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1 MBF2213 | Operations Management Prepared by Dr Khairul Anuar L1: Operations Management www.notes638.wordpress.com

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Page 1: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

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MBF2213 | Operations Management Prepared by Dr Khairul Anuar

L1: Operations Management

www.notes638.wordpress.com

Page 2: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

• What is operations management?

• Why is operations management important in all types of organization?

• What is the input–transformation–output process?

• What is the process hierarchy?

• How do operations processes have different characteristics?

• What are the activities of operations management?

Key operations questions Key operations questions

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Page 3: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

Operations management is the activity of

managing the resources which are devoted to

the production and delivery of products and

services.

Operations management defined

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Page 4: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

Customers Input

resources

Output products and services

Transformed resources

• Materials • Information • Customers

Transforming resources

• Facilities

• Staff

Design

Planning and control

Operation’s performance

Operations strategy

Improvement

Operations management

Operations strategy

Slack et al.’s model of operations management

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Page 5: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

The consultancy services market – % of world revenues of 40 largest consultancy firms

Marketing/sales 2

Operations and process management

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Corporate strategy 17

IT strategy 17

Benefits/Actuarial 16

Organizational design

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Financial 6

Operations management is fashionable!

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Page 6: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

Design a store layout which gives smooth and effective flow

Design elegant products which can be flat-packed efficiently

Site stores of an appropriate size in the most effective locations

Maintain cleanliness and safety of storage area Arrange for fast

replenishment of products

Monitor and enhance quality of service to customers

Continually examine and improve operations practice

Ensure that the jobs of all staff encourage their contribution to business success

Operations management at IKEA

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Page 7: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

• The best way to start understanding the nature of ‘Operations’ is to look around you.

• Everything you can see around you (except the flesh and blood) has been produced by an operation.

• Every service you consumed today (radio station, bus service, lecture, etc.) has also been produced by an operation.

• Operations Managers create everything you buy, sit on, wear, eat, throw at people and throw away.

Operations are everywhere

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Page 8: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

The three basic functions of enterprises

Digital Stock

Ford Motor Company

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Page 9: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

Interfunctional relationships between operations and other functions

Engineering/ technical function

Accounting and finance

function

Human resources function

Information technology (IT)

function

Understanding of the capabilities and

constraints of the operations process

New product and service ideas

Understanding of the capabilities and

constraints of the operations process

Market requirements

Financial analysis for performance and

decisions

Provision of relevant

data

Recruitment development and training

Understanding of human resource needs

Analysis of new technology options Understanding of

process technology needs

Provision of systems for design, planning and

control, and improvement

Understanding of infrastructural

and system needs

Marketing function

Product/service development

function

Operations function

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Page 10: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

• ‘High-end’ sandwich and snack retailer

• Use only ‘wholesome’ ingredients

• All shops have their own kitchens where fresh sandwiches are prepared every day

• Fresh ingredients are delivered early every morning

• Same staff who serve you at lunch made the sandwiches that morning

• ‘We don’t work nights, we wear jeans, we party…’

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Page 11: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

Nutritional ‘mechanical’ and aesthetic design of the

sandwiches and snacks

Design, location and management of

stores and in-store processes and the

network that supplies them

The three basic functions at Prêt a Manger

Product/ Service

development

Operations Marketing

Promotional activities, market

research, etc.

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Page 12: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

Automobile assembly factory – Operations management uses machines to efficiently assemble products that satisfy current customer demands

Operations management in all types of organization

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Page 13: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

Physician (General practitioner) – Operations management uses knowledge to effectively diagnose conditions in order to treat real and perceived patient concerns

Operations management in all types of organization (Continued)

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Page 14: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

Management consultant – Operations management uses people to effectively create the services that will address current and potential client needs

Operations management in all types of organization (Continued)

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Page 15: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

Disaster relief charity –

Operations management uses ours and our partners’ resources to speedily provide the supplies and services that relieve community suffering

Operations management in all types of organization (Continued)

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Page 16: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

Advertising agency – Operations management

uses our staff’s knowledge and experience to creatively present ideas that delight clients and address their real needs

Operations management in all types of organization (Continued)

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Page 17: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

machines

Operations management uses…

to efficiently assemble products

effectively knowledge to treat real and perceived patient

concerns

diagnose conditions

to

people create services that will address current and

potential client needs

effectively to

ours and our partners’ resources

speedily provide supplies and services that relieve

community suffering

to

our staff’s knowledge and

experience

creatively ideas that delight clients and address

their real needs

present to

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Page 18: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

The business environment is

changing, for example:

Prompting operations responses, for

example:

• Increased cost-based competition

• Higher quality expectations

• Demands for better service

• More choice and variety

• Rapidly developing technologies

• Frequent new product/service

introduction

• Increased ethical sensitivity

• Environmental impacts are more

transparent

• More legal regulation

• Greater security awareness

• Globalization of operations networking

• Information-based technologies

• Internet-based integration of operations

activities

• Supply chain management

• Customer relationship management

• Flexible working patterns

• Mass customization

• Fast time-to-market methods

• Lean process design

• Environmentally sensitive design

• Supplier ‘partnership’ and development

• Failure analysis

• Business recovery planning

Operations management is changing

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Page 19: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

