Chapter 1
What is operations management?
Operations management is the activity of managing the resources that create and deliver
services and products.
What are the 3 core functions of any organization?
1. The marketing function -> responsible for communicating the organizations services
and products to its markets. To generate customers’ requests.
2. The product/service development function -> Responsible for coming up with new
and modified services and products in order to generate future customer requests.
3. The operations function -> Responsible for the creation and delivery of services and
products based on customer requests.
The new operations agenda:
- Adoption of new technologies. (ex. Internet, 3D printing, robotics, algorithmic
decision making.)
- Adoption of different supply arrangements. (ex. Global operations networks,
business ecosystem analysis.)
- Increased emphasis on social and environmental issues. (ex. Environmentally
sensitive design, flexible working patterns.)
Operations management uses:
Transforming resources -> (resources) people, technology, knowledge etc.
Transforming objectives -> (appropriately) effectively, creatively, accurately etc.
Nature of the transformation -> (create) produce, sell, move etc.
Nature of the product/service -> (outputs) services, products, ideas etc.
Performance standard -> (fulfil) meet, satisfy etc.
Nature of the objectives -> (defined) current, protentional, perceived etc.
The operation’s customers -> (market) customer, citizens, clients etc.
Customers objectives -> (requirements) demands, concerns, needs etc.
The input-transformation-output process
Input to the process:
- Materials (storing materials, processing materials, changing the location of
materials)
- Information (transforming information: sell information, store information and
changing the location of information)
- Customers (change their physical properties, accommodate/store customers ex.
Hotel, transport systems change the location of customers, changing the
psychological state of customers ex. music)
Transforming resources:
- Facilities (the buildings, equipment, process technology)
- Staff (the people who operate, maintain, plan and manage the operation)
,Dominants transformed resource inputs of various operations:
Processing inputs of materials-> all manufacturing operations, retail operations,
warehouses.
Processing inputs of information -> bank headquarters, news services, accountants.
Processing inputs of customers -> hotels, dentists, mass rapid transports.
Outputs from the process:
Operations create products and services.
Products: tangible things.
Services: activities or processes.
Most operations create a mixture of tangible and intangible services.
In a sense all operations create a service for their customers.
Servitization:
Involves firms developing the capabilities to provide services and solutions that supplement
their traditional product offerings.
B2B = business to business
B2C = business to customer
Good example operations process: page 19 OM.
Process perspectives:
- The operation itself
- The supply network
- The individual processes.
What is process hierarchy:
- All operations are part of a supply network which through the individual
contributions of each operation contributes to operation, satisfaction and the
customer requirements.
- All operations are made up of processes that form a network of intercustomer-
supplier relationships within the operation.
- End to end business processes that satisfy customer
Two meanings of operations:
- Operations as a function. The part of the organization which creates and delivers
services and products for the organization’s external customers.
- Operations as an activity. The management of the processes within any of the
organizations functions.
Processes are defined by how the organization chooses to draw process boundaries.
,How do operations and processes differ?
The 4 v’s:
o The volume of their output
o The variety of their output
o The variation in the demand for their output
o The degree of visibility that the creation of their output has for
customers.
High volume, low variety, low variation and low customer visibility are usually associated
with low cost.
What do operations managers do?
- Directing -> the overall strategy of the operation
- Designing -> the operations services, products and processes.
- Planning and controlling the process of delivery -> the delivery of services and
products.
- Developing -> process performance.
Operations management activities will have a significant effect on the sustainability
performance of any type of enterprise.
Operation management activities can be grouped into four categories (direct, design, deliver
and develop):
- Directing the overall strategy of the operation.
- Designing the operations products, services and processes.
- Planning and controlling delivery.
- Developing performance
, Chapter 2
Why is operations performance vital in any organization?
Operations management can either make or break any business. In most businesses it
represents the bulk of its assets.
The positive effects of a well-run operation include a focus on improvement, the building of
difficult to imitate capabilities, and an understanding of the processes that are the building
blocks of all operations.
The negative effects of a poorly run operation include failures that are obvious to costumers
(and expensive for the organization), a complacency that leads to the failure to exploit
opportunities for improvement.
Performance at three levels:
- The broad, societal level, using the idea of the triple bottom line.
- The strategic level of how an operation can contribute to the organization’s
overall strategy.
- The operational level, using the five operations performance objectives.
All operations decisions should reflect the interests of stakeholder groups.
Stakeholder = people and groups who have a legitimate interest in the operations activities.
CSR = corporate social responsibility
Corporate social responsibility = operations taking into account their impact on a broad mix
of stakeholders.
TBL/3BL = the triple bottom line
Triple bottom line = planet, people & profit.
Operations should judge themselves on the triple bottom line principle.
The social bottom line:
Some ways that operations can impact the social bottom line performance:
- Customer safety from products and services
- Employment impact of an operations location
- Employment implications of outsourcing
- Repetitive or alienating work
What is operations management?
