Post on 18-Nov-2014
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Chapter 1
Quick Review…
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Transformed resources …
Materials Information Customers
Transforming resources …
Facilities Staff
Customers
Output products
and services
Input resources
Some inputs are transformed resources
Some inputs are transforming resources
Outputs are products and services that add value for customers
Transformation process
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Operations can be analyzed at three levels
Flow between operations
The level of the supply network
The level of the operation
Flow between processes
The level of the process Flow between resources
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
A Typology of OperationsImplications Implications
Changing capacityAnticipationFlexibility
In touch with demandHigh unit costs
StableRoutine
PredictableHigh utilizationLow unit costs
Variation in demand
High Low
VisibilityHigh Low
Short waiting toleranceSatisfaction governed by
customer perceptionCustomer contact skills
neededReceived variety is high
High unit costs
Time lag between production and consumption
StandardizationLow contact skills
High staff utilizationCentralizationLow unit costs
FlexibleComplex
Match customer needsHigh unit costs
Well definedRoutine
StandardizedRegular
Low unit costs
VarietyHigh Low
High
Low repetitionEach staff member
performs more of jobLess systemization
High unit costs
High repeatabilitySpecialization
Capital intensiveLow unit costs
VolumeLow High
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Key Terms Test
Operations managementThe activities, decisions and responsibilities of managing the
production and delivery of products and services.
Operations functionThe arrangement of resources that are devoted to the production
and delivery of products and services.
Operations managersThe staff of the organization who have particular responsibility
for managing some or all of the resources which comprise the operation’s function.
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Key Terms TestTransformed resourcesThe resources that are treated, transformed or converted in a process,
usually a mixture of materials, information and customers.
Input resourcesThe transforming and transformed resources that form the input to
operations.
Transforming resourcesThe resources that act upon the transformed resources, usually
classified as facilities (the buildings, equipment and plant of an operation) and staff (the people who operate, maintain and manage the operation).
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Chapter 2
The strategic role and objectives of operations
Source: Honda Motor Company
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Key teaching objectives
• To stress to students the importance of how the operations function sees its role and contribution within an organization
• To show students that there is a progression of operations excellence (using Hayes and Wheelwright’s nomenclature) from Stage 1 to Stage 4.
• To demonstrate that there is a whole range of performance criteria, which can be used to judge an operation and which operations managers influence
• To demonstrate that for each performance objective there are internal and external benefits.
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
What is the role of the Operations function?Operations as implementer
Operations implements strategy
Strategy
Operations
Operations drives strategy
Operations as driver
Strategy
Operations
Operations supports strategy
Operations as
supporter
Strategy
Operations
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
The 3 key attributes of Operations
Operations contribution
Implementing Be dependable
Operationalize strategy
Explain practicalities
Supporting Be appropriate
Understand strategy
Contribute to decisions
Driving Be innovative
Provide foundation of strategy
Develop long-term capabilities
The strategic role of the Operations function
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Internally neutral
STAGE 1 Correct the
worst problems
Holding the organization back
Increasing contributio
n of operatio
ns
The four-stage model of Operations contribution
Externally neutral
As good as the competitors
STAGE 2 Adopt best
practice
Implementin
g
strategy
Internally supportive
Clearly the best in the industry
STAGE 3 Link strategy
with operations
Supporting
strategy
Externally supportive
Redefining industry expectations
STAGE 4 Give an
operations advantage
Driving
strategy
Incr
easi
ng s
trat
egic
impa
ct
Increasing operations capabilities
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Broad strategic objectives for an operation applied to stakeholder groups
SocietyIncrease employmentEnhance community well-beingProduce sustainable productsEnsure clean environment
CustomersAppropriate product or service specificationConsistent qualityFast deliveryDependable deliveryAcceptable price
SuppliersContinue businessDevelop supplier capabilityProvide transparent information
ShareholdersEconomic value from investmentEthical value from investment
EmployeesContinuous employmentFair payGood working conditionsPersonal development
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Com
petit
iven
ess
The Operations function can provide a competitive advantage through its performance at the five competitive objectives
Quality Being RIGHT
Speed Being FAST
Dependability Being ON TIME
Cost Being PRODUCTIVE
Being ABLE TO CHANGEFlexibility
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
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
Minimum cost, maximum value
Minimum price, highest value
Fast throughput
Quick delivery
Reliable operation
Dependable delivery
Error-free processes
Error-free products and
services
Ability to change
Frequent new products, maximum
choice
The benefits of excelling
Dependability
Cost
Speed
Quality Flexibility
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
What does Quality mean in …
Patients receive the most appropriate treatment
… a hospital?
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
What does Quality mean in …
… 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?
What does Quality mean in …
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?
What does Quality mean in …
The store is clean and tidy
Décor 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
Quality as the conformance with which the product or service is produced
e.g. Quick-service restaurants like McDonald’s may buy less expensive meat, but its conformance must be high
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Quality
Irrespective of a product or service’s 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
Depend-ability
FlexibilityQuality
Speed
Cost
QualityExternal and internal benefits
On-specification products and services
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
The time between requiring treatment and receiving treatment is kept to a minimum
… a hospital?
