• Flexibility
• In touch with
demand
• High unit costs
1.35
Implications
Variation in
High
High
Low
demand
•
•
•
•
•
Stable
Routine
Predictable
High utilization
Low unit costs
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.36
A typology of operations and processes (Continued)
The implications of high and low Visibility in operations and
processes
1.36
Implications
Implications
• Short waiting
tolerance
• Satisfaction
governed by
customer
perception
• Customer contact
skills
needed
• Received variety
is high
• High unit costs
• Time lag between
production
and
consumpti
on
• Standardization
• Low contact skills
• High staff
utilization
• Centralization
• Low unit costs
High
Visibility
High
Low
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
1.37
A 4 Vs profile of two operations
Low
Volume
High
High
Variety
Low
High
Variation
Low
High
Visibility
Low
Mwagusi
Safari Lodge
Formule 1
Hotel
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?
1.37
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010