All operations are input–transformation–output processes

Inputs Outputs Transformation process

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Page 20: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

Customers

Operations input resources and outputs

Input resources

Output products and services

Transformation process

Outputs are products and services that add value for customers

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Transformed resources

• Materials • Information • Customers

Transforming resources

• Facilities

• Staff

Page 21: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

Customers

Transformed resources • Ingredients • Packaging • Customers

Inputs and outputs at Prêt a Manger

Input resources

Served and satisfied customers

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Transforming resources

• Equipment • Fittings • Staff

Page 22: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

Mixture of products and services – Outputs that

are a mixture of the tangible and intangible

Prèt a Manger

Acme Whistles

Mwagusi Safari Lodge

Crude oil production

Aluminium smelting

Specialist machine tool production

Restaurant

Information systems provider

Management consultancy

Psychotherapy clinic

Pure products –Outputs that are exclusively

tangible

Pure services – Outputs that are exclusively

intangible

IKEA

Most operations produce products and services

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Page 23: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

Flow between operations

The level of the supply network

The level of the operation

Flow between processes

The level of the process

Flow between resources

Operations can be analyzed at three levels

Page 24: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

Operations management is concerned with the flow of transformed resources between operations, processes, where

Processes form an internal ‘supply network’ and become each others customers and suppliers

External operations interact with internal processes to form the external supply network

Operations can be analyzed at three levels (Continued)

Flow between operations

Flow between processes

Flow between resources

Page 25: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

The supply network – Flow between operations

Broadcasting company

Promotion agency

Studios

Casting agency

Creative agency

A programme and video supply

network Programme/

video maker

The programme and video operation

The operation – Flow between processes

Example of analysis at three levels

Page 26: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

The supply network – Flow between operations

Programme and video maker

Example of analysis at three levels (Continued)

The programme and video operation

The operation – Flow between processes

Production unit

Set and props manufacture

Engineer-ing

Marketing and sales

Finance and accounting

Post production

Page 27: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

The supply network – Flow between operations

Programme and video maker

Example of analysis at three levels (Continued)

The operation – Flow between processes

Set and props manufacture

Set design Props

acquisition

Set construction

Set finishing

The ‘Set and props

manufacturing’ process

Page 28: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

End-to-end process for programme production

Programme set and props manufacture

Engineering

Programme marketing and

sales Programme

production unit

Programme finance and accounting

Programme post production

End-to-end process for music video production

Music video set and props

manufacture

Music video marketing and

sales

Music video production unit

Music video finance and accounting

Music video post production

The television and video company divided into two ‘end-to-end’ business processes

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Page 29: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

Any organization

Operations Marketing

Sales Finance

Human resources

Information systems

All functions use processes to provide service

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Page 30: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

Financial services

An account management centre at a large retail bank

Financial analyst advising a client at an

investment bank

Furniture manufacturing

Mass production of kitchen units

Craft production of reproduction

‘antique’ furniture

Hotels

Value-for-money hotel

Lobby of an international luxury hotel

Differences within sectors are often greater than the differences between sectors

Photodisc. Photolink. Jack Star

Pearson Education Ltd. MindStudio

Pearson Education Ltd. Rob Judges

Photodisc. Life File. Emma Lee

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Page 31: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

Variation in demand High Low

Visibility High Low

Variety High Low

High Volume Low High

A typology of operations and processes

The 4 Vs

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Page 32: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

High

Implications

• Low repetition • Each staff member performs more of each task • Less systemization • High unit costs

Implications

• High repeatability • Specialization • Capital intensive • Low unit costs

Volume Low

A typology of operations and processes (Continued)

The implications of high and low Volume in operations and processes

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Page 33: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

Low

Implications

• Flexible • Complex • Match customer needs • High unit costs

Implications

• Well defined • Routine • Standardized • Regular • Low unit costs

Variety High

The implications of high and low Variety in operations and processes

A typology of operations and processes (Continued)

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Page 34: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

Low

Implications

• Changing capacity • Anticipation • Flexibility • In touch with demand • High unit costs

Implications

• Stable • Routine • Predictable • High utilization • Low unit costs

Variation in demand

High

The implications of high and low Variation in operations and processes

A typology of operations and processes (Continued)

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Page 35: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

Low

Implications

• Short waiting tolerance • Satisfaction governed by customer perception • Customer contact skills needed • Received variety is high • High unit costs

Implications

• Time lag between production and consumption • Standardization • Low contact skills • High staff utilization • Centralization • Low unit costs

Visibility High

The implications of high and low Visibility in operations and processes

A typology of operations and processes (Continued)

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Page 36: MBF2213 | Operations Management · Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. Operations

Volume

Important to understand how different operations are positioned on the 4 Vs.

Is their position where they want to be?

Do they understand the strategic implications?

Variety

Variation

Visibility

Low

High

High

High

High

Low

Low

Low

Mwagusi Safari Lodge

Formule 1 Hotel

A 4 Vs profile of two operations

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