An Insight Into Operations Management

Prepared by Derek Thomason MIOM

Agenda

• Introduction to Operations Management

– What is Operations Management
– Definitions of Operations Management
• So what do you think it means?
• Brief history of Operations Management
• Operations Management Examples – Rich Pictures
• What do Operations Managers do?
• What Skills do Operations Managers Need?
• What are the issues facing Operations Managers?
• Another Language
• Summary
What is Operations Management?

• Understanding Operations Management

– Consider the ingredients of your breakfast this morning. Unless you
live on a farm and produced them yourself, they passed through a
number of different processing steps between the farmer and your
table...
• Operations, Operations Management and Operations Managers
– Every organisation has an operations function, whether or not it is
called ‘operations’. The goal or purpose of most organisations involves
the production of goods and/or services.
– Operations in some form has been around as long as human
endeavour itself but, in manufacturing at least, it has changed
dramatically over time.
– To some (especially those professionally involved in operations
management!) operations management involves everything an
organisation does. In this sense, every manager is an operations
manager.
Operations Management Definitions

• The efficient and effective implementation of the policies and tasks

necessary to satisfy a firm's customers, employees, and
management (and stockholders, if a publicly owned company)
• The management of systems or processes that create goods
and/or provide services.
• "The ongoing activities of designing, reviewing and using the
operating system, to achieve service outputs as determined by the
organization for customers" (Wright, 1999)
• Management of main business activity: the organizing and
controlling of the fundamental business activity of providing goods
and services to customers
Exercise

• Generate a list of statements that could be included under the term

Operations Management.
• You have 10 minutes to complete this task
Operation Management – Exercise Output

• Forecast Demand • Sourcing and Procurement

– Market Product – Order Stationery
– Adapt to comply with customer – Negotiate price
demand – Check delivery with order
– Understand what the customer – Reconcile invoice with correct
wants supplier statement
– Understand how much the – Pay on time
customer wants – Buy supplies
– Set targets (timescales) [?] – Order materials
– Know product demand – Stock control [?]
– Measuring standards [?] – Buying resources and allocating
– Produce sales invoices solve – Inventory / stock control [?]
customer disputes [?]
– Schedule suppliers
– Measure outputs [?]
– Managing stock (getting it in the
– Plan production and Time Scales right place at the right time)
[?]
– Locating and procuring supplies
– Pay suppliers [?]
Operation Management – Exercise Output

• Creation of Output • Delivery

– Collect payment [?] – Customer satisfaction
– Managing budgets [?] – Deliver finished products
– Cost implications [?] – Consider logistics / delivery
– Buy cost effective materials [?] – Arrange delivery to customer
– Replenish inventories [?] – Dispatching the goods or service to
– Arrange for necessary equipment the customer
– Schedule material / staff / – Arrange packaging / presentation
equipment to produce goods and
services
– Plan ‘work order’
– Produce product
– Produce goods
– Converting supplied materials
(adding vale)
– Quality control
– Measure conformance / quality
Operation Management – Exercise Output

• Manage People • Post Sales

– Employ people
– Train people
– Implementing and timescales [?]
– Outsource
– Delegation
– Managing people
– Recruit and train staff
– Schedule labour
A Brief History Of Operations Management

• Pre 18th century

– Agriculture was the predominant industry
in every country.
• Industrial Revolution 1770 – 1830
– Economy based on manual labour was
replaced by one dominated by industry
and the manufacture of machinery.
– The development of all-metal machine
tools in the first two decades of the 19th
century facilitated the manufacture of
more production machines powered by
steam or water (James Watt 1785) James Watt’s steam engine
• Second Industrial Revolution
(around 1850)
– Development of steam-powered ships,
railways, and later in the nineteenth
century with the internal combustion
engine and electrical power generation.
– Introduction of Frederick W. Taylor's
systematic approach to scientific
management at the beginning of the
twentieth century (1911)
– 1920, Henry Ford, father of the moving
assembly line, brought the world into an Manchester in 1840
age centred around the mass production
of goods
A Brief History Of Operations Management
• Post WWII
– Leverage of management science techniques that
were developed in the war
– Growth in power of computers
– Japanese Production System (e.g. TPS) based on
three principles:
1. Quality
2. Continual Improvement
3. Elimination of waste
• Late 1950s and early 1960s
– Move from industrial engineering and operations Source: The Manufacturing Institute
research into production management
– Production management becomes a professional
field as well as an academic discipline.
– Major world economies evolving into the service
arena:
• service jobs outnumber manufacturing jobs
• productivity increases much more difficult to
achieve
– Operations techniques begin to be incorporated
into services - the term production/operations
management comes into use
• Now
– Environmental and social awareness
Operations Management - Examples

• Manufacturing Products
• Providing Insurance Cover
• Providing Healthcare
• Government
• Armed Forces – Peace Keeping
• OXFAM – bringing relief

Exercise:

You will be assigned one of the areas listed above. Draw a picture
(no words) which represents the role of operations management in
each of the above. You have 15 minutes to complete the task.
Manufacturing Products

