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Samenvatting: Operations Management (Slack & Brandon-Jones)Chapter 1 Operations management
Operations management – is the activity of managing the resources that create and deliver services
and products. Every organization has an operations function. But not every organization calls the
function by this name. Operational managers are the people who have particular responsibility for
managing some, or all, of the resources that comprise the operations function.
The 3 core functions of a business:
1. The marketing function – responsible for communicating the organization’s services and
products to its markets in order to generate customer requests.
2. The production/service development function – responsible for coming up with new and
modified services and products in order to generate future costumer requests.
3. The operations function – responsible for the creation and delivery of services and products
based on costumer requests.
In addition, there are the support functions which enable the core functions to operate effectively. In
practice, there is not always a clear division between functions. This leads to some confusion, over
where the boundaries of the operations function should be drawn.
We view the operations function as comprising all the activities necessary for the day-to-day
fulfilment of customer request within the constraints of environmental and social sustainability.
The relationship between the operations function and other core and support functions:
This figure illustrates some
of the relationships in terms
of the flow of information
between them. Note that
the support functions have
a different relationship with
operations than the core
functions.
Operations management’s
responsibility to support
functions is to make sure
that they understand
operations’ needs end help
them satisfy these needs.
The relationship with the
other core functions is
more equal.
In some types of organization, it is relatively easy to visualize the operations function and what it
does, even if we have never seen it. The clue lies in the word ‘create’. Any business that creates
something must use resources to do so, and so must have an operations activity.
Whatever terminology is used there is a common theme and a common purpose to how we an
visualize the operations activity in any type of organization. However, although the essential nature
and purpose of operations management is the same in any type of organization, there are some
special issues to consider, particularly in smaller organizations and those whose purpose is to
maximize something other than profit.
,Samenvatting: Operations Management (Slack & Brandon-Jones)
Smaller organization
Irrespective of their size, all companies need to create and deliver their service and products
efficiently and effectively. Large companies may have the resources to dedicate individuals to
specialized tasks but smaller companies often cannot, so people have to do different jobs as the need
arises. Such an informal structure can allow the company to respond quickly as opportunities or
problems present themselves. But decision making can also become confused as individuals’ roles
overlap.
Not-for-profit organizations
Operations have to take the same decisions. However, the strategic objectives of not-for-profit
organizations may be more complex and involve a mixture of political, economic, social or
environmental objectives.
The new operations agenda
Changes in the business environment have had a significant impact on the challenge faced by
operations managers. Some of them are in response to change in the nature of demand. Operations
managers have had to adjust their activities to cope, especially in the following areas:
New technologies – in both manufacturing and services industries, process technologies are
changing so fast that it is difficult to predict exactly what their effects will be, in only a few
years in the future.
Different supply arrangement – markets have become global, often meaning a demand for a
higher variety, or customized products and services. Also, globalized supply markets are
opening up new options source input goods and services.
Increased emphasis on social and environmental issues – generally, customers have been
developing an increased ethical and environmental sensitivity. This is leading to operations
having to change the way they create their products and services, and be more transparent
about it.
Input-transformation-output process
All operations create and deliver service and products by changing inputs into outputs using an input-
transformation-output’ process.
,Samenvatting: Operations Management (Slack & Brandon-Jones)
Inputs to the process
Transformed resources
Some operations have inputs of materials and information and customers, but usually one of these is
dominant
Materials – operations which process materials could do so to transform their physical
properties. Most manufacturing operations are like this. Other operations process materials
to change their location. Some do so to change the possession of the materials. Finally, some
operations store materials.
Information – operations which process information could do so to transform their
informational properties. Some change the possession of the information. Some store the
information. Finally, some operations change the location of the information
Customers – operations which process customers might change their physical properties in a
similar way to materials processors. Some store customers transform the location of their
customers, while others transform their physiological state. Some are concerned with
transforming their psychological state.
But customers are not always simple ‘passive’ items to be processed. They can also play a
more active part in many operations and processes. When customers play this role, it is
usually referred to as ‘co-production’ because the customer plays a vital part in the provision
of the product/service offering.
Transforming resources
These are the resources which act upon the transformed resources. There are two types which form
the ‘building blocks’ of all operations. The exact nature of both facilities and staff will differ between
organisation.
Facilities – the buildings, equipment, plat and process technology of the operation.
Staff – the people who operate, maintain, plan and manage the operation.
Outputs from process
Operations create products and services. Products are usually tangible things whereas services are
activities of processes. Also while most products can be stored, at least for a short time, services only
happens when it is consumed of used.
Producing both products and services
Most companies create and deliver both services and products. For example, an aluminium smelters,
besides delivering their product, they might also give technical advice. This is called ‘facilitating
services’.
But at some places, like a restaurant, the services area an essential part of what the customer is
paying for. Finally, pure services solely create and deliver services, such as a psychotherapy clinic.
Product or service
Increasingly the distinction between services and products is difficult to define. Nor is it particularly
useful. Not only do most businesses produce a combination of products and services, but also the
outputs from their operations are increasingly seen as a combined ‘package’.
For example, one buys a vehicle from a motor dealer, but part of the decision to buy that vehicle
could have been based on the ongoing servicing and financing deal.
Indeed, we could argue that all operations are service providers which may create and deliver
products as part of the offering to their customers.
Servitization
A term that is often used to indicate how operations, which one consider themselves exclusively
producers of products, are becoming more service-conscious. Servitization involves firms developing
, Samenvatting: Operations Management (Slack & Brandon-Jones)
the capabilities they need to provide services and solutions that supplement their traditional product
offerings:
First a company becomes a provider of service as opposed to a manufacturer of technically
complex products.
Second, it means that what customers really want and the objectives of the company are
more closely aligned.
Third, it provides an opportunity for companies to earn additional revenue from new
services.
Subscription services – using this model, an operation’s customers pay a fixed amount each agreed
time period for which they receive a pre-agreed service. The implication for operations management
is that such services move from ‘one off’ supply to ongoing supply.
Customers
Any discussion about the nature of outputs from operations must involve consideration of the
customers from whom they are intended. Nor should customers be seen as a homogeneous group.
Marketing professionals spend much of their effort in trying to understand customers can be usefully
grouped together, the better to understand their various needs.
In essence, it means that different customer groups may want different things from an operation,
even if they want the same product or service.
B2B – business to business
B2C – business to customer
The operations serving these two types of customer will be faced with different kinds of concerns,
and probably be organised in different ways. Yet an understanding of customers is always important.
Without them, there would be no operation.
Aware of customer needs determine what the operation has to do defines the service/product.
Process hierarchy
All operations consist of alle collection of processes interconnecting with each other to form a
network.
Process – an arrangement of resources and activities that transform inputs into outputs that satisfy
(internal or external) costumer needs. They form an ‘internal network’ within an operation. each
process is an internal supplier and an internal customer for other processes.
This ‘internal customer’ concept provides a model to analyse the internal activities of an operation. It
is also a useful reminder that, by treating internal customers with the same degree of care as
external customers, the effectiveness of the whole operation can be improved.
Within each of these processes is another network of individual units of resources such as individual
people and individual items of process technology. Any business, or operation, is made up of a
network of processes and any process is made up of a network of resources. But also, any business
can itself be viewed as part of a greater network of businesses or operations.
You can analyse businesses at three levels:
1. The process
2. The operation
3. The supply network
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