2010 s1-operations managementsession1intro
DESCRIPTION
Slides for the lecture series in Operations Management I took at Kingston University LondonTRANSCRIPT
Monday, 16/July/2001Slide: 1
Contextualizing Operations Management
Royston E Morgan
Monday, 16/July/2001Slide: 2
Objectives Session
Defining Operations Management
Examining Performance Objectives
Introducing Transformation Models
Brief overview core competences and their place in operations management
Exploring concept of operational fit
Applying the above to exercises and a Case history.
Monday, 16/July/2001Slide: 3
BA's new business class only plane
Jessops shares suspended ahead of winding-up
Vodafone & Orange announces UK iPhone deal
Monday, 16/July/2001Slide: 4
Why OM is important
Effective OM a clear source of competitive advantage
Plays a part in shaping strategic direction
Matters to all sectors of the economy
All managers are operations managers
Operations should be viewed in light of the extended supply network
OM is about managing processes
Monday, 16/July/2001Slide: 5
Contextualising operations…..
Operations management is an organisation-wide concern
Should be viewed as strategic
Clearly influenced by competitive positioning
Is ever-changing
Concerns services and manufacturing activities
Monday, 16/July/2001Slide: 6
Defining Operations Management
The management of the conversion of inputs into outputs
Monday, 16/July/2001Slide: 7
The input-transformation-output Model
Transformed Resources
Transformed Resources
MaterialsInformationCustomers
MaterialsInformationCustomers
TransformingResources
TransformingResources
FacilitiesStaff
FacilitiesStaff
InputInput OutputOutput Goods &ServicesGoods &Services
TransformationProcess
TransformationProcess
Monday, 16/July/2001Slide: 8
The Input Output Model
TransformationProcess
TransformationProcess
Buns
Patties
Salad
Car parking
Staff
Payment system
Shop facilities
Hamburger
Ambience
Service
Ease of use
Minimal waste
Payment
Enjoyment
Monday, 16/July/2001Slide: 9
Monday, 16/July/2001Slide: 10
Application – Input Output Model
Identify the inputs, transformation process and desired outputs of each operation
Check each output and input are traceable via the process
Monday, 16/July/2001Slide: 11
The performance objectives drive the configuration options
Quality
Speed
FlexibilityReliability
Cost
Monday, 16/July/2001Slide: 12
McLaren
Monday, 16/July/2001Slide: 13
Assess McLaren over the Five Dimensions
Where are they placing emphasis?
How does the way they configure their operations support their overall positioning
Monday, 16/July/2001Slide: 14
Key point
Order of performance objectives influences the configuration of Operations– Sets the relative importance and focus of operational improvement
Monday, 16/July/2001Slide: 15
Speed
Minimum price, highest value
Quickdelivery
Dependable delivery
Error-free products and
services
Frequent new products, maximum
choice
A focus on a key dimensions can give competitive advantage
CostCost
SpeedSpeed
QualityQuality
ReliabilityReliability
FlexibilityFlexibility
Minimum cost,maximum value Reliable
operation
Ability to changeError-free
processes
Fastthroughput
Monday, 16/July/2001Slide: 16
Core Competences
A core competence is a specific resource or capability that an organisation sees as being central to the way it succeeds.
A core competence fulfils three criteria:– Provides a direct benefit to a customer and is a process that adds
value to the product or service.
– It is not easy for a competitor to replicate.
– It can be leveraged widely to many products and markets (has scope)
Monday, 16/July/2001Slide: 17
A core competency can take various forms
Technical and subject matter know-how.
Expertise in a particular business (or technology) process– Note the cumulative nature of technology competence.
Deep knowledge in a particular market or product trajectory (is an aspect of collective learning)– e.g. lighting for Philips
Possession of a particular market entrance or relationship with suppliers and/or clients.
Pivotal position in the supply chain
Monday, 16/July/2001Slide: 18
A core competence is relative to other organisations
Provides fundamental basis of added value and competitive edge.
Found in added value parts and operational processes of organisations.
Involves coordination and integration of technologies and processes.
No more than about six core competences in an organisation.
Need to keep these close as they form the basis of survival in the competitive environment.
Monday, 16/July/2001Slide: 19
Scaling competences
MonitorMonitor CoreCore
NonCoreNonCore QuestionQuestion
Ability Competitors to follow or replicate
Tra
cea
ble
ben
efi
t to
cu
sto
me
r
Easy Hard
Lo
wH
igh
Monday, 16/July/2001Slide: 20
Assess McLaren, McDonalds, Sainsbury's over the Core Competence framework
Identify the operational core capabilities that give them an ‘edge’
Monday, 16/July/2001Slide: 21
Service & Manufacturing Operations
Services – essentially intangible outputs
Manufacturing operations – essentially tangible outputs
Monday, 16/July/2001Slide: 22
Front Office & Backroom Operations
Activities which involve the customer are generally undertaken within a ‘front-office’ environment
Operations that need not be seen by the customer are undertaken in a ‘backroom’ environment
Monday, 16/July/2001Slide: 23
Reflection
For MacDonald's and Sainsbury's identify the key front and back office operational processes?
