Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Right.docx

Copyright © 2016, 2013, 2010 Pearson Education, Inc. All
Rights Reserved
Operations Management
8th edition
Chapter 2
Operations Performance
Rights Reserved
Slack et al.’s model of operations management
Rights Reserved
In Chapter 2 – Operations performance – Slack et al. identify
the following key questions…
ow is operations performance judged at a societal level?

level?
erformance objectives trade off against
each other?
Key questions
Rights Reserved
Three levels of operations performance
Rights Reserved
Stakeholder groups with typical operations objectives
Rights Reserved
People – The social
account, measured by

the impact of the
operation on the quality
of people’s lives
Planet – The environmental account,
measured by environmental impact of
the operation
Profit – The economic
profitability, return on
assets, etc. of the
operation
Sustainability
How operations can impact TBL performance (1 of 3)
• Recyclability of materials, energy consumption and waste
material
generation
• Reducing transport-related energy
• Noise pollution, fume and emission pollution
• Obsolescence and wastage

• Environmental impact of process failures
• Recovery to minimize impact of failures
Rights Reserved
the impact of the
of people’s lives
the operation
assets, etc. of the
operation

Sustainability
• Customer safety from products and services
• Employment impact of an operation’s location
• Employment implications of outsourcing
• Repetitive or alienating work
• Staff safety and workplace stress
• Non-exploitation of developing country suppliers
Rights Reserved
the impact of the
of people’s lives
the operation

assets, etc. of the
operation
Sustainability
• Cost of producing products and services
• Revenue from the effects of quality, speed,
dependability, and flexibility
• Effectiveness of investment in operations resources
• Risk and resilience of supply
• Building capabilities for the future
Rights Reserved
OM’s contribution to the ‘economic bottom line’

Rights Reserved
Employ skilled, enthusiastic people, and encourage them to
contribute
ideas for cutting out waste and working more effectively.
Carefully monitor their customers’ perception of the quality of
service they
are receiving and learn from any examples of poor service and
always
apologise and rectify any failure to give excellent service.
Have invested in simply but appropriate systems of their own
that allow
the business to plan and control its activities effectively.
Hold regular meetings where staff share their experiences and
think
about how they can build their knowledge of customer needs,
new
technologies and how their services will have to change in the
future to
add value for their customers and help the business to remain
competitive.
Company A has operations managers who…

Rights Reserved
Last year’s financial details for Company A
Rights Reserved
Employ only people who have worked in similar companies
before and
supervise them closely to make sure that they ‘earn their
salaries’.
Have rigid ‘completions of service’ sheets that customers sign
to say that
they have received the service, but they never follow up to
check on
customers’ views of the service that they have received.
Have bought an expensive integrative system with extensive
functionality,
because ‘you might as well invest in state-of-the art
technology’.
At the regular senior managers’ meeting always have an agenda
item
entitled ‘Future business’.

Company B has operations managers who…
Rights Reserved
Last year’s financial details for Company B
Rights Reserved
Original –
(sales volume =
50,000 units)
(€,000)
Option 1 –
sales campaign
Increase sales
volumes by 30%
to 65,000 units
(€,000)
Option 2 –

operations efficiency
Reduce operating
expenses by 20%
(€,000)
Option 3 –
‘speedy service’
Increase price
by 10%
(€,000)
Sales
revenue
5,000 6,500 5,000 5,500
Operating
expenses
4,500 5,550 3,800 4,500
EBIT 500 1,000 1,200 1,000
Investment
required

100 70
The effects of three options at Kandy Kitchens
Rights Reserved
Stakeholder What stakeholders want from the
operation
What the operation wants from
stakeholders
Shareholders Return on investment
Stability of earnings
Liquidity of investment
Investment capital
Long-term commitment
Directors/top
management
Low/acceptable operating costs
Secure revenue

Well-targeted investment
Low risk of failure
Future innovation
Coherent, consistent, clear and
achievable strategies
Appropriate investment
Staff Fair wages
Good working conditions
Safe work environment
Personal and career development
Attendance
Diligence/best efforts
Honesty
Engagement
Staff representative
bodies (e.g. trade
unions)
Conformance with national

agreements
Consultation
Understanding
Fairness
Assistance in problem solving
Suppliers (of
materials, services,
equipment, etc.)
Early notice of requirements
Long-term orders
Fair price
On-time payment
Integrity of delivery, quality and
volume
Innovation
Responsiveness
Progressive price reductions
Typical stakeholders’ performance objectives (1 of 2)

Rights Reserved
Stakeholder What stakeholders want from
the operation
What the operation wants
from stakeholders
Regulators
(e.g. financial
regulators)
Conformance to regulations
Feedback on effectiveness of
regulations
Consistency of regulation
Consistency of application of
regulations
Responsiveness to industry
concerns
Government

(local, national,
regional)
Conformance to legal
requirements
Contribution to
(local/national/regional)
economy
Low/simple taxation
Representation of local
concerns
Appropriate infrastructure
Lobby groups
(e.g.
environmental
lobby groups)
Alignment of the organization’s
activities with whatever the
group are promoting