Operations management is the activity of managing the resources that create and deliver
services and products.
What are the 3 core functions of any organization?
1. The marketing function -> responsible for communicating the organizations services
and products to its markets. To generate customers’ requests.
2. The product/service development function -> Responsible for coming up with new
and modified services and products in order to generate future customer requests.
3. The operations function -> Responsible for the creation and delivery of services and
products based on customer requests.
The new operations agenda:
- Adoption of new technologies. (ex. Internet, 3D printing, robotics, algorithmic
decision making.)
- Adoption of different supply arrangements. (ex. Global operations networks,
business ecosystem analysis.)
- Increased emphasis on social and environmental issues. (ex. Environmentally
sensitive design, flexible working patterns.)
Operations management uses:
Transforming resources -> (resources) people, technology, knowledge etc.
Transforming objectives -> (appropriately) effectively, creatively, accurately etc.
Nature of the transformation -> (create) produce, sell, move etc.
Nature of the product/service -> (outputs) services, products, ideas etc.
Performance standard -> (fulfil) meet, satisfy etc.
Nature of the objectives -> (defined) current, protentional, perceived etc.
The operation’s customers -> (market) customer, citizens, clients etc.
Customers objectives -> (requirements) demands, concerns, needs etc.
The input-transformation-output process
Input to the process:
- Materials (storing materials, processing materials, changing the location of
materials)
- Information (transforming information: sell information, store information and
changing the location of information)
- Customers (change their physical properties, accommodate/store customers ex.
Hotel, transport systems change the location of customers, changing the
psychological state of customers ex. music)
Transforming resources:
- Facilities (the buildings, equipment, process technology)
- Staff (the people who operate, maintain, plan and manage the operation)
,Dominants transformed resource inputs of various operations:
Processing inputs of materials-> all manufacturing operations, retail operations,
warehouses.
Processing inputs of information -> bank headquarters, news services, accountants.
Processing inputs of customers -> hotels, dentists, mass rapid transports.
Outputs from the process:
Operations create products and services.
Products: tangible things.
Services: activities or processes.
Most operations create a mixture of tangible and intangible services.
In a sense all operations create a service for their customers.
Servitization:
Involves firms developing the capabilities to provide services and solutions that supplement
their traditional product offerings.
B2B = business to business
B2C = business to customer
Good example operations process: page 19 OM.
Process perspectives:
- The operation itself
- The supply network
- The individual processes.
What is process hierarchy:
- All operations are part of a supply network which through the individual
contributions of each operation contributes to operation, satisfaction and the
customer requirements.
- All operations are made up of processes that form a network of intercustomer-
supplier relationships within the operation.
- End to end business processes that satisfy customer
Two meanings of operations:
- Operations as a function. The part of the organization which creates and delivers
services and products for the organization’s external customers.
- Operations as an activity. The management of the processes within any of the
organizations functions.
Processes are defined by how the organization chooses to draw process boundaries.
,How do operations and processes differ?
The 4 v’s:
o The volume of their output
o The variety of their output
o The variation in the demand for their output
o The degree of visibility that the creation of their output has for
customers.
High volume, low variety, low variation and low customer visibility are usually associated
with low cost.
What do operations managers do?
- Directing -> the overall strategy of the operation
- Designing -> the operations services, products and processes.
- Planning and controlling the process of delivery -> the delivery of services and
products.
- Developing -> process performance.
Operations management activities will have a significant effect on the sustainability
performance of any type of enterprise.
Operation management activities can be grouped into four categories (direct, design, deliver
and develop):
- Directing the overall strategy of the operation.
- Designing the operations products, services and processes.
- Planning and controlling delivery.
- Developing performance
, Chapter 2
Why is operations performance vital in any organization?
Operations management can either make or break any business. In most businesses it
represents the bulk of its assets.
The positive effects of a well-run operation include a focus on improvement, the building of
difficult to imitate capabilities, and an understanding of the processes that are the building
blocks of all operations.
The negative effects of a poorly run operation include failures that are obvious to costumers
(and expensive for the organization), a complacency that leads to the failure to exploit
opportunities for improvement.
Performance at three levels:
- The broad, societal level, using the idea of the triple bottom line.
- The strategic level of how an operation can contribute to the organization’s
overall strategy.
- The operational level, using the five operations performance objectives.
All operations decisions should reflect the interests of stakeholder groups.
Stakeholder = people and groups who have a legitimate interest in the operations activities.
CSR = corporate social responsibility
Corporate social responsibility = operations taking into account their impact on a broad mix
of stakeholders.
TBL/3BL = the triple bottom line
Triple bottom line = planet, people & profit.
Operations should judge themselves on the triple bottom line principle.
The social bottom line:
Some ways that operations can impact the social bottom line performance:
- Customer safety from products and services
- Employment impact of an operations location
- Employment implications of outsourcing
- Repetitive or alienating work
