Operation Management chapter 1

Chapter 1BBT2435| TOUR OPERATION MANAGEMENT

Prepared by KAMELIA CHAICHI

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

Lecture outline

• INTRODUCTION

• What operations management DO?

• Variations in the operations management ROLE

• SERVICES vs MANUFACTURING

• Critical REFLECTIONS

• SUMMARY

OPERATIONS FUNCTION/Value-Added Process

Inputs

Transformation/

Conversion

process

Outputs

Feedback

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.

> 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

CASE 1.1 KEY OPERATIONS TASKS

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

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

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

•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

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

• DAY-TO-DAY role

• STRATEGIC role

CONTENT STYLE

• INTERNAL role

• EXTERNAL role

The role of operations management

> 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

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

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?

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

The role of operations management

The role of operations management

> KEY IDEA

Operations: • CONTRIBUTES to gaining FIRST sale• PROCURES SECOND sale

• 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

Inputs and outputs

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?

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

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?

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

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?

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

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

> KEY IDEA

Operations may PROCESS: • CUSTOMERS• CUSTOMER SURROGATES• INFORMATION and/or• PRODUCTS

Variations in output - services versus products

> KEY IDEAThe operations OUTPUT can be: •SERVICES (intangible) and/or•PRODUCTS (tangible) Variations in output -

services versus products

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?

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

Variations in output - services versus products

• Nature of the OFFERING• Level of CUSTOMER involvement• Operations CAPACITY• ORGANISATIONAL arrangements• QUALITY control• COMPETITIVE environment

DEPENDING ON

> 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

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

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

> REFRENCE BOOK

-Tourism: Operations and Management, 1/eSunetra Roday, Archana Biwal & Vandana Joshi25 Mar 2009

-Essential Operations Management ,Alex Hill and Terry Hill