Operation Management Chapter 1
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Transcript of Operation Management Chapter 1
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Chapter 1BBT2435| TOUR OPERATION MANAGEMENT
Prepared by KAMELIA CHAICHI
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Learning objectives
• Explain ROLE of operations management in an organisation
• Appreciate the dimensions that make up the operations management TASK
• Identify where the operations management FUNCTION fits within an organisation
• Illustrate the crucial role of operations management in organizational SUCCESS
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Lecture outline
• INTRODUCTION
• What operations management DO?
• Variations in the operations management ROLE
• SERVICES vs MANUFACTURING
• Critical REFLECTIONS
• SUMMARY
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OPERATIONS FUNCTION/OPERATIONS FUNCTION/Value-Added ProcessValue-Added Process
Inputs
Transformation/
Conversion
process
Outputs
Feedback
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What does Operations Management do?
To deliver SERVICES and PRODUCTS
that have been sold to CUSTOMERS
Manages PEOPLE, MATERIALS, RESOURCES and DELIVERY
SYSTEMS
Operations management is set of activities that creates value in the
form of goods and services by transforming inputs into outputs.
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> KEY IDEA
Operations delivers the SERVICES and PRODUCTS that have been sold to CUSTOMERS
> KEY IDEA
Operations delivers services and products to customers by MANAGING the PEOPLE, MATERIALS, RESOURCES and DELIVERY SYSTEMS involved
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CASE 1.1 KEY OPERATIONS TASKS
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Cafe Garment manufacturer
CASE 1.1
KEY OPERATIONS TASKS
• DESIGNING products• Making PRODUCTS• Delivering SERVICES• SCHEDULING operations• Managing INVENTORY• Managing QUALITY• Managing SUPPLY CHAIN• IMPROVING operations
• SAME
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How operations management fits into an organisation
•SELL services or products to customers
•DESIGN services or products•PURCHASE materials and/or
services•DELIVER the services or products
to meet customer needs•ACCOUNT for the cash or credit
transactions involved in the above
ORGANISATIONS NEED TO
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How operations management fits into an organisation
•SELLING services or products to customers
•DESIGNING services or products•PURCHASING materials and/or
services•DELIVERING the services or
products to meet customer needs•ACCOUNTING for the cash or
credit transactions involved in the above
OPERATIONS IS RESPONSIBLE FOR
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•Manufacturing and service organizations differ chiefly because manufacturing is goods-oriented and service is act-oriented.
•The differences involve the following:- Degree of customer contact- Uniformity of input- Labor content of jobs- Uniformity of outputs- Measurement of productivity- Production and delivery- Quality assurance- Amount of inventory- Evaluation of work- Ability to patent design
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Characteristics Goods Services
Customer contact Low High
Uniformity of inputs High Low
Uniformity of outputs High Low
Output Tangible Intangible
Measurement of productivity Easy Difficult
Opportunity to correct quality problems before delivery to customer
High Low
Inventory Much Little
Evaluation Easier More difficult
Patentable Usually Not usually
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•DAY-TO-DAY role
•STRATEGIC role
CONTENT STYLE
•INTERNAL role
•EXTERNAL role
The role of operations management
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> KEY IDEA
DAY-TO-DAY role of operations include:• Managing within BUDGETS• SCHEDULING• SERVING customers• Meeting OUTPUT targets• Communicating with other FUNCTIONS
> KEY IDEA
STRATEGIC role of operations include:• Supporting market ORDER-WINNERS and QUALIFIERS• Making company COMPETITIVE
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Order Winners and Order Qualifiers•Order Qualifier: The level of a product characteristic(s)
that allow a product to be considered for selection . in other words
•Order qualifiers are the basic criteria that permit the firm’s products to be considered as candidates for purchase by customers
•Order Winner: The level of a product characteristic(s) that drive the customer decision to select a product . in other words Order winners are the criteria that differentiate the products and services of one firm from another
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CASE 1.2
OPERATIONS TASKS AT PORTIOLI’S SANDWICH AND COFFEE BAR
1.What are its MARKET order-winners and qualifiers?
2.How must it manage OPERATIONS to support its market?
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CASE 1.2
Question Answer
ORDER-WINNERS
QUALIFIERS• QUALITY• Delivery SPEED• PRICE
• Product DESIGN• Product RANGE
Manage operations
Manage SUPPLY CHAIN
Manage QUALITY
Manage CAPACITY
Manage INVENTORY
DELIVER services and products
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The role of operations management
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The role of operations management
> KEY IDEA
Operations: • CONTRIBUTES to gaining FIRST sale• PROCURES SECOND sale
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•Large COST centre•PEOPLE•TECHNOLOGY•SHORT and LONG
term
MANAGE
Links THINKING and DOING ends of the
business
> KEY IDEA
Managers need to THINK and WORK in: • SHORT-TERM• LONG-TERM
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Inputs and outputs
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CASE 1.3
OPERATIONS -A KEY ROLE IN THE RETAIL CHAIN1.What makes the
STORE MANAGER a classic operations manager?
2.Assess the size of the OPERATIONS TASK and its financial impact
3.How is the store a key LINK in the supply chain?