Monday, 16/July/2001Slide: 24
Viewing Operations as Strategic
Monday, 16/July/2001Slide: 25
Operations strategy - definition
Operations strategy is the total pattern of decisions which shape the long term capabilities of any type of operation and their contribution to overall strategy, through the reconciliation of market requirements with operations resources
(Slack & Lewis, 2008, p18)
Monday, 16/July/2001Slide: 26
OperationsCapabilitiesOperationsCapabilities
OperationsPerformanceObjectives
OperationsPerformanceObjectives
OperationsStrategyDecision
Areas
OperationsStrategyDecision
Areas
MarketPositioning
MarketPositioning
CompetitorActivity
CompetitorActivity
MarketSegmentation
MarketSegmentation
Understand markets
Define competitive
position
State market requirements
in terms of operations
performance objectives
Make strategic
operations decisions
… to enhance core
capabilities
‘Fit’ operations resources to market requirements ‘fit’
Monday, 16/July/2001Slide: 27
Operations Management v Operations Strategy
Monday, 16/July/2001Slide: 28
Stop holdingOrganisation
back
Stop holdingOrganisation
back
Be as good ascompetitors
Be as good ascompetitors
Be best inindustry
Be best inindustry
RedefineIndustry
expectations
RedefineIndustry
expectations
The role of operations is defined by its aspirations (Hayes and Wheelwright)
Increasing contribution operations
Increasing contribution operations
STAGE 1 STAGE 2 STAGE 3 STAGE 4
Ability to support strategy
Ability to drive
strategy
Give an operations advantage
Correct worst
problems
Link strategy
with operations
Adopt best practice
Externally supportive
Internally supportive
Externally neutral
Internally neutral
Ability to implement
strategy
Monday, 16/July/2001Slide: 29
position (with justification) the following organisations using the 4 stages of the H&W model
Monday, 16/July/2001Slide: 30
Quality
Perf
orm
ance
obj
ectiv
es
Resource Usage
Mar
ket
Com
petiti
vene
ss
Decision areas
Speed
Dependability
Flexibility
Cost
The operations strategy matrix
Capacity Supply Network
Process Technology
Development and
Organisation
Operations strategy
The operations strategy matrix
Monday, 16/July/2001Slide: 31
Operational Improvement Model (Platt/Gregory)
Assessment of the market demands, quality, delivery and service requirements
Assessment of the market demands, quality, delivery and service requirements
AS IS assessment of organisation’s capabilities in capacity, service and delivery capability
AS IS assessment of organisation’s capabilities in capacity, service and delivery capability
TO BE Gap Analysis and improvement
objectives identified
TO BE Gap Analysis and improvement
objectives identified
STAGE 1 STAGE 2 STAGE 3
STEP Analysis +
market requirements
STEP Analysis +
market requirements
Integration of running
initiatives
Integration of running
initiatives
Monday, 16/July/2001Slide: 32
Using the Passport Agency ‘Fiasco’ Case
Use the Platts-Greggory model to show what might have been!
Monday, 16/July/2001Slide: 33
Mar
ket r
equi
rem
ents
Level of operations resource capability
Line of fi
t
Alignment between market and operations capability
X
Y
In operations strategy ‘fit’ is the alignment between market and operations capability
Monday, 16/July/2001Slide: 34
Mar
ket r
equi
rem
ents
Level of operations resource capability
Line of fi
t
Nissan
Virgin Trains
Virgin Trains and Nissan positioned in relation to market requirements and operations capabilities
Monday, 16/July/2001Slide: 35
Key issue with fit is sustainability
Achieving fit over time = sustainability
Strategies should adapt to changes in operations capabilities and/or market requirements
Monday, 16/July/2001Slide: 36
Sustainability
Monday, 16/July/2001Slide: 37
Mar
ket r
equi
rem
ents
Level of operations resource capability
Exte
nsio
n of
mar
ket
requ
irem
ents
Susta
inable impro
vement
Improvements in operations capabilities
Sustainable improvement implies simultaneous extension/improvement of market requirements and operations capabilities
Monday, 16/July/2001Slide: 38
Reflection
What are the practical implications of engineering a ‘simultaneous’ improvement?
How might we do this?
Monday, 16/July/2001Slide: 39
Risk
The less certain and predictable it is for an operation to reposition itself on either of the two axes, the more likely is deviation from the line of fit and therefore the greater the exposure to risk
Monday, 16/July/2001Slide: 40
Leve
l of m
arke
t re
quire
men
ts
Level of operations resource capability
Line of fi
t
External operational risk (Market needs exceeding current level of capability means risk of failing to satisfy the market)
Internal operational risk (excess capability
for current market needs means risk of
unexploited capabilities)
B
A
Monday, 16/July/2001Slide: 41
Flight for Survival case
In your groups analyse this case using concepts from the first session
Present your findings