All chapters are included (all parts that we need to read are included as well). It provides a solid basis to understand the slides better. The only 2 chapters that are not discussed are chapter 9 and 19 (which are not for the exam as well).
This summary will help you pass your exam by understa...
Samenvatting voor Business Operations and Processes (BOP) UvA
Samenvatting Operations Management
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Tilburg University (UVT)
International Business Administration
Operations Management (30J203B6)
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OPERATIONS MANAGEMENT FOR IBA
Week 1: chapter 1 = operations management
What is operations management?
Operations management is about how organizations create and deliver services and
products. It is the activity of managing the resources that create and deliver services and
products. Every organization creates some type of service or good, and therefore all
organizations have an operations function.
An operations manager has responsibility for managing some, or all, of the resources that
comprise the operations function (sometimes this function is called by another name, like;
administrative manager). The function depends strongly on the type of organization (this
determines how services and goods are produced/ delivered).
The operations function is central to the organization because it creates and delivers
services and products, which is its reason for existing. The three core functions of any
organization are:
- Marketing function communicates the services and products to the markets in
order to sell them to customers
- Product/service development function coming up with new and modified services
and products (generate future customer requests)
- Operations function creation and delivery of services and products based on
customer requests.
In addition, there are support functions which enable the core functions to operate effectively
(accounting, finance, human resource function).
The operations function does not have a clear division always. In general, it is the function
that comprises all the activities necessary for the day-to-day fulfilment of customer requests
within the constraints of environmental and social sustainability (sourcing services and
products from suppliers and delivering them to customers).
The relationship between the operations function and the support function is: “this is what we
want”, while with core functions it is more of: “this is what we can do currently, how do we
reconcile this with broader business needs?”
In this way, operations managers need to cooperate with other functions to ensure effective
organizational performance.
Why is operations management important in all types of organization?
In some types of organization, it is relatively easy to visualize the operations function and
what it does, but in others it isn't so visible. The clue lies in the words create. Any business
that creates something has an operations function. Most companies have a common
objective, which is making a profit from creating and delivering their products or services.
However, there are also nonprofit organizations that creates and deliver services.
The economic sector of an operation is less important in determining how it should be
managed than its intrinsic characteristic's.
Operations management uses resources to appropriately create outputs that fulfilled defined
market requirements. the essential nature of operations management is the same in any
type of organization, however, there are some special issues to consider, particularly in
smaller organizations and those who maximize something other than profit.
Operations management in a smaller organization
In practice, managing operations in a small or medium size organization has its own set of
problems. Smaller companies do not have the resources to dedicate individuals to
specialized tasks, so people may have to do different jobs as the need arises. This helps to
respond quickly as problems present themselves, but decision making can become
,confused as individuals’ roles overlap. However, small operations can also have significant
advantages: Flexibility, have the resources and skills to provide a creative and professional
service (too expensive for big firm to be too specialized), Can be clear about what type of
work the company want to do (share commitment to environmental sustainability with the
clients).
Operations management in nonprofit organizations
Strategic objectives of nonprofit organizations maybe more complex and involve a mixture of
political, economic, social or environmental objectives. There may be a greater chance of
operations decisions being made under conditions of conflicting objectives. Nevertheless,
the vast majority of topics in this book have relevance to all types of organization.
Changes in the business environment have a significant impact on the challenges faced by
operations managers
- New technologies: process technologies are changing so fast that it is difficult to
predict exactly what their effects will be.
- Different supply arrangements: markets have become more global (more variety in
demand, or more customized requests). Globalization means new options in how
operations source input goods and services. There is a possibility of getting goods
and services at low costs, but this also means a longer supply chain, supply
vulnerability and reputational risk.
- Increased emphasis on social and environmental issues: customers often want More
transparency about production process and there is greater expectation about the
ethical treatment of all people (Society, customers, stakeholders, etc.).
new agenda for operations.
What is the input-transformation-output process?
Operations are processes that take in a set of input resources which are used to transform
something, or are transformed themselves, into outputs of services and products. Although
all operations conform to this model, they differ in nature of their specific inputs and outputs.
Phone company can be a service delivery, while the other is a product delivery. Also, what is
inside each operation differs.
