Summary Business Operations and Processes

Summary Chapter 1 Business operations and processes:

What is operations management:

 This is the activity of managing the resources that create and deliver services and products.

Operations in the organization:

 There are three core functions of any organization:
o The marketing function – responsible for communicating the organization’s services
and products to its markets in order to generate customer requests.
o The product/service development function – responsible for coming up with new
and modified services and products in order to generate future customer requests.
o The operations function – responsible for the creation and delivery of services and
products based on customer requests.

The new operations agenda:

 New technologies: in both manufacturing and service industries, process technologies are
changing so fast that it is difficult to predict exactly what their effect will be, only a few years
in the future.
 Different supply arrangements: markets have become more global, often meaning a demand
for a higher variety, or customized products and services.
 Increased emphasis on social and environmental issues: customers have been developing an
increased ethical and environmental sensitivity. This is leading to operations having to
change the way they create their products and services, and be more transparent about it.

Inputs to the process:

 Materials: operations which process materials could do so to transform their physical
properties. Other operations process materials to change their location. Some, like retail
operations, do so to change the possession of the materials. Finally, some operations store
materials, such as warehouses.
 Information: operations which process information could do so to transform their
informational properties. Some change the possession of the information. Some store the
information and some operations change the location of the information.
 Customers: operations which process customers might change their physical properties in a
similar way to materials processors. Some store customers, others transform the location of
their customers, while hospitals transform their physiological state. Some are concerned
with transforming their psychological state. When customers play an active role, it is usually
referred to as ‘co-production’ because the customer plays a vital part in the provision of the
product/ service offering.

What is the process hierarchy:

 A process perspective can be used at three levels: the level of the operation itself, the level
of the supply network, and the level of individual processes.

,Operations management is relevant to all parts of the business:

 All parts of the business manage processes, so all parts of the business have an operations
role and need to understand operations management principles.
 ‘Operations’ as a function, meaning the part of the organization which creates and delivers
services and products for the organization’s external customers.
 ‘Operations’ as an activity, meaning the management of the processes within any of the
organization’s functions.

How do operations and processes differ:

 The volume of their output  repeatability, systemization, low unit costs.
 The variety of their output  flexibility, high unit costs.
 The variation in the demand for their output  routine, predictable, low unit costs.
 The degree of visibility that the creation of their output has for customers  short waiting
tolerance, good contact skills, high unit costs.

The implications of the four V’s:

 High volume, low variety, low variation and low customer contact help to keep processing
costs down.

What do operation managers do:

 Directing the overall strategy of the operation.
 Designing the operation’s services, products and processes.
 Planning and control process delivery.
 Developing process performance.

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, Summary Chapter 2 Business Operations and Processes:

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.

Corporate social responsibility:

 This is listening and responding to the needs of a company’s stakeholders and includes the
requirements of sustainable development.

The triple bottom line:

 This is known as people, planet and profit. Organizations should measure themselves not
just on the traditional economic profit that they generate for their owners, but also on the
impact their operations have on society and the ecological impact on the environment.

The social bottom line – the social account, measured by the impact of the operation on the quality
of people’s lives:

 Some ways that operations can impact the social bottom line performance:
o Customer safety from products and services.
o Employment impact of an operation’s location.
o Employment implications of outsourcing.
o Repetitive or alienating work.
o Staff safety and workplace stress.
o Non-exploitation of developing country suppliers.

The environmental bottom line – the environmental account, measured by environmental impact of
the operation:

 Some ways that operations can impact the environmental bottom line performance include
the following:
o Recyclability of materials, energy consumption, waste material generation.
o Reducing transport-related energy.
o Noise pollution, fume and emission pollution.
o Obsolescence and wastage.
o Environmental impact of process failures.
o Recovery to minimize impact of failures.

The economic bottom line – the economic account, measured by profitability, return on assets, etc.,
of the operation:

 Some ways that operations can impact the financial bottom line performance include the
following:
o Cost of producing products and services.
o Revenue from the effects of quality, speed, dependability and flexibility.
o Effectiveness of investment in operations resources.
o Risk and resilience of supply.
o Building capabilities for the future.