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CASE 1.3 OPERATIONS - A KEY ROLE IN THE
RETAIL SUPPLY CHAIN
Question Answer
STORE MANAGER is a classic operations manager
OPERATIONS TASK size and financial impact
Key LINK in supply chain
• Manages large COST centre• Manages large number of PEOPLE• Manages SHORT-TERM and LONG-
TERM• Manages TECHNOLOGY• Manages COMPLEXITY
• SALES REVENUE - $ per week• COSTS - $ part and full-time staff• PROFITS - meet sales and cost
budgets
• Links hundreds of SUPPLIERS to hundreds of CUSTOMERS
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Restaurant
Task of the operations manager
Factory
Modern Times
(1936)
Dinner Rush
(2000)
•What type of ORGANISATION is represented?•What is the ROLE of the operations function?•What is the TASK of the operations manager?
•What type of ORGANISATION is represented?•What is the ROLE of the operations function?•What is the TASK of the operations manager?
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Film clip Factory
Film
TitleDirector (year)
Modern TimesCharles Chaplin (1936)
Clip
StartFinish
00:01:5300:06:03
What clip shows
Charlie Chaplin working on a production line within a factory
Key learning objective
How an operation transforms inputs into outputsThe order-winners and qualifiers for a high volume factory producing a narrow range of standard products
Task of the operations manager
Film clip Restaurant
Film
TitleDirector (year)
Dinner RushBob Giraldi (2000)
Clip
StartFinish
00:58:5801:02:44
What clip shows
The chef producing a special one-off dish for a restaurant critic who is having dinner in the restaurant
Key learning objective
How an operation transforms inputs into outputs (and the difference between services and manufacturing) The order-winners and qualifiers for a low volume, design-led restaurant offering high levels of service
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Operations process
Factory Restaurant
Type of ORGANISATION
ROLE of the operations function
TASK of the operations manager
For each film:• What type of ORGANISATION is represented?• What is the ROLE of the operations function?• What is the TASK of the operations manager?
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Operations process
Factory Restaurant
Type of ORGANISATION
ROLE of the operations function
TASK of the operations manager
• MANUFACTURING• HIERARCHICAL• CENTRALISED• LOW empowerment
• MAKE products• DELIVER products• Manage SUPPLIERS
• Manage PROCESS• Manage COST• Manage TECHNOLOGY• Manage PEOPLE• Co-ordinate ACTIVITIES
• SERVICE• TEAM based• DECENTRALISED• HIGH empowerment
• MAKE food• SERVE customers• Manage SUPPLIERS
• Manage PROCESS• Manage COST• Manage TECHNOLOGY• Manage PEOPLE• Co-ordinate ACTIVITIES
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Variations in complexity
•SIZE of organisation•Service or product VOLUMES•RANGE of services or products
sold•TECHNOLOGY required to deliver
them•Number of operations IN-HOUSE•What is being PROCESSED
DEPENDING ON
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> KEY IDEA
Operations may PROCESS: • CUSTOMERS• CUSTOMER SURROGATES• INFORMATION and/or• PRODUCTS
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Variations in output - services versus products
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> KEY IDEA
The operations OUTPUT can be: •SERVICES (intangible) and/or•PRODUCTS (tangible) Variations in output -
services versus products
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CASE 1.4
A CUP OF COFFEE - PRODUCT OR SERVICE?
1.Why is HOTEL COFFEE more expensive?
2.How does your LAST CUP of coffee compare with a hotel cup?
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Question Answer
Why is HOTEL COFFEE more expensive?
How does your LAST CUP of coffee compare with a hotel cup?
• Product DESIGN• Service DESIGN• Product RANGE• Able to CUSTOMISE Product• Hotel ENVIRONMENT
A CUP OF COFFEE - PRODUCT OR SERVICE?
• LOWER specification
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Variations in output - services versus products
•Nature of the OFFERING•Level of CUSTOMER involvement•Operations CAPACITY•ORGANISATIONAL arrangements•QUALITY control•COMPETITIVE environment
DEPENDING ON
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> KEY IDEA
SERVICES are CONSUMED as they’re provided whereas most PRODUCTS can be made in advance and STORED
•Class Activity
•Choose any business •Identify the business operation (use the add
value perspective)•Identify the characteristics
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Critical reflections
• Operations manager’s ROLE is both:
- Demanding, challenging, absorbing and satisfying; and
- Frustrating and complex
• DAY-TO-DAY task requires physical effort
• Difficult to BALANCE day-to-day and strategic role
• Good management of operations is key to an organization's SUCCESS
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Summary
• Different SECTORS- Services vs Manufacturing
• TASK of operations manager is the same- Different focus
• Operations TRANSFORMS- Inputs into outputs that are sold to customers
• Critical to overall SUCCESS of an organisation- Manages 60-70% of people, assets and costs
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> REFRENCE BOOK
-Tourism: Operations and Management, 1/eSunetra Roday, Archana Biwal & Vandana Joshi25 Mar 2009
-Essential Operations Management ,Alex Hill and Terry Hill