Operations Management
Chapter 1: Operations Management _________________________________________________________________ 2
Chapter 2: Operations Performance _________________________________________________________________ 10
Chapter 3: Operations Strategy ____________________________________________________________________ 20
Lecture 1: Operations, Processes and Operations Strategy _______________________________________________ 31
Reflection Lecture 1: Operations, Processes and Operations Strategy ______________________________________ 35
Chapter 5: The Structure and Scope of Operations _____________________________________________________ 38
Chapter 6: Process Design (pp. 183 – 210) ____________________________________________________________ 49
Chapter 7: Layout and Flow _______________________________________________________________________ 59
Lecture 2: Structure & Scope of Organisations, Process Design and Layout & Flow ____________________________ 68
Reflection Lecture 2: Structure & Scope of Organisations, Process Design and Layout & Flow ___________________ 73
Chapter 10: Planning and Control ___________________________________________________________________ 76
Chapter 11: Capacity Management _________________________________________________________________ 88
Lecture 3: Planning & Control and Capacity Management ______________________________________________ 105
Reflection Lecture 3: Planning & Control and Capacity Management ______________________________________ 112
Chapter 13: Inventory Management _______________________________________________________________ 115
Chapter 14: Planning and Control Systems___________________________________________________________ 129
Lecture Week 5: Inventory Management and Planning & Control Systems _________________________________ 140
Reflection Lecture Week 5: Inventory Management and Planning & Control Systems_________________________ 144
Chapter 15: Lean Operations _____________________________________________________________________ 147
Chapter 16: Operations Improvement ______________________________________________________________ 163
Lecture Week 6: Lean Operations and Operations Improvement _________________________________________ 183
Reflection Lecture Week 6: Lean Operations and Operations Improvement ________________________________ 190
Lecture Week 7: Quality Management, Managing Risk and Project Management ____________________________ 193
Reflection Lecture Week 7: Fact-Based Management, Critical Path Analysis and Reliability ____________________ 204
,Operations Management
Chapter 1: Operations Management
What is Operations Management?
• Operations management is about how organizations create and deliver services and products.
• Operations management is the activity of managing the resources that create and deliver services and
products.
• The operations function is the part of the organization that is responsible for this activity.
• Operations managers are the people who have particular responsibility for managing some, or all, of the
resources that make up the operations function.
o Again in some organizations, the operations manager could be called by some other name.
o E.g. the ‘fleet manager’ in a distribution company, the ‘administrative manager’ in a hospital, or the
‘store manager’ in a supermarket.
• All organisations have ‘operations’ that produce some mix of services and products.
• The operations function is important for any company whose reputation depends on producing safe, high
quality, sustainable and profitable products or services.
Operations in the Organisation
• The operations function is one of the three core functions of any organization.
o the marketing (including sales) function – which is responsible for communicating the organization’s
services and products to its markets in order to generate customer requests;
o the product/service development function – which is responsible for coming up with new and
modified services and products in order to generate future customer requests;
o the operations function – which is responsible for the creation and delivery of services and products
based on customer requests.
• In addition, there are the support functions which enable the core functions to operate effectively.
o These include, for example, the accounting and finance function, the technical function, the human
resources function and the information systems function.
• Almost all organizations will have the three core functions, because all organizations have a fundamental
need to sell their products and services, meet customer requests for services and products, and come up with
new services and products to satisfy customers in the future.
• In practice, there is not always a clear division between the three core functions or between core and
support functions.
o This leads to some confusion over where the boundaries of the operations function should be
drawn.
• It is fundamental to modern management
that functional boundaries should not
hinder efficient internal processes.
• The support functions have a different
relationship with operations than the other
core functions.
o Operations management’s
responsibility to support functions
is primarily to make sure that they
understand operations' needs and
help them to satisfy these needs.
o The relationship with the other
two core functions is more equal –
less of ‘this is what we want’ and
more ‘this is what we can do
currently – how do we reconcile
this with broader business needs?’
• Operations managers need to cooperate
with other functions to ensure effective
organizational performance.
,Operations Management
Why is Operations Management Important in All Types of Organisation?