What does Speed mean in …
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
What does Speed mean in …
… 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
What does Speed mean in …
… 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
What does Speed mean in …
… 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 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
Speed
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Depend-ability
FlexibilityQuality
Speed
Cost
SpeedExternal and internal benefits
On-specification products and services
Short delivery lead-time
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
What does Dependability mean in …
The proportion of appointments that are cancelled is kept to a minimum
… a hospital?
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
What does Dependability mean in …
… an automobile plant?
On-time delivery of vehicles to dealers
On-time delivery of spares to service centres
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
What does Dependability mean in …
… 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
What does Dependability mean in …
… 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
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
Dependability
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Depend-ability
FlexibilityQuality
Speed
Cost
DependabilityExternal and internal benefits
Depend-ability
FlexibilityQuality
Speed
Cost
On-specification products and services
Short delivery lead-time
Reliable delivery
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Flexibility has several distinct meanings but is always associated with an operation’s 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
Flexibility
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
What does Flexibility mean in …
Introducing new treatments
… a hospital?
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
What does Flexibility mean in …
… 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?
What does Flexibility mean in …
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?
What does Flexibility mean in …
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
Depend-ability
FlexibilityQuality
Speed
Cost
External and internal benefits
FlexibilityExternal and internal benefits
Depend-ability
FlexibilityQuality
Cost
On-specification products and services
Short delivery lead-time
Reliable deliverySpeed
Frequent new products/servicesWide rangeVolume and delivery changes
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
What does Cost mean in …
… a hospital?
Staff costs
Technology and facilities costs
Bought-in materials and services
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
What does Cost mean in …
… an automobile plant?
Technology and facilities costs
Staff costs
Bought-in materials and services
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
… a bus company?
What does Cost mean in …
Staff costs
Technology and facilities costs
Bought-in materials and services
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
… a supermarket?
What does Cost mean in …
Staff costs
Technology and facilities costs
Bought-in materials and services
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
The cost of producing products and services is obviously influenced by many factors such as input costs, but two important sets are …
The 4 V’s: volume variety variation visibility The internal performance of the operation in terms of quality speed dependability flexibility
Cost
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Volume
Important to understand how different operations are positioned on the 4 V’s.
Is their position where they want to be?
Do they understand the strategic implications?
Variety
Variation
Visibility
Low
High
High
High
High
Low
Low
Low
Four Star Hotel
4 V’s profile of two operations
Budget Hotel
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
CostExternal and internal benefits
Depend-ability
FlexibilityQuality
Speed
Cost
Depend-ability
FlexibilityQuality
Cost
On-specification products and services
Short delivery lead-time
Reliable deliverySpeed
Frequent new products/servicesWide rangeVolume and delivery changes
Low price, high margin, or both
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Polar diagrams
Polar diagrams are used to indicate the relative importance of each performance objective to an operation or process
They can also be used to indicate the difference between different products and services produced by an operation or process
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Polar diagrams for a taxi service versus a bus service
Cost
Quality Flexibility
DependabilitySpeed
Taxiservice
Busservice
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Reassurance
Crimereduction
CrimedetectionWorking with
criminal justiceagencies
Efficiency
Actualperformance
Required performance
Polar diagrams for a proposed police performance method
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Polar Representation – Organisation D
SpeedCost
Dependability
QualityFlexibility
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Polar Representation – Organisation E (Mosaic tiles)
SpeedCost
Dependability
QualityFlexibility
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Polar Representation – Organisation E (Outside wall tiles)
SpeedCost
Dependability
QualityFlexibility
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
SpeedCost
Dependability
QualityFlexibility
Org. A
Org. C
Org. D
Org. B
Org. E
Polar Representation for all Organisations
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Key Terms Test
The four-stage model of operations contribution
A model devised by Hayes and Wheelwright that categorizes the degree to which operations management has a positive influence on overall strategy.
Quality
There are many different approaches to defining this. We define it as consistent conformance to customers’ expectations.
Speed
The elapsed time between customers requesting products or services and receiving them.
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Key Terms Test
Dependability
Delivering, or making available, products or services when they were promised to the customer.
Flexibility
The degree to which an operation’s process can change what it does, how it is doing it, or when it is doing it.
Product/service flexibility
The operation’s ability to introduce new or modified products and services.
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Key Terms Test
Mix flexibility
The operation’s ability to produce a wide range of products and services.
Volume flexibility
The operation’s ability to change its level of output or activity to produce different quantities or volumes of products and services over time.
Delivery flexibility
The operation’s ability to change the timing of the delivery of its services or products.
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Key Terms TestMass customization
The ability to produce products or services in high volume, yet vary their specification to the needs of individual customers or types of customer.
Agility
The ability of an operation to respond quickly and at low cost as market requirements change.
Productivity
The ratio of what is produced by an operation or process to what is required to produce it, that is, the output from the operation divided by the input to the operation.