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
organizations resources effectively to create (produce) outputs that help
satisfy the defined (existing) market requirements
b) Todays 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 companys
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 organizations 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 organizations 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 process
b) All operation conform to this input-transformation-output process but the
nature of their inputs and outputs differ
c) 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 its 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
Hierarchy
ii. 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 Vs
i. Volume of their output
ii. Variety of their output
iii. Variation in demand for their output
iv. Degree of Visibility which customers have of the
production of their output

Volume of their output

i. 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 doing
iv. Systematization of the work is when standard procedures are
set, stating on how each part of the job should be done
v. 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 Demand
i. 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 Dimension
i. 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