T1: Operations and Process Management

Core to a functioning organisation

Finance

Operations

Marketing

HR

Define: The management of the resources and processes that produce products and services (Slack)

Define: An organisational function used to create and deliver value to consumers to satisfy their needs and wants, and also manage customer relationships.

Define: The pattern of planned human resources deployments and activities intended to enable an organisation to achieve its goals.

Changing environment

Once 'Operations' Managers were responsible for production management

Now there is growth of the 'Supply Chain and Logistics' manager, who has a much wider perspective and strategic objective

KEY CONCEPT: The 4 Vs (Demand characteristics) - p.21

What are they?

Variation

Volume

Visibility

What is a process?

Model

  1. Output
  1. Input

How people are managed

How quality is managed

Choice of technology

Unit cost

How visible is the actual process to the customer?

Eg, hairdresser = high visibility

Eg, production of a can of soup = low visibility

Across day, week, month, year, etc

Stable and reliable or highly fluctuating

Variation of demand levels

Variety

Strategic impact of Ops and Process Management

Revenue - enhance orgs ability to generate revenue through increased customer satisfaction and increased flexibility

Investment - especially enhancing ROI and innovation

Cost - especially cost controls through efficiency

Capabilities - enhancing long-term competitive edge

  1. Transformation (intending to add value along the way) #

Multiple processes make up the overreaching function of operations

The 'Process Perspective'

Levels p.12

Supply network

Individual processes

One way of viewing, analysing and understanding an organisation, but not the only way and not to the exclusion of other ways.

Operation

'Service-dominant logic' p.14

Service-dominant logic posits that all operations offer 'value propositions' through service

The service is the basis of every exchange and any physical goods are simply the distribution mechanism

The distinction between product and service providers is bluring

Also posits that the customer is always the co-creator of value

All operations are a mixture of both products and services

An arrangement of processes

Characteristics

An arrangement of operations

Wide - vast actual boundaries, artificial ones often decided on to focus attention (i.e. does the org take responsibility for the waste connected to it's products)

Ever changing - suppliers / customers changing all the time

Complex - multiple suppliers / customers

Often grouped on a functional level, i.e. finance, HR, production, etc

Multitude of possible ways processes can be grouped, i.e. end-to-end customer needs is one option, example of this p. 17/18

An arrangement of resources

Risk - through reduced failure rates and increased recovery (resilience)

E.g. low variety bus service v high variety taxi service - impacts on the cost per unit (km)

Influences the need for customer service and preparation of customer facing aspects of the organisation

Lag time relates to the response time required, I.e. immediately as with high visibility or within a few days as with less visible processes. This impacts the ability to achieve high utilisation by being able to dictate when things happen.

Most organisations will have 'front office' processes and 'back office' processes.

Product or service range

Implications on cost (Fig 1.9, p.23)

Low cost

High cost

Low variety

Low variation

High volume

Low visibility

Low volume

High variety

High variation

High visibility

Four broad operations activities

Designing the operations products, services and processes (Ch3-6)

Planning and control process delivery (Ch7-11)

Directing the overall strategy of the operation (Ch1-2)

Developing process performance (Ch12-15)

Does the operation have a strategy?

Operations performance objectives

Flexibility

Speed

Cost

Quality

Dependability

Hayes and Wheelwright four-stage model (p.44)

Models (p.50)

'Busines model' (the core)

'Operations model'

Integrated CSR - The Triple Bottom Line (p.42)

Environmental

Social

Economic

Stage 3: Internally supportive top performer

Stage 2: External neutrality Peaking up

Stage 4: Externally supportive future focused

Stage 1: Internal neutrality Head in the sand

Not considered a source of any drive/strategic initiative

Inward looking with little contribution to competitive advantage

All about keeping head down and avoiding mistakes

Very poor contribution to org

Aiming to be 'up to speed' and 'externally neutral'

Focuses on adopting 'best practices' gleaned from other orgs

Ops starts looking up, considering competitive environment

Aiming to be top of the industry in whatever metrics they value

Focus is on developing ops capabilities to excel in areas that achieve competitive advantage

Among the industry top performers but not the best

Becomes the foundation of competitive advantage

True industry leader - influences its market and industry

Strategy-making, innovative and adaptable

Long-term, future focused, one-step ahead

KPIs

Core financial structure

The nature of accountabilities for products, geographies, assets, etc

The structure of the organisation - sometimes expressed as capability areas rather than traditional functional roles

Systems and technologies

Process responsibilities and interactions

Key knowledge and competence

Strategic and operations considerations

Strategic techniques (p.52)

'Bottom-up'

'Top-down'

In the market (p.54)

'Order-winners'

'Qualifiers'

High achievement here doesn't add much

The minimum you must achieve to be considered by customers

High performance will add value

The key reasons in the purchase decision

PLC influence on performance objectives (p.56) see table

Growth stage

Maturity stage

Introduction stage

Decline stage

The Resource-based view - RBV (p.57)

Controls the resource while other views try to control the market, i.e. building barriers to entry

RBV rests on 'barriers to imitation'

Takes a resource view of competitive advantage

Imperfectly mobile

Imperfectly imitable or substitutable

Scarce

Improvement path (p.59)

'Trade-off'

Efficient frontier

Some view an unavoidable, so must be strategic and conscious

Some view as a challenge to be overcome through ambition and innovation

The current optimum efficiency between any two of the five performance objectives

Can be pushed out by:

Trade-offs - reduce one objective while increasing the other

Overcoming trade-offs to increase both and efficiency all together (development of car manufacturing is an example of this)