1. Strategic Operations Management

Introduction

Production and service operations have a central role in most firms (services and manufacturing).

They typically account for 70 - 80% of a firm’s assets, expenditure and people.

The nature of operations differs widely between industries and organisations

Evolution of Operations

Socially, production - though important - is often undervalued;

Seen as a career for male, engineer-types who enjoy getting their hands dirty!

Are views changing? The growth of services encourages rethinking the production concept

Technological innovation is raising the status of manufacturing.

In the UK people employed in 'operations' are far fewer today

Yet employment here is greater still than other functions. A major part of total revenue and capital investment

expenditure is spent on production operations.

Operations as Transformation: Four Types:

builders, gardeners and manufacturers transform raw materials & components

suppliers, wholesales, retailers change the nature of "ownership"

hauliers, postal/courier and telephone services transform "place"

insurance provides people with security, building societies lend for housing, physios improve physical well-being

The boundary concerns of operations

management include discussion of:

Innovation Purchasing Marketing Finance/Accounting Personnel (HR) Product/Service Design CAD Standardization Location Decisions The State &

Manufacturing

Ops Management & Technology

Flexible Manufacturing Systems

Signs of De-Industrialization in UK

Design of Operations Environment

Production Technology & Job Issues

1) Innovation

New product development - What the design is and how it can be produced are important development decisions.

Innovative designs have to be made within cost and skill parameters.

2) Purchasing

Procuring and storing raw materials, components & equipment is a key role.

3) Marketing

Production staffs need marketing and sales information: total demand for the product, when is it required?

Customer feedback helps R&D design and create future products.

4) Accounting & Finance

Production department must budget. The cost of each element of

expenditure/ activity must be known for price and wage determination and profit/loss identification.

Capital equipment has to be replaced, maintained and disposed

5) Personnel

Recruitment, training, the design of reward systems, health and safety and industrial relations

6) Product & Service Design

Products must be designed to function well.

The range of products or degree of standardisation must be decided.

Materials for the product must be chosen

7) CAD

CAD (computer aided design) evaluates designs with fast computer graphics offering 3-D perspectives.

Specifications are more accurate. CAD can store standard designs, names

and dimensions of components (information needed for purchasing specifications, machine and tools set-up).

8) Standardization/Modularization

Modular systems are a form of standardisation - a means of cost reduction.

A college with many under-subscribed evening courses - may rationalise its "product mix" around the most popular courses reducing staff costs and overheads.

Standardisation means longer production runs (economies of scale), discounts on bulk supplies.

The consumer however may have less choice.

9) Location

A department store groups similar products to maximise staff product knowledge and satisfy customer expectations.

Fast-moving goods and those bought on impulse are located on the ground floor.

Furniture can be located on upper floors Where production is located depends on

factors ranging from raw material and power supply to transport and labour availability.

10) The State & Manufacturing

Government encouragement of manufacturing, attempts to regenerate industries/firms and evidence for deindustrialisation?

Does manufacturing drive economic growth? What are the links between manufacturing output & GDP?

11) Technology

Technology has developed exponentially, and this has a bearing on Ops management: Computerised Numerical Control

(CNC). CAD Robotics

12) Flexible Manufacturing Systems

FMS involves advanced manufacturing engineering directed towards better consumer choice & a quicker response to customer demand using less working capital. It embraces: CNC based equipment automated transport systems for moving tools & work

pieces at exactly the moment they are needed the whole system is computer-controlled with

software for scheduling, tool/part selection, fault finding, machine breakdown detection, etc.

13) Signs of Deindustrialization in the UK?

There are signs Other countries?

14) Design of the Operations Environment

The production function – is influenced by business and technological environments:

Equipment has to be selected. How much product should we make ourselves?

How much to we buy in? Product design, capacity planning, employee skills

and accounting procedures all have a bearing. Decisions extend to automation and

computerisation, job security and employee stress.

The type of equipment used influences work design.

15) Production technology & Job/Employment Issues

Issues include attitudes/alienation, training, industrial relations, redundancy and job loss, the quality of working life and payment systems, social responsibility to the community.

Changes: From Talyor to Herzberg: Scientific Management Job Enrichment

The Japs

Japanese economic and export success stems from well-planned and executed methods of production management in manufacture

attention to detail and importance given to quality control (JIT & TQM/QCCs)

total integrated production systems from delivery of materials/parts to final distribution

Supported by cultural aspects of labour

More…

The discussion of boundary concerns of operation management leads us to conclude that operations is tied up with all aspects of the organization

Hence, operations is tied up with overall corporate/business strategy of the organization

With globalization and the speed of change, and the increased intensity of competition, overall strategy (and hence, operations) need to be flexible