Inputs
- Transformed resources
o Materials: process materials to change physical properties, location,
possession or to store materials.
o Information: same four things can be done with information as materials
o Customers: same four things can be done with customers as materials
Store customers = hotel
Change physical properties = hairdresser
Location = airplane
Change physiological state = hospital
Customers play an active role in a lot of operations (provide
information at check-in, create atmosphere in restaurant) co-
production
o One of the 3 transformed resources is dominant.
- Transforming resources: resources which act upon the transformed resources
o Facilities (building, equipment)
o Staff (people who operate, maintain, plan and manage the operation)
o The nature of both depends on the type of operation (hotel has a lot of low-
tech buildings, furniture and fittings, for example).
o The balance between facilities and staff also varies.
,Outputs
- Service
o Intangible
o Production at the same time as consumption - cannot be stored
o Transformed resources - the customers
o
- Product
o Tangible
o Production proceeds consumption - they can be stored
o Transformed resources - materials
Most operations produce both products and services.
products and services matrix
When an operation is mainly concerned with products, there might be facilitating services
that support the production of products.
When an operation is mainly concerned with services, there might be facilitating products
that support the production of services.
It's more difficult to distinguish between products and service, but at the same time it
becomes less important seems most businesses produce a combination of both, and the
output is also seen as a combined package. In a sense, all operations produce service for
their customers.
Servitization
This involves firms developing the capabilities to provide services and solutions that
supplement their traditional product offerings.
An example of this is Rolls-Royce (sells engines, but also the option of customers being able
to buy ‘power-by-the-hour’. Rolls Royce also provided all the support to ensure that the
engines could continue to deliver power. This means that it also produces a service,
objectives of customers and manufacturer are more aligned, and it provides opportunity for
companies to earn additional revenue from new services.
Subscription model
This is a further development to the idea that all outputs can be seen as services. A
customer pays a fixed amount each agreed time period, for which they receive a pre-agreed
service.
Customers
Different groups have different wants, even if they want the same product/service.
- Business to Business (B2B): those who provide their products or services to other
businesses
, - Business to Consumer (B2C): those who provide their products or services directly to
its consumers (ultimate users of output)
- This means that the operations for these different types of customers will be very
different, but an understanding about customers is always necessary.
What is the process hierarchy?
When we look inside of an operation, one will see that it consists of a collection of processes
interconnecting with each other to form a network. Each process acts as a smaller version of
the whole operation of which it forms a part, and transformed resources flow in between
them. A process is an arrangement of resources and activities that transform inputs into
outputs that satisfies customer needs. They are the building blocks of all operations. Each
process is, at the same time, an internal supplier and an internal customer for other
processes.
Within these processes is another network of individual units of resource such as individual
people and individual items.
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 feud as part of a greater
network of businesses or operations. Moreover, any operation could have several suppliers
and several customers, and may be in competition with other operations. This network of
operations it's called the supply network.
Businesses are analyzed at three levels: the process, the operation and the supply
network.
One could define many different levels of analyzes, moving upwards from small to larger
process is come up right up to the huge supply network that describes a whole industry
hierarchy of operations.
All parts of the business have an operations role and need to understand operations
management principles (marketing, finance, etc.).
We must distinguish between two meanings of operations:
- as a function: the part of the organization which creates and delivers services and
products to its customers
- as an activity: the management of the processes within any of the organization’s
functions.
Processes are defined by how the organization chooses to draw process boundaries.
How do operations and processes differ?
Although all operations processes are similar in that they all transform inputs, but they do
differ in a number of ways, which are known as the four V's:
- volume: the level or rate of output from a process
o characteristics that determine whether the volume is low or high:
repeatability of the tasks people do
systemization of the work (where standard procedures are set down
specifying how each part of the job should be carried out)
specialization (create special fryers and ovens)
o When we have a small cafeteria, the number of orders is lower and therefore
the repetition is lower and the number of staff is lower too. An individual is
likely to perform a wider range of tasks. This means less openness to
systemization and it is less feasible to invest in specialized equipment high
unit costs.
- variety: the range of different products and services produced by a process
o characteristics that determine whether the variety is low or high:
flexibility
well-defined, standardized, regular
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