DMO summary

Table of Content
Introduction class...................................................................................................................................2
4 V model...........................................................................................................................................3
LU1.........................................................................................................................................................4
The five operations performance objectives......................................................................................9
LU2.......................................................................................................................................................12
Hayes and Wheelwright’s four stages of operations contribution...................................................13
The market requirements and operations resources perspectives..................................................15
Structural and infrastructural decisions............................................................................................16
LU3.......................................................................................................................................................18
Manufacturing process types...........................................................................................................19
Service process types........................................................................................................................20
Little’s law.........................................................................................................................................22
LU4.......................................................................................................................................................24
The difference between planning and control..................................................................................24
Drum, buffer, rope............................................................................................................................26
LU5.......................................................................................................................................................32
What is lean synchronization?..........................................................................................................32
Muda, mura, muri.............................................................................................................................34
Why variability is a bad thing?..........................................................................................................41
Lean as an improvement approach..................................................................................................43
Six Sigma...........................................................................................................................................44
Theory of constraints........................................................................................................................47
LU6.......................................................................................................................................................48
Why consider the whole supply network?.......................................................................................48
Changing the shape of the supply network......................................................................................48
Disintermediation.........................................................................................................................48
Co-opetition..................................................................................................................................49
Outsourcing..................................................................................................................................49
Vertical integration.......................................................................................................................49




1

, Introduction class
Operations performance objectives:
 Costs
 Quality
 Dependability
 Speed
 flexibility

Finding a bottleneck in a system: Finding the spot where the process is slowed
down.

DMO tries to reduce waste. This refers to reducing moments that do not add value
to the complete experience of the guest.

What causes dissatisfaction:
 Not enough handling capacity; bottlenecks in the system.
 Badly designed service process or layout.
 All kinds of disruptions [e.g. check in terminals broken] Also referred to as
variability.
 Being ‘’stuck in the system.’’ [waiting lines]
 Lack of quality standards.
 Managers are firefighting daily problems; not focussing on how the process could be
improved.

Operations principle
Organisations have ‘’operations’’ that produce some mix of services and products.
e.g. where services are created and delivered.

How to manage your resources in order to effectively and efficiently create/assemble
something of value.

OM decisions:
 How to outperform competition and win business.
 Service process design, quality design, supply network design
 Capacity management and managing disruptions.
 Planning and controlling systems
 How can we constantly improve our way of service etc.

Operations vs. Operational
Operations management:
Managing resources and the production of manufactured goods or the creation or delivery
of services.
Operations [DMO] Operational
‘’Big’’ decisions, e.g. locations, machines, Daily decisions to run the daily operations.
capacity, improvements to become more
competitive.
Strategic role; how to outperform the Daily running of the business.
competitions.




2

,Competitive advantage bases on:
Quality By doing the right things at the right time.
Costs Doing things inexpensively.
Speed Deliver services without delays.
Dependability On time and keeping your promise.
Flexibility By changing what, how or when we do it.

Ryanair’s lean operations strategy:
 High volume/low variety.
 Efficient use of aircrafts. [high capacity utilization]
 Standardized, fast turn around process on the ground.
 One type of aircraft.
 Cheaper airports
 No thrills services.


4 V model
Volume
Low High
Low repetition High repeatability
Each staff member performs more of job Specialisation
Less systemisation Systemisation
High unit costs Capital intensive
Low unit costs

Variety
High Low
Flexible Well defined
Complex Routine
Match consumer needs Standardized
High unit costs Regular
Low unit costs

Variation in demand
High Low
Changing capacity Stable
Anticipation Routine
Flexibility Predictable
In touch with demand High utilisation
High unit costs Low unit costs


Visibility
High Low
Short waiting tolerance Time lag between production and
Satisfaction governed by costumer consumption
perception Standardized
Costumer contact skills needed Low contact skills
Received variety is high High staff utilisation
High unit costs Centralisation
Low unit costs




3

, LU1
What is operations management?

Operations management is the activity of managing the resources that create and deliver
services and products.

Operations in the organisation

The operations function is central to the organization because it creates and delivers
services and products, which is its reason for existing. The operations function is one of
the three core functions of any organization. These are:

 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;
 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;
 the operations function – which is responsible for the creation and delivery of
services and products based on customer requests




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