Chapter 1 - Operations Management

What is Operations Management?

Operations Management

o
Managing the resources that create and deliver services and products

3 Core Functions of an Organization (OPM)

1.
Marketing Function
Responsible for communicating the organization's services and

products to its markets in order to generate customer requests

2.
Product/Service Development Function
Responsible for coming up with new and modified services and

products
3.
Operations Function
Creation and delivery of services and products based on

customer requests

Support Functions of an Organization (TAHI)

o
Enable the Core Functions to operate effectively
1.
Accounting and Finance Function
2.
Technical Function
3.
Human Resources Function
4.
Information Systems Function

The Input-Transformation-Output Process

Operations

o
The processes that take in a set of inpput resources which are used to
transform something, or are transformed themseves, into outputs of
services and products
Inputs to the Process

o
Materials
Transform their physical properties

o
Information
Transform the informational properties

Change the possession of info (market research firms)

Store the info (libraries)

Change the location of the info (Telecommunications

companies)
o
Customers
Change the physical properties of the customers themselves

Ex. Surgeons, hairdressers.

Change the location of the customers

Ex. Transportation companies

Transforming Resources

Facilities
Buildings, equipment, plant and process technology of the

operation
Staf
The people who operate, maintain, plan and manage the

operation

Outputs from the Process

o
Products
Tangible

o
Service
Activities or Processes

The Process Hierarchy

Process

o
An arrangement of resources that create some mixture of service and
product
o
The "building blocks" of all operations
o
Form an internal network within an operation.

Levels of Hierarchy (SOP)

1.
Supply Network Level
Network of operations with flow between them

2.
Operation Level
Network of processes with flow between them

3.
Process Level
Network of resources with flow between them

Characteristics of Operations Processes (4 V's)

1 Volume of their Output
o
High volume can mean high repeatability of tasks (ex. Fast food burger
production)
2 Variety of their output
o
Flexible, low degree of standardization (ex. Customized products, taxi
service)
3 Variation in the demand for their output
o
Seasonal
4 Degree of Visibility of customers in the creation of their output
o
How much of the operation's activities the customer experiences
o
High visibility operations tend to have high-cost operations
o
Low visibility operations can have high staff utilization
Implications of the Four V's of Operations Processes
High Volume, Low Variety, Variation, and Visibility (Low Costs)

Low Volume, High Variety, Variation, and Visibility (High Costs)

4 Activities in Operations Management (4 D's)

1
2
3
4

Directing the overall nature and strategy of the operation

Designing the operation's services, products and processes
Planning and control process delivery
Developing process performance