1 -managing_operations

Alex Hill and Terry Hill

Managing OperationsAlex Hill and Terry Hill

Learning objectives

• Explain ROLE of operations management in an organisation

• Appreciate the dimensions that make up the operations management TASK

• Identify where the operations management FUNCTION fits within an organisation

• Illustrate the crucial role of operations management in organiational SUCCESS

Lecture outline

• INTRODUCTION

• What operations management DO?

• Variations in the operations management ROLE

• SERVICES vs MANUFACTURING

• Critical REFLECTIONS

• SUMMARY

What does Operations Management do?

To deliver SERVICES and PRODUCTS

that have been sold to CUSTOMERS

Manages PEOPLE, MATERIALS, RESOURCES and DELIVERY

SYSTEMS

> KEY IDEA

Operations delivers the SERVICES and PRODUCTS that have been sold to CUSTOMERS

> KEY IDEA

Operations delivers services and products to customers by MANAGING the PEOPLE, MATERIALS, RESOURCES and DELIVERY SYSTEMS involved

CASE 1.1 KEY OPERATIONS TASKS

Cafe Garment manufacturer

CASE 1.1 KEY OPERATIONS TASKS

• DESIGNING products• Making PRODUCTS• Delivering SERVICES• Managing CAPACITY• SCHEDULING operations• Managing INVENTORY• Managing QUALITY• Managing SUPPLY CHAIN• IMPROVING operations

• SAME

What does Operations Management do?How operations management fits into an organisation

•SELL services or products to customers

•DESIGN services or products•PURCHASE materials and/or

services•DELIVER the services or products

to meet customer needs•ACCOUNT for the cash or credit

transactions involved in the above

ORGANISATIONS NEED TO


•SELLING services or products to customers

•DESIGNING services or products•PURCHASING materials and/or

services•DELIVERING the services or

products to meet customer needs•ACCOUNTING for the cash or

credit transactions involved in the above

OPERATIONS IS RESPONSIBLE FOR


To deliver SERVICES and PRODUCTS

that have been sold to CUSTOMERS

Manages PEOPLE, MATERIALS, RESOURCES and DELIVERY

SYSTEMS

The role of operations management

•DAY-TO-DAY role

•STRATEGIC role

CONTENT STYLE

•INTERNAL role

•EXTERNAL role

What does Operations Management do?The role of operations management

> KEY IDEA

DAY-TO-DAY role of operations include:• Managing within BUDGETS• SCHEDULING• SERVING customers• Meeting OUTPUT targets• Communicating with other FUNCTIONS

> KEY IDEA

STRATEGIC role of operations include:• Supporting market ORDER-WINNERS and QUALIFIERS• Making company COMPETITIVE

CASE 1.2

OPERATIONS TASKS AT PORTIOLI’S SANDWICH AND COFFEE BAR

1.What are its MARKET order-winners and qualifiers?

2.How must it manage OPERATIONS to support its market?

CASE 1.2

Question Answer

ORDER-WINNERS

QUALIFIERS• QUALITY conformance• Delivery SPEED• PRICE


• Product DESIGN• Product RANGE

CASE 1.2

Manage operations

Order-winners

Qualifiers

Product design

Product range

Quality conforman

ce

Delivery

speedPrice

Manage SUPPLY CHAIN

Manage QUALITY

Manage CAPACITY

Manage INVENTORY

DELIVER services and products



•Large COST centre•PEOPLE•TECHNOLOGY•SHORT and LONG

term

MANAGE

The role of operations management

Links THINKING and DOING ends of the

business

> KEY IDEA

Managers need to THINK and WORK in: • SHORT-TERM• LONG-TERM

> KEY IDEA

Operations: • CONTRIBUTES to gaining FIRST sale• PROCURES SECOND sale

What does Operations Management do?Inputs and outputs

CASE 1.3

OPERATIONS -A KEY ROLE IN THE RETAIL CHAIN

1.What makes the STORE MANAGER a classic operations manager?

2.Assess the size of the OPERATIONS TASK and its financial impact

3.How is the store a key LINK in the supply chain?

CASE 1.3 OPERATIONS - A KEY ROLE IN THE

RETAIL SUPPLY CHAIN

Question Answer

STORE MANAGER is a classic operations manager

OPERATIONS TASK size and financial impact

Key LINK in supply chain

• Manages large COST centre• Manages large number of PEOPLE• Manages SHORT-TERM and LONG-

TERM• Manages TECHNOLOGY• Manages COMPLEXITY

• SALES REVENUE - £1M per week• COSTS - 700 part and full-time staff• PROFITS - meet sales and cost

budgets

• Links hundreds of SUPPLIERS to hundreds of CUSTOMERS

Restaurant

Task of the operations managerWhat does Operations Management do?