• Any business that creates something must use resources to do so, and so must have an operations activity.
o Automobile assembly factory – Operations management uses machines to efficiently assemble
products that satisfy current customer demands
o Physician (general practitioner) – Operations management uses knowledge to effectively diagnose
conditions in order to treat real and perceived patient concerns
o Management consultant – Operations management uses people to effectively create the services
that will address current and potential client needs
o Disaster relief charity – Operations management uses ours and our partners' resources to speedily
provide the supplies and services that relieve community suffering
o Advertising agency – Operations management uses our staff’s knowledge and experience to
creatively present ideas that delight clients and address their real needs
• The automobile plant and the advertising agency do have one important element in common: both have a
higher objective – to make a profit from creating and delivering their products or services.
• Yet not-for-profit organizations also use their resources to create and deliver services, not to make a profit,
but to serve society in some way.
• Operations management uses ‘resources to appropriately create outputs that fulfil defined market
requirements’
Operations Management in the Smaller Organisation
• In practice, managing operations in a small or medium-size organization has its own set of problems.
• Large companies may have the resources to dedicate individuals to specialized tasks but smaller companies
often cannot, so people may 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.
• Small companies may have exactly the same operations management issues as large ones but they can be
more difficult to separate from the mass of other issues in the organization.
• However, small operations can also have significant advantages:
o ‘We can be hugely flexible and agile, in what is still a dynamic market.
o But at the same time we have the resources and skills to provide a creative and professional service.
o Any senior manager in a firm of our size cannot afford to be too specialised.
o All of us here have their own specific responsibilities; however, every one of us shares the overall
responsibility for the firm's general development.
o We can also be clear and focused on what type of work we want to do.
Operations Management in Not-For-Profit Organisations
• Operations have to take the same decisions – how to create and deliver service and products, invest in
technology, contract out some of their activities, devise performance measures, improve their operations
performance, and so on.
• However, the strategic objectives of not-for-profit organizations may be more complex and involve a mixture
of political, economic, social or environmental objectives.
o Because of this there may be a greater chance of operations decisions being made under conditions
of conflicting objectives.
The New Operations Agenda
• Over the last few years, changes in the business environment have had a significant impact on the challenges
faced by operations managers.
o Many (although not all) industries have experienced increasing cost-based competition while
simultaneously their customers' expectations of quality and variety have increased.
o Markets have become more global, sometimes meaning a demand for a higher variety, or even
totally customized products and services.
o Rapidly developing (often digital) technologies are leading to more frequent, new product/service
introductions.
o Customers have increased ethical and environmental sensitivity.
o Also, the impact of new process technologies, in both manufacturing and service, is having a
dramatic effect, radically altering the operating practices of almost every industry.
, Operations Management
• This leads to operations having to change the way they create their products and services, serve their
customers, relate to stakeholders and involve their workforce.
• Just as importantly, globalized supply markets are opening new options in how operations source input goods
and services.
o Very few businesses have not at least considered purchasing from outside their geographic area.
o But while bringing opportunities for cost savings, a bigger supply market also brings new problems
of long supply chains, supply vulnerability and reputational risk.
• These responses form a major part of a new agenda for operations.
o Parts of this agenda are trends which have always existed but have accelerated, such as
globalization and increased cost pressures.
o Part of the agenda involves seeking way to exploit new technologies, most notably the Internet.
What is the Input-Transformation-Output Process?
• All operations create and deliver service and
products by changing inputs into outputs using an
‘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.
Inputs to the Process
• One set of inputs to any operation’s processes is
transformed resources.
o These are the resources that are treated, transformed or converted in the process.
o They are usually a mixture of the following:
o Materials – operations which process materials could do so to transform their physical properties
(shape or composition, for example).
§ Other operations process materials to change their location (parcel delivery companies, for
example).
§ Some, like retail operations, do so to change the possession of the materials.
§ Finally, some operations store materials, such as warehouses.
o Information – operations which process information could do so to transform their informational
properties (that is, the purpose or form of the information).
§ Some change the possession of the information, for example market research companies
sell information.