• Managing Operations
– Receiving requirements
– Procuring raw materials
– Recruiting and retaining staff
– Budgeting and cash
management
– Meeting Health, Safety and Legal
requirements
– Planning resources
– Improving quality, cost and
delivery – Plan raw materials
– Procuring / Managing assets – Process raw materials
– Defining policies and procedures – Make intermediates
– Making products – Process copy (for Control)
– Storing and distributing products – Printing
– Negotiations – Quality control
– Provide training – Recycling / rework
Providing Insurance Cover

• Managing Operations
– Receiving requests for cover
– Assessing / reassess risk
– Answering customer enquiries
– Undertaking competitor reviews
– Processing claims
– Making payments
– Recruiting and retaining staff
– Budgeting and cash-flow
management – Forecast demand
– Meeting Health, Safety and Legal – Process applications
requirements – Process renewals
– Planning resources – Calculate no claims bonuses
– Improving quality, cost and delivery – Arrange repairs
– Customer care process – Send out certificates / reminders
– Accredit repairers – Send out claims forms
Providing Health Care

• Managing Operations
– Obtaining finance
– Project / Programme Management
– Recruiting and retaining staff
– Sourcing and procuring supplies
– Responding to emergencies
– Scheduling patient operations
– Controlling infection
– Providing post operative care
– Capacity planning (bed / theatre – Provide interim care – stabilise patient
management) – Prepare resource (theatre)
– Quality control / track and trace – Kitting for operations
– Dispatch ambulance – Resource planning (ITU / Ward)
– Inform hospital of arrival – Plan diagnostics resources
– Inform stakeholders – Liaise with other department
– Contact theatre team – Deploy ambulance
Government

• Managing Operations
– HMRC
• Process tax forms
• Investigate errors
• Prosecute offenders
• Labour planning
– Social Services
• Assessing risk
• Providing support services
– Emergency Services – Central Government
• Capacity planning • Generate new laws
• Resource deployment • Influence people
• Process claimants
• Allocate resources according to need
• Return people
• Educate and train people
Armed Forces

• Managing Operations
– Training and development
– Contingency planning
– Capital investment and
programme management
– Logistics (soldiers and materials)
– Supply Chain Management
– Returns management
– Deployment
– Measurement and control
– Manage budgets and costs
– Stakeholder management
– Manage people
– Manage resources (equipment
and materials)
– Management of maintenance
OXFAM

• Managing Operations
– Generate funds
– Contingency planning
– Material and labour planning
– Forecast demand
– Source and procure non-
perishables
– Response time management
– What-if and scenario planning
– Deploying aid (people and – Conduct risk assessment
materials) – Skills assessment / training
– Transport to site of disaster – Manage shops
– Enabling sustainability – Run collections / donations
– Distribute to people in need – Receive goods and price in shops
– Plan for short term and longer
term sustainability
What Do Operations Managers Do?

• Strategic (long term) Level

– Responsible for, and decisions about:
• What to make (product development)
• How to make it (process and layout decisions) – or should we buy it
• Where to make it (site location)
• How much is needed (high level capacity decisions)
• Tactical Level (intermediate term)
– Address material and labour resourcing within strategy constraints, for example:
• How many workers are needed and when (labour planning)
• What level of stock is required and when should it be delivered (inventory and
replenishment planning)
• How many shifts to work. Whether overtime or subcontractors are required (detailed
capacity planning)
• Operational Level
– Detailed lower-level (daily/weekly/monthly) planning, execution and control decisions, for
example:
• What to process and when (scheduling),
• The order to process requirements (sequencing)
• How work is put on resources (loading)
• Who does the work (assignments)
What Skills Do Operations Managers Need

• Must have knowledge of:

– advanced operations technology and technical knowledge relevant to his/her
industry
– interpersonal skills and knowledge of other functional areas
– The ability to communicate effectively, motivate other people, manage projects,
and work on multidisciplinary teams
• Multi-disciplinary working, for example:
– Supply Chains - management of all aspects of providing goods to a consumer
from extraction of raw materials to end-of-life disposal
– The interface with Marketing - determining what customers' value prior to
product/service development
– Operations Management/Finance Interface - Capital equipment and inventories
comprise a sizable portion of many firms' assets in addition to normal operating
costs
– Service Operations - Coping with inherent service characteristics such as
simultaneous delivery/consumption, performance measurements, etc.
– Operations Strategy - Consistent and aligned with other strategies and legal
requirements.
– Process Design and Improvements - Managing the innovation process.
Issues Facing Operations Managers

• Major Issues are:

– Environmental sustainability, recycling , reuse
– Counter terrorism / risk management
– Globalisation of supply and demand
– Reducing time to market
– Achieving and sustaining high quality while controlling cost
– Integrating new technologies and control systems into existing processes
– Obtaining, training, and keeping qualified workers and managers
– Working effectively with other functions to accomplish the goals
– Integrating production and service activities at multiple sites in decentralized organizations
– Working effectively with suppliers and customers
– Strategic alliances

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Another Language??
Operations Management - Summary

• Management of…:
– People
– Process
– Systems
…. to delivery a useful product or service

• Recognition / realisation of improvement opportunities in the areas of:

– Increasing Customer Value
– Reducing Operational Cost
– Increasing Return on Assets
– Sustainability