Operational Management Week 1
Operations Management.
H1 Operations Management.
What is operations management?
It’s the activity of managing resources that create and deliver services and products.
It’s the part that is responsible for the activity.
Operations managers: people who have a responsibility for managing resources that
comprise the operations function.
Operations in the organization.
Creates and delivers services and products.
Core functions of any organization:
1. Marketing (including sales) function.
Responsible for communicating the organization services and products to its
markets to generate customer requests.
2. Product/service development function.
Responsible for new modified services and products to generate future
customer requests.
3. Operations function.
Creation and delivery of services and products based on customer requests.
In addition there are support functions.
Almost all organizations has the 3 core functions.
Not always a clear division between functions.
Figure 1.2
Why is operations management important in all types of organization?
To create something, you need resources that have an operations activity.
Uses machines to efficiently assemble products to satisfy current customer demands.
Operations management in the smaller organization.
In smaller companies people have to do different jobs.
Informal structure -> react quick on opportunities or problems.
Decision making can be difficult -> roles overlap.
Operations management in not-for-profit organizations.
Strategic objectives can be more complex and involve destep.
The new operations agenda.
Customers attitude changes to social and environmental issues.
- New technologies.
Its not sure how they will be in a few years.
- Different supply arrangements.
More global -> demand for higher variety of customized products and services.
- Increased emphasis on sical and environmental issues.
Operation have to change the way they create their products and services &
more transpiration.
,What is the input-transformation-output process?
Inputs to the process.
- Materials.
Operations which process materials could do to transform their physical
properties (shape, composition).
Change location (parcel delivery companies).
Change possession of materials.
Store materials (warehouses).
- Information.
Information properties (purpose or form of information) (accountants).
Change possession (sell information).
Store information (archives, library).
Change location of information (telecommunication).
- Customers.
Customers change physical properties in a similar way to materials processors
(hairdressers).
Store customers (hotels).
Transform the location of customers (airlines, bus).
Transform physiological state (hospitals).
Concerned with transforming physiological state, entertainment (music,
theatre, tv, radio)
Customers can be active in operations and processes -> atmosphere in
restaurant, learning groups in education, provide information at check in desk.
Customers play role -> co-production.
Operations have inputs of materials and information and customers.
Other inputs are transforming resources.
2 types which form the building blocks of all operations:
Facilities.
The buildings, equipment, plant and process technology of operation.
Staff.
People who operate, maintain, plan and manage operation.
It will differ between operations.
Skills vary, everyone van make a contribution.
Balance between staff and facilities also varies.
Outputs from the process.
Most operations produce both product and services.
Operations create and deliver just services and some just products, most combine
the 2.
Product or service?
Difficult to define.
Operations principle = all operations produce service for their customers.
Servitization.
,Indicate how operations, that consider themselves exclusively producers of products
-> becoming more service-conscious = servitization.
Often involves developing capabilities they need to provide services and solutions
that supplement the product offerings.
Subscription services.
All outputs from operations can be seen as services.
Operations customer pay each period for pre-agreed services.
Not a new idea -> phones, gyms.
Customers.
Are reason operations are existing.
Not a homogeneous group.
Different customers group can want different things from an operation even if they
want the same product or service.
B2B and B2C.
B2B = provide services or product to other businesses.
B2C = provide services or product to customer.
What is the process hierarchy?
Process = arrangement of resources and activities that transform inputs into outputs
that satisfy customer needs.
Building blocks of all operations -> internal network.
Each process is an internal supplier and internal customer for other processes.
All operations are made up of processes that form a network of internal customer-
supplier relationships within the operation.
Process can be used at 3 levels:
1. Level of operation itself.
2. Level of the supply network.
3. Level of individual processes.
many different levels of analysis, upwards from small to lager processes.
Supply network = network of operations, several suppliers and customers.
Operations management is relevant to all parts of the business.
All functions manage processes.
Each function has technological knowledge.
Each will have a process management role of producing plans, policies, reports,
services,
All managers have responsibility for process managing.
Operations function = part of organization which creates and deivers services and
product for organization external customers.
Operations activity = management of the process within any of the organizations
functions.
Business processes.
Each of processes will contribute parts to fulfilling customer needs.
Company needs t ore-organize operations that each product is created from begin to
end by process with all needed elements.
, End-to-end business process = customer needs for each product are entirely fulfilled
from begin to end.
How do operations and processes differ?
4 V’s.
1. The volume dimension.
Systematized and repeated tasks -> low unit costs -> mostly in big
organisations.
One person has many tasks -> small organizations -> more rewarding for staff,
but less open to systemization -> less feasible to invest in equipment -> costs
are higher.
2. The variety dimension.
Taxi -> high variety -> to every location -> flexible -> high costs.
Bus -> less variety -> low costs
3. The variation dimension.
Summer holiday resort hotel -> high capacity in summer, low in winter.
Hotel -> predict level of demand -> plan activities well in advance.
4. The visibility dimension.
How much of the operations activities its customers experience or how much
operation in exposed to its customers.
Customers perceptions are important.
High received variety = customers can ask what they want because they are in
the operation.
High staff utilization =
Mixed high-and low-visibility processes.
Airport -> activities visible to customers & activities with little visibility.
The implications of the four Vs of operations processes.
Implications for cost of creating and delivering services and products.
Position operation determined by demand of market its serving.
What do operations managers do?
- Directing.
Overall strategy of operation.
Is required to detailed design of operations and process.
- Designing.
Operations services, products, processes.
- Delivery.
Plan and control delivery.
Through total operation it need to be planned and controlled.
- Developing.
Process performance. Develop capabilities of process to improve process
performance.
Operations management impacts environmental sustainability.