Factory

Modern Times

(1936)

Dinner Rush

(2000)

Film clip Factory

FilmTitleDirector (year)

Modern TimesCharles Chaplin (1936)

ClipStartFinish

00:01:5300:06:03

What clip showsCharlie Chaplin working on a production line within a factory

Key learning objective

How an operation transforms inputs into outputsThe order-winners and qualifiers for a high volume factory producing a narrow range of standard products


Film clip Restaurant

FilmTitleDirector (year)

Dinner RushBob Giraldi (2000)

ClipStartFinish

00:58:5801:02:44

What clip showsThe chef producing a special one-off dish for a restaurant critic who is having dinner in the restaurant

Key learning objective

How an operation transforms inputs into outputs (and the difference between services and manufacturing) The order-winners and qualifiers for a low volume, design-led restaurant offering high levels of service



Operations process

Factory Restaurant

Type of ORGANISATION

ROLE of the operations function

TASK of the operations manager

For each film:•What type of ORGANISATION is

represented?•What is the ROLE of the operations

function?•What is the TASK of the operations

manager?


Operations process

Factory Restaurant

Type of ORGANISATION

ROLE of the operations function

TASK of the operations manager


• MANUFACTURING• HIGH volume• HIERARCHICAL• CENTRALISED• LOW empowerment

• MAKE products• DELIVER products• Manage SUPPLIERS

• Manage PROCESS• Manage COST• Manage TECHNOLOGY• Manage PEOPLE• Co-ordinate ACTIVITIES

• SERVICE• LOW volume• TEAM based• DECENTRALISED• HIGH empowerment

• MAKE food• SERVE customers• Manage SUPPLIERS

• SAME

Variations in the operations management roleVariations in complexity

•SIZE of organisation•Service or product VOLUMES•RANGE of services or products

sold•TECHNOLOGY required to deliver

them•Number of operations IN-HOUSE•What is being PROCESSED

DEPENDING ON

> KEY IDEA

Operations may PROCESS: • CUSTOMERS• CUSTOMER SURROGATES• INFORMATION and/or• PRODUCTS

Variations in the operations management roleVariations in complexity

Variations in the operations management roleVariations in output - services versus products

> KEY IDEA

The operations OUTPUT can be: •SERVICES (intangible) and/or•PRODUCTS (tangible)

CASE 1.4

A CUP OF COFFEE - PRODUCT OR SERVICE?

1.Why is HOTEL COFFEE more expensive?

2.How does your LAST CUP of coffee compare with a hotel cup?

CASE 1.4

Question Answer

Why is HOTEL COFFEE more expensive?

How does your LAST CUP of coffee compare with a hotel cup?

• Product DESIGN• Service DESIGN• Product RANGE• Able to CUSTOMISE Product• Hotel ENVIRONMENT

A CUP OF COFFEE - PRODUCT OR SERVICE?

• LOWER specification


•Nature of the OFFERING•Level of CUSTOMER involvement•Operations CAPACITY•ORGANISATIONAL arrangements•QUALITY control•COMPETITIVE environment

DEPENDING ON

> KEY IDEA

SERVICES are CONSUMED as they’re provided whereas most PRODUCTS can be made in advance and STORED

Critical reflections

• Operations manager’s ROLE is both:

- Demanding, challenging, absorbing and satisfying; and

- Frustrating and complex

• DAY-TO-DAY task requires physical effort

• Difficult to BALANCE day-to-day and strategic role

• Good management of operations is key to an organisation’s SUCCESS

Critical reflections

Summary• Different SECTORS- Services vs Manufacturing

• TASK of operations manager is the same

- Different focus

• Operations TRANSFORMS- Inputs into outputs that are sold to

customers

• Critical to overall SUCCESS of an organisation

- Manages 60-70% of people, assets and costs

Revision questions

1 Which of the following is typically NOT the responsibility of the operations function:a) Managing the supply chainb) Selling services and products to

customersc) Converting inputs into outputs that are

then sold to customers

Revision questions

2 Typical inputs into an operations process are:a) Materials, people, energy, capital and

informationb) Services, products and informationc) Performance measurement and control

Revision questions

3 Services are:

a) Tangible items purchased by individuals or organisations for subsequent use

b) Intangible items that are consumed as they are delivered

c) Both a) and b)

Revision questions

4 Which of the following affects the size of the operations task:

a) The number of people involved in the operations process

b) The number of assets involved in the operations process

c) Both a) and b)

CASE FOR TUTORIAL

TOO SHORT THE DAY

1 -managing_operations

Business

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