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Introduction to Operations Management: Block 1 - Reading 11 - Coggle…
Introduction to Operations Management: Block 1 - Reading 11
What is Operations Management?
Financial Impact - balances fixed assts (plants, equipment) and working capital (raw materials, work-in-progress, inventory) to prevent cash flow problems and waste.
Input-Process-Output Framework:
Inputs (Resources) - facilities, equipment, staff, customers, suppliers, transport, materials, energy and information.
Processes (transformation) - managing process flow, work-in-progress, design, planning/scheduling, control and system improvement.
Outputs - products/services, customer satisfaction, unit costs (profitability) and environment impact.
Definition - the efficient delivery of goods and services through effective management of organisational resources to meet customer needs.
Divided into 3 areas:
Managing processes - all operations managers are responsible for processes. Processes are defined as a series of interlinked activities or steps that consume resources to meet a goal or output.
:Managing outputs - the operations function is responsible for meeting customers' needs by delivering required products or services. The effectiveness and efficiency of the operation dictates how much resources is needed and this feeds straight through to unit cost and (where relevant) profitability.
Managing input resources - operations managers must ensure that the right resources, such as people, equipment and materials are available in the right quantity at the right time for the operation's needs.
Transformation Process
Dominant Resource Types
Information Processing - banking, accounting, telecommunications and research.
Customer Processing - hotels, hairdressers, hospitals and theme parks.
Material Processing - manufacturing, mining, logistics and retail.
Nature of Transformational Change
Informational - processing data or records.
Possession - changing ownership or temporary custody (e.g. retail, conveyancing)
Physical - Changing form (e.g. cooking, machining).
Location - moving goods or people (logistics, transport)
Storage - holding inventory, data or people for availabity/utilisation
Phsiyological/Psychological - altering state of mind or body (medical surgery), spa, counselling
What Do Operations Managers Do?
Key Tensions: Balancing short-term crises (machine breakdowns, supplier failures) with long-term strategic development. Preferring simplicity, stability and low variety over complex, disrupted workflows.
Core Tasks:
Managing Outputs - meeting market requirements and delivery promises efficiently.
Managing Processes (Slack et al., 2011):
Design - Layout, flow and structural efficiency.
Planning & Control - Scheduling, shift patterns, capacity plans, stock control and quality assurance.
Improvement - Continuous process improvement and lean thinking.
Organising Input Resources - obtaining and managing people, facilities and equipment within budget and infrastructive constraints.
The Importance of Operations & Strategy
Hayes and Wheelwright Four-Stage Model:
Stage 1 (Internally Neutral) - Operations hold the organisation back, focus is on fixing short-term errors.
Stage 2 (Externally Neutral) - Operations achieve industry parity/best practice, but do not provide a competitive edge.
Stage 3 (Internally Supportive) - Operations offer best-in-class capabilities that actively support the business strategy.
Stage 4 (Externally Supportive) - Operations provide a unique competitive advantage, driving the entire organisational strategy.
Operations as Risk: Failures (e.g, BP Deepwater Horizon oil spill) can cause catastrophic environmental harm, financial loss, fatalities and severe reputational damage.
Strategic Impact - Reduces costs, enhances revenues, minimises capital needs and builds competitive capabilities.
Universal Relevance ("Are You An Operational Manager?"
Applies to all organisational sectors (manufacturing, service, public, private.
Any manager or supervisor who manages resources, processes and delivers an output (even internal reports in HR, accounts or marketing) is performing an operations management role.