1. What is Operations Management:a) The activity of managing those resources which help in creating (producing) and delivering

the products and/or services (offerings)b) Operations Management is also concerned with managing processes that help in creating

and delivering the products and/or services

2. Why is Operations Management important?a) Operations management is important because it aims to use the organization’s resources

effectively to create (produce) outputs that help satisfy the defined (existing) market requirements

b) Today’s business environment requires new thinking from operations managers hence operations management is important

Operations in the organization

a) Operations function is important to the organization because it creates the products and services

b) Operations function is one of the three core functions in the organization Three core functions: See diagram on page 4-5

Operations function Responsible for creating and delivering products and services (offerings)

that help fulfil customer requests Marketing (including Sales) function

Responsible for communicating the company’s products/services (offerings) to its markets in order to generate new customer requests

Product/Service Development function Responsible for developing new and/or modifying products and/or

services (offerings) to generate further customer requests Supporting functions (Support functions) that help the core functions to succeed:

HR Function Recruits and develops the organization’s staff

Accounting and Finance Function Provides information to help in economic decision making and

managing of the financial resources of the organization All organizations have the three core functions because they have a need to sell their

offerings, satisfy their customers and trying to satisfy their customers in the future Operations as an activity: management of the processes within any of the

organization’s functions Operations as a function: part of organization that creates and delivers

products/services for its external customers

3. The input-transformation-output processes a) All operations as we know create products and services by changing inputs into outputs

using this processb) All operation conform to this input-transformation-output process but the nature of their

inputs and outputs differc) Inputs to the process

Transformed resources are those resources that are converted in the process Materials Information Customers

Transforming resources act upon the transformed resources Facilities Staff

d) Outputs from the process Some operations create and deliver just services and others just products, but most

operations produce a mixture of the two “Pure Products” “Pure Services” Mixture of Products & Services

Pure Products: Crude Oil production Aluminum smelting

Pure Services: Management consultancy Psychotherapy clinic

Mixture of Products & Services Restaurant

Manufacturing operation that produces meals Provider of service in the advice, ambience and service of the food

Specialist machine tool production Machine tool manufacturers also give services such as technical

advice and applications engineering Information systems provider

Produced software products but also provides a service to it’s customers

Management consultancy Produces reports and documents is also a service provider

Output from most types of operation is a mixture of products and services

4. The processes hierarchy

All operations are made up of processes (that form a network of internal customer-supplier relations within the operation)

i. An overall operation is made up of many individual processes Each individual process is an internal customer-supplier for each other

ii. Within each of these individual processes there is a network of even smaller processes (sub-processes within a process)

All operations are part of a larger supply network which, through the individual contributions of each operation, satisfy the end-customer requirements

i. See page 14 (Table 1.4) and page 15 (Fig 1.5) for Process Hierarchyii. Supply network is comprised of operations which through the contributions of

each operation aim to satisfy the end-customer requirements

5. Operations processes have different characteristics

Operations are similar in the way that they transform the inputs but they differ on the four V’s

i. Volume of their outputii. Variety of their output

iii. Variation in demand for their outputiv. Degree of Visibility which customers have of the production of their output

Volume of their outputi. Tasks differ on their repeatability and their systematization

ii. A task with high repeatability and systematization will give low unit costs (high volume) and vice versa

iii. Repeatability of its tasks people are doingiv. Systematization of the work is when standard procedures are set, stating on

how each part of the job should be donev. Parameters:

Repeatability (Low/High) Specialization/Each staff member performs more of each task Capital intensive/Systemization (More/Less)

Variety of their output

i. Low variety means standardization hence translating to lower costs and vice versa

ii. Parameters: Well defined/Flexible Routine/Complex Standardized/Match customer needs

Variation in Demandi. If there is a level demand for something it can plan its activities well in advance

hence activities can be done in a routine and predictable manner ii. This results into high utilization of resources and hence translating to lower unit

costs than those in highly variable pattern (and vice versa)iii. Parameters:

Stable capacity/Changing capacity High utilization/In touch with demand Predictable/Flexible Routine/Anticipation

Visibility Dimensioni. How much of the operation is exposed to its customers or its customers

experience ii. Visibility means process exposure (high visibility operation and vice versa)

iii. Customer processing operations are more exposed to their customers than material or information processing operations

iv. Parameters: Low contact skills/High customer contact skills high visibility

operations require the latter (Flexible) Anticipation /In touch with demand Predictable/Routine Standardization/Governed by customer perception customer

perceptions is imp Time lag between production and consumption/Short waiting

tolerance may walk out if not served in a reasonable time