Operations Management.
H1 Operations Management.
What is operations management?
It’s the activity of managing resources that create and deliver services and products.
It’s the part that is responsible for the activity.
Operations managers: people who have a responsibility for managing resources that
comprise the operations function.
Operations in the organization.
Creates and delivers services and products.
Core functions of any organization:
1. Marketing (including sales) function.
Responsible for communicating the organization services and products to its
markets to generate customer requests.
2. Product/service development function.
Responsible for new modified services and products to generate future
customer requests.
3. Operations function.
Creation and delivery of services and products based on customer requests.
In addition there are support functions.
Almost all organizations has the 3 core functions.
Not always a clear division between functions.
Figure 1.2
Why is operations management important in all types of organization?
To create something, you need resources that have an operations activity.
Uses machines to efficiently assemble products to satisfy current customer demands.
Operations management in the smaller organization.
In smaller companies people have to do different jobs.
Informal structure -> react quick on opportunities or problems.
Decision making can be difficult -> roles overlap.
Operations management in not-for-profit organizations.
Strategic objectives can be more complex and involve destep.
The new operations agenda.
Customers attitude changes to social and environmental issues.
- New technologies.
Its not sure how they will be in a few years.
- Different supply arrangements.
More global -> demand for higher variety of customized products and services.
- Increased emphasis on sical and environmental issues.
Operation have to change the way they create their products and services &
more transpiration.
,What is the input-transformation-output process?
Inputs to the process.
- Materials.
Operations which process materials could do to transform their physical
properties (shape, composition).
Change location (parcel delivery companies).
Change possession of materials.
Store materials (warehouses).
- Information.
Information properties (purpose or form of information) (accountants).
Change possession (sell information).
Store information (archives, library).
Change location of information (telecommunication).
- Customers.
Customers change physical properties in a similar way to materials processors
(hairdressers).
Store customers (hotels).
Transform the location of customers (airlines, bus).
Transform physiological state (hospitals).
Concerned with transforming physiological state, entertainment (music,
theatre, tv, radio)
Customers can be active in operations and processes -> atmosphere in
restaurant, learning groups in education, provide information at check in desk.
Customers play role -> co-production.
Operations have inputs of materials and information and customers.
Other inputs are transforming resources.
2 types which form the building blocks of all operations:
Facilities.
The buildings, equipment, plant and process technology of operation.
Staff.
People who operate, maintain, plan and manage operation.
It will differ between operations.
Skills vary, everyone van make a contribution.
Balance between staff and facilities also varies.
Outputs from the process.
Most operations produce both product and services.
Operations create and deliver just services and some just products, most combine
the 2.
Product or service?
Difficult to define.
Operations principle = all operations produce service for their customers.
Servitization.
,Indicate how operations, that consider themselves exclusively producers of products
-> becoming more service-conscious = servitization.
Often involves developing capabilities they need to provide services and solutions
that supplement the product offerings.
Subscription services.
All outputs from operations can be seen as services.
Operations customer pay each period for pre-agreed services.
Not a new idea -> phones, gyms.
Customers.
Are reason operations are existing.
Not a homogeneous group.
Different customers group can want different things from an operation even if they
want the same product or service.
B2B and B2C.
B2B = provide services or product to other businesses.
B2C = provide services or product to customer.
What is the process hierarchy?
Process = arrangement of resources and activities that transform inputs into outputs
that satisfy customer needs.
Building blocks of all operations -> internal network.
Each process is an internal supplier and internal customer for other processes.
All operations are made up of processes that form a network of internal customer-
supplier relationships within the operation.
Process can be used at 3 levels:
1. Level of operation itself.
2. Level of the supply network.
3. Level of individual processes.
many different levels of analysis, upwards from small to lager processes.
Supply network = network of operations, several suppliers and customers.
Operations management is relevant to all parts of the business.
All functions manage processes.
Each function has technological knowledge.
Each will have a process management role of producing plans, policies, reports,
services,
All managers have responsibility for process managing.
Operations function = part of organization which creates and deivers services and
product for organization external customers.
Operations activity = management of the process within any of the organizations
functions.
Business processes.
Each of processes will contribute parts to fulfilling customer needs.
Company needs t ore-organize operations that each product is created from begin to
end by process with all needed elements.
, End-to-end business process = customer needs for each product are entirely fulfilled
from begin to end.
How do operations and processes differ?
4 V’s.
1. The volume dimension.
Systematized and repeated tasks -> low unit costs -> mostly in big
organisations.
One person has many tasks -> small organizations -> more rewarding for staff,
but less open to systemization -> less feasible to invest in equipment -> costs
are higher.
2. The variety dimension.
Taxi -> high variety -> to every location -> flexible -> high costs.
Bus -> less variety -> low costs
3. The variation dimension.
Summer holiday resort hotel -> high capacity in summer, low in winter.
Hotel -> predict level of demand -> plan activities well in advance.
4. The visibility dimension.
How much of the operations activities its customers experience or how much
operation in exposed to its customers.
Customers perceptions are important.
High received variety = customers can ask what they want because they are in
the operation.
High staff utilization =
Mixed high-and low-visibility processes.
Airport -> activities visible to customers & activities with little visibility.
The implications of the four Vs of operations processes.
Implications for cost of creating and delivering services and products.
Position operation determined by demand of market its serving.
What do operations managers do?
- Directing.
Overall strategy of operation.
Is required to detailed design of operations and process.
- Designing.
Operations services, products, processes.
- Delivery.
Plan and control delivery.
Through total operation it need to be planned and controlled.
- Developing.
Process performance. Develop capabilities of process to improve process
performance.
Operations management impacts environmental sustainability.
