Operations management summary
Chapter 1 operati ons management
Definition according MIT: Operations Management deals with the design and management of
products, processes, services and supply chains. It considers the acquisition, development,
and utilization of resources that firms need to deliver the goods and services their clients
want.
According Slack: Operations Management is the activity of managing the resources which are
devoted to the production and delivery of products and services.
The operations function is one of the three core functions of an organization:
o The marketing (including sales): responsible for communicating the organization’s
services and products to its markets in order to generate customer requests.
o The product/service development: responsible for comping up with new and
modified services and products to generate future customer requests.
o The operations: responsible for the creation and delivery of services and products
based on customer requests.
In addition, there are the support functions (HR, finance etc.) which enable the core functions to
operate effectively.
Inputs to the process: resources that are treated, transformed or converted in the process. They are
usually a mixture of:
- Materials (change shape/composition, i.e. retail operations, postal services, warehouses)
- Information (change purpose or form of info, i.e. accountants, banks)
- Customers (hospitals transform physiological state, airlines location etc.)
Output from the process: product +/ service
Everything you see was produced by an
operation.
Every service you consume was produced by
an operation.
Operations Managers create everything you
buy, sit on, wear, eat, throw at people and
throw away.
All operations processes are similar in that they all
transform inputs, but they do differ in 4 ways:
Dimensions of OM: 4v’s (all about output)
1. Volume (McDonalds vs local café)
2. Variety (taxi vs bus)
3. Variation in demand (season hotels)
4. Visibility; customer contact (online vs
brick and mortar)
Low cost strategy: high volume, low variety,
low customer visibility and low variation.
,Three levels of performance:
• Societal level PPP – Sustainability
• Strategic level contribution to overall
strategy
• Operational level performance objectives
We classify operations management activities
under 4 headings:
- Directing the overall strategy
- Designing the operation’s resources and
processes
- Planning and controlling process
delivery
- Developing process performance
Chapter 2 Operati ons performance
- Operations management in fundamental to the sustainable success of any organization
How operations can judge its performance at three levels
The broad, societal level, using the idea of the ‘’triple bottom line’’
The strategic level of how an organization can contribute to the organization’s overall strategy
The operational level, using the 5 performance objectives
1. Triple bottom line (people, planet and profit): organizations should not only measure the
economic profit that they generate for owners, but also the impact that their operations have
on society and environment.
2. Strategic level: operations can affect economic performance in 5 ways:
a. Reduce cost
b. Achieve customer satisfaction through service
c. Reduce risk of operational failure
d. Reduce the amount of investment that is necessary
e. Provide the basis for future innovation
3. Operational level--> 5 performance objectives
a. Quality: by doing things right, operations seek to influence the quality of the
company’s goods and services. Externally: quality is important for customer
satisfaction. Internally: quality reduces cost and increases dependability
b. Speed: the time between customers requesting and receiving. Externally: customer
service. Internally: speed reduces inventories by decreasing internal throughput time
and reduces risks by delaying the commitment of resources.
c. Dependability: give the customer what they promised. External: customer service.
Internally: increases operational reliability, thus saving the time and money that
would otherwise be taken up in solving problems and also makes an operation more
stable.
d. Flexibility: external: produce new products and services/ produce wider range/
produce different quantities/ different time (delivery flexibility). Internal: speed up
response, save times wasted in changeovers and maintain dependability.
, e. Cost: external: low costs allow organizations to
reduce the price. Internal:
Chapter 1 operati ons management
Definition according MIT: Operations Management deals with the design and management of
products, processes, services and supply chains. It considers the acquisition, development,
and utilization of resources that firms need to deliver the goods and services their clients
want.
According Slack: Operations Management is the activity of managing the resources which are
devoted to the production and delivery of products and services.
The operations function is one of the three core functions of an organization:
o The marketing (including sales): responsible for communicating the organization’s
services and products to its markets in order to generate customer requests.
o The product/service development: responsible for comping up with new and
modified services and products to generate future customer requests.
o The operations: responsible for the creation and delivery of services and products
based on customer requests.
In addition, there are the support functions (HR, finance etc.) which enable the core functions to
operate effectively.
Inputs to the process: resources that are treated, transformed or converted in the process. They are
usually a mixture of:
- Materials (change shape/composition, i.e. retail operations, postal services, warehouses)
- Information (change purpose or form of info, i.e. accountants, banks)
- Customers (hospitals transform physiological state, airlines location etc.)
Output from the process: product +/ service
Everything you see was produced by an
operation.
Every service you consume was produced by
an operation.
Operations Managers create everything you
buy, sit on, wear, eat, throw at people and
throw away.
All operations processes are similar in that they all
transform inputs, but they do differ in 4 ways:
Dimensions of OM: 4v’s (all about output)
1. Volume (McDonalds vs local café)
2. Variety (taxi vs bus)
3. Variation in demand (season hotels)
4. Visibility; customer contact (online vs
brick and mortar)
Low cost strategy: high volume, low variety,
low customer visibility and low variation.
,Three levels of performance:
• Societal level PPP – Sustainability
• Strategic level contribution to overall
strategy
• Operational level performance objectives
We classify operations management activities
under 4 headings:
- Directing the overall strategy
- Designing the operation’s resources and
processes
- Planning and controlling process
delivery
- Developing process performance
Chapter 2 Operati ons performance
- Operations management in fundamental to the sustainable success of any organization
How operations can judge its performance at three levels
The broad, societal level, using the idea of the ‘’triple bottom line’’
The strategic level of how an organization can contribute to the organization’s overall strategy
The operational level, using the 5 performance objectives
1. Triple bottom line (people, planet and profit): organizations should not only measure the
economic profit that they generate for owners, but also the impact that their operations have
on society and environment.
2. Strategic level: operations can affect economic performance in 5 ways:
a. Reduce cost
b. Achieve customer satisfaction through service
c. Reduce risk of operational failure
d. Reduce the amount of investment that is necessary
e. Provide the basis for future innovation
3. Operational level--> 5 performance objectives
a. Quality: by doing things right, operations seek to influence the quality of the
company’s goods and services. Externally: quality is important for customer
satisfaction. Internally: quality reduces cost and increases dependability
b. Speed: the time between customers requesting and receiving. Externally: customer
service. Internally: speed reduces inventories by decreasing internal throughput time
and reduces risks by delaying the commitment of resources.
c. Dependability: give the customer what they promised. External: customer service.
Internally: increases operational reliability, thus saving the time and money that
would otherwise be taken up in solving problems and also makes an operation more
stable.
d. Flexibility: external: produce new products and services/ produce wider range/
produce different quantities/ different time (delivery flexibility). Internal: speed up
response, save times wasted in changeovers and maintain dependability.
, e. Cost: external: low costs allow organizations to
reduce the price. Internal:
