FACULTY:

Dr. CH. VENKATAIAH

B.Tech, MBA, PhD
Professor (Operations, Quality & Project Management)
E-Mail: [email protected]

Operations Management: Theory and Practice, 3e

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What is operations management?

Why is operations management important in all types of
organization?
What is the input-transformation-output process?
What is the process hierarchy?
How do operations processes have different
characteristics?
What are the activities of operations management?
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What is operations management?

Operations management defined C
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Operations management is the activity

of managing the resources which are
devoted to the production and delivery
of products and services.
 Slack et al’s model of operations C
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management V

Transformed
resources
•Materials Direct
•Information
•Customers
Operations
Design Management Output
Input Develop
resource products Customers
s and services
Deliver
Transforming
resources
•Facilities
•Staff
 Operations management is fashionable! C
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The consultancy services market - % of world
revenues of 40 largest consultancy firms

Financial Marketing/sales
6 2
Organizational
design
Operations and process
11
management
31
Benefits/Actuarial
16

IT strategy Corporate strategy

17 17
 Operations management at..... IKEA C
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Design a store layout
V
Design elegant which gives smooth Ensure that the jobs
products which can be and effective flow of all staff encourage
flat-packed efficiently their contribution to
business success

Site stores of an Continually examine

appropriate size in and improve
the most effective operations practice
locations

Maintain
cleanliness and Monitor and enhance
safety of storage Arrange for fast quality of service to
area replenishment of customers
products
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1. How is the IKEA operations design

different from that of most furniture retail
operations?
2. What do you think might be the major
problems in running an operation like
IKEA?
3. What do you identify as the ‘operations
function’ within IKEA? How is this
different from the ‘sales function’?
 They are all operations C
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Back office Kitchen unit V
operation in a bank manufacturing
operation

Take-out / restaurant
operation
Retail operation
 Operations are everywhere C
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The best way to start understanding the nature of
“Operations” is to look around you

Everything you can see around you (except the flesh and
blood) has been produced by an operation

Every service you consumed today (radio station, bus

service, lecture, etc.) has also been produced by an
operation

Operations Managers create everything you buy, sit on,

wear, eat, throw at people, and throw away
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Engineering/ Product/service
technical Understanding of
the capabilities and development
function constraints of the function
operations process
Analysis of new
technology options Understanding of
process technology
needs New product and
Accounting service ideas
and finance Provision Understanding of the
of relevant capabilities and
function data
Operations constraints of the
Financial analysis function operations process
for performance
and decisions Market
requirements Marketing
Understanding of function
human resource needs Understanding Provision of systems for
of infrastructural design, planning and
Recruitment and system control, and improvement
development needs
and training
Human Information
resources technology
function (IT) function
 Prêt a Manger C
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“High-end” sandwich and snack retailer

Use only “wholesome” ingredients

All shops have own kitchens which makes fresh
sandwiches every day
Fresh ingredients delivered early every morning

Same staff who serve you at lunch made the sandwiches

that morning
“We don’t work nights, we wear jeans, we party…”
 The three basic functions at Prêt a Manger C
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Nutritional “mechanical”
and aesthetic design of
the sandwiches and
snacks

Design, location
and management
of stores and in-
store processes
Promotional and the network
activities, that supplies them
market
research, etc.
Operations management in all types of C
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organization V
Automobile assembly factory -
Operations management uses machines to
efficiently assemble products that satisfy
current customer demands
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Physician (General
practitioner) - Operations
management uses
knowledge to effectively
diagnose conditions in
order to treat real and
perceived patient concerns
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Management consultant - V
Operations management uses
people to effectively create the
services that will address current
and potential client needs
Operations management C
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in all types of organization V
 Disaster relief
charity -
Operations
management uses
ours and our
partners’
resources to
speedily provide
the supplies and
services that
relieve community
suffering
Operations management in all types of organization C
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 Advertising agency - Operations V
management uses our staff’s
knowledge and experience to
creatively present ideas that delight
clients and address their real needs
Operations management uses………… C
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machines to efficiently assemble products V

diagnose to treat real and

knowledge to effectively perceived patient
conditions
concerns

people to effectively create services that will

address current and
potential client
needs

ours and our to speedily provide supplies and

partners’ services that relieve
resources community suffering

our staff’s to creatively present ideas that delight

knowledge and clients and address
experience their real needs
 Operations management is changing C
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The business environment is Prompting operations responses, for V
changing, for example…… example…….
 Increased cost-based competition Globalization of operations networking
 Higher quality expectations Information-based technologies
Internet-based integration of operations
 Demands for better service activities
 More choice and variety Supply chain management
Customer relationship management
 Rapidly developing technologies
Flexible working patterns
 Frequent new product/service Mass customization
introduction
Fast time-to-market methods
 Increased ethical sensitivity Lean process design
 Environmental impacts are more Environmentally sensitive design
transparent Supplier ‘partnership’ and development
 More legal regulation Failure analysis
Business recovery planning
 Greater security awareness
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All operations are input-transformation- H
output processes V

Inputs Transformation process Outputs

 Operations input resources and outputs C
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V
Transformed
resources
•Materials
•Information
•Customers

Input Output
Transformation process products Customers
resource
s and services

Transforming
resources
•Facilities
Outputs are products and services
•Staff that add value for customers
 Inputs and outputs at Prêt a Manger C
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Transformed
resources
Ingredients
Packaging
Customers

Input Served and

resource satisfied Customers
s customers

Transformin
g resources

Equipment
Fittings
Staff
 Most operations produce products and C
services H
Pure products – V
Crude oil production
Outputs that are
Acme whistles exclusively tangible
Aluminium smelting

Specialist machine tool

production Mixture of products
Prèt a manger and services –Outputs
Restaurant that are a mixture of
the tangible and
IKEA
Information systems intangible
provider

Management consultancy
Pure services –
Mwagusi Safari
Outputs that are
Psychotherapy clinic Lodge
exclusively intangible
Operations can be analyzed at three levels C
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Flow between operations

The level of the supply network

Flow between processes

The level of the operation

The level of the process

Flow between resources
 Operations can be analyzed at three levels C
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Operations management is V
Flow between operations concerned with the flow of
transformed resources
between operations,
processes, where….
Flow between processes External operations interact
with internal processes to form
the external supply network

Processes form an internal

“supply network” and
become each others
customers and suppliers
Flow between resources
 Example of analysis at three levels C
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The supply network - Flow between operations V

Studios Promotion A programme

agency
and video
Casting Broadcasting supply network
agency company
Program /
video
Creative maker
agency

The operation - Flow between processes

The
programme
and video
operation
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Example of analysis at three levels H
The supply network - Flow between operations V

Programme
and video
maker

The operation - Flow between processes

Enginee
r-ing

Marketing Finance Production Post

and sales and unit productio
accounting n
Set and props
manufacture

The programme and video operation

 Example of analysis at three levels C
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The supply network - Flow between operations V

Programme
and video
maker

The operation - Flow between processes

Set and props

manufacture

The ‘Set and Set

construction
props Set Set
manufacturing design Props finishing
’ process acquisition
The television and video company divided into two ‘end-C
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to-end’ business processes, V V
End-to-end process for programme production
Engineering
Programme
marketing and Programme finance Programme Programme
sales and accounting production unit post
Programme and
Programme set and production
props manufacture
video maker
End-to-end process for music video production
Music video
finance and
Music video accounting
marketing and Music video Music video
sales production post
Music video set unit production
and props
manufacture
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All functions use processes to provide service
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V

Human
resources

Operations
Marketing
Information
systems

Finance Sales
o r g a n iz a tio n uses
any
EveryAny
part oforganization
d u c e p ro du c ts o r
pr o
processes to s f o r e x te rn al or
vi c e
(usually) ser a l c u stomers
in ter n
(usually)
Differences within sectors are often greater than the C
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differences between sector V
Financial services
An account Financial analyst
management centre at advising a client at an
a large retail bank investment bank

Furniture manufacturing

Mass production of Craft production of

kitchen units reproduction
‘antique’ furniture

Hotels

Value-for-money Lobby of an
hotel international
luxury hotel
 A typology of operations and processes C
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The 4 vs............ V

Low Volume High

High

High Variety Low

High Variation in demand Low

High Visibility Low

 A typology of operations and processes C
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The implications of high and low Volume in operations and
processes.......

Implications Implications

•Low repetition
•Each staff Low Volume High •High repeatability
member performs
more of each task •Specialization
•Less •Capital intensive
systemization •Low unit costs
•High unit costs
 A typology of operations and processes C
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The implications of high and low Variety in operations and
processes.......

Implications Implications

•Flexible •Well defined

•Complex High Variety High
Low •Routine
•Match customer •Standardized
needs •Regular
•High unit costs •Low unit costs
 A typology of operations and processes C
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The implications of high and low Variation in operations and
processes.......

Implications Implications

•Changing •Stable
capacity Variation in
High High
Low •Routine
•Anticipation demand
•Predictable
•Flexibility
•High utilization
•In touch with
demand •Low unit costs
•High unit costs
 A typology of operations and processes C
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The implications of high and low Visibility in operations and
processes.......

Implications Implications

•Short waiting •Time lag

tolerance High Visibility High
Low between
•Satisfaction production and
governed by consumption
customer •Standardization
perception •Low contact
•Customer contact skills
skills needed •High staff
•Received variety utilization
is high •Centralization
•High unit costs •Low unit costs
A 4 Vs profile of two operations C
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Low Volume High

High Variety Low

High Variation Low

High Visibility Low

Important to understand how different operations are

positioned on the 4 V’s.
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COMMENTS

THANK YOU…