No unfair targeting
Practical help in achieving aims
(if the organization wants to
achieve them)
Society Minimize negative effects from
the operation (noise, traffic, etc.
and maximize positive effects
(jobs, local sponsorship, etc).
Support for organization’s
plans
Typical stakeholders’ performance objectives (2 of 2)
Rights Reserved
The five operations’ performance objectives
Quality Being RIGHT
Speed Being FAST
Dependability Being ON TIME

Cost Being PRODUCTIVE
Being ABLE TO CHANGEFlexibility
Rights Reserved
Minimum cost,
maximum value
Minimum price, highest value
Fast
throughput
Quick
delivery
Reliable
operation
Dependable
delivery
Error-free
processes
On-

specification
products and
services
Ability to
change
Frequent new
products, maximum
choice
The benefits of excelling at the five objectives
Dependability
Cost
Speed
Quality Flexibility
Internal
benefits
External
benefits

Rights Reserved
What does Quality mean in… (1 of 4)
Patients receive the most appropriate treatment.
… a Hospital?
Treatment is carried out in the correct manner.
Patients are consulted and kept informed.
Staff are courteous, friendly and helpful.
Rights Reserved
… an automobile plant?
All assembly is to specification.
Product is reliable.
All parts are made to specification.
The product is attractive and blemish-free.

Rights Reserved
… a bus company?
The buses are clean and tidy.
The buses are quiet and fume-free.
The timetable is accurate and user-friendly.
Rights Reserved
… a supermarket?
The store is clean and tidy.
Décor is appropriate and attractive.
Goods are in good condition.
Rights Reserved

Two common meanings of ‘Quality’
Quality as the specification of a product or service
e.g. Lower Hurst Farm produces organic meat raised
exclusively on its own farm
Quality as the conformance with which the product or service
is produced
e.g. Quick service restaurants like McDonald’s may buy
less expensive meat, but its conformance must be high
Rights Reserved
Irrespective of a product or service’s specification quality,
producing it so it
conforms to its specification consistently brings benefits to any
operation.
Externally – it enhances the product or service in the market, or
at least
avoids customer complaints.
Internally – it brings other benefits to the operation.
It prevents errors slowing down throughput speed.

It prevents errors causing internal unreliability and low
dependability.
It prevents errors causing wasted time and effort, therefore
saving
cost.
External and internal benefits of conformance quality
Rights Reserved
The time between requiring treatment and receiving
treatment is kept to a minimum.
… a Hospital?
What does Speed mean in… (1 of 4)
The time for test results, X-rays, etc. to be returned
is kept to a minimum.
Rights Reserved
Time between dealers requesting a vehicle of a

particular specification and receiving it is minimized.
Time to deliver spares to service centres is
minimized.
Rights Reserved
… a bus company?
The time between customer setting out on the
journey and reaching his or her destination is kept
to a minimum.
Rights Reserved
… a supermarket?
The time for the total transaction of going to the
supermarket, making the purchases and returning it
is minimized.
The immediate availability of goods.

Rights Reserved
Speed again has different interpretations externally and
internally.
Externally – it means the elapsed time between a customer
asking for a
product or service and getting it (in a satisfactory condition).
It often enhances the value of the product or service to
customers.
It helps to overcome internal problems by maintaining
dependability.
It reduces the need to manage transformed resources as they
pass
through the operation, therefore saving cost.
External and internal benefits of speed
Rights Reserved
What does Dependability mean in… (1 of 4)
Proportion of appointments that are cancelled kept
to a minimum.
… a hospital?

Keeping appointment times.
Test results, X-rays, etc. returned as promised.
Rights Reserved
On-time delivery of vehicles to dealers.
On-time delivery of spares to service centres.
Rights Reserved
… a bus company?
Keeping to the published timetable at all points on
the route.
Constant availability of seats for passengers.
Rights Reserved

… a supermarket?
Predictable opening hours.
Proportion of goods out of stock kept to a minimum.
Keeping to reasonable queuing times.
Constant availability of parking.
Rights Reserved
Externally – it enhances the product or service in the market, or
at least
avoids customer complaints.
It prevents late delivery slowing down throughput speed.
It prevents lateness causing disruption and wasted time and
effort,
therefore saving cost.
External and internal benefits of Dependability

Rights Reserved
Flexibility has several distinct meanings but is always
associated with an operation’s ability it change.
Change what?
–
Product/service flexibility.
time – Mix flexibility.
– Volume
flexibility.
– Delivery
flexibility.
Flexibility – what does it mean?
Rights Reserved
What does Flexibility mean in… (1 of 4)
Introducing new treatments.

… a Hospital?
A wide range of treatments.
The ability to adjust the number of patients treated.
The ability to reschedule appointments.
Rights Reserved
The introduction of new models.
A wide range of options.
The ability to adjust the number of vehicles
manufactured.
The ability to reschedule manufacturing priorities.
Rights Reserved
… a bus company?
The introduction of new routes and excursions.
A large number of locations served.

The ability to adjust the frequency of services.
The ability to reschedule trips.
Rights Reserved
… a supermarket?
The introduction of new goods.
A wide range of goods stocked.
The ability to adjust the number of customers served.
The ability to get out-of-stock items.
Rights Reserved
… a hospital ?
Staff
costs
Technology

and facilities
costs
Bought-in
materials
and
services
What does Cost mean in… (1 of 4)
Rights Reserved
Technology
and facilities
costs
Staff
costs
Bought-in
materials

and
services
Rights Reserved
… a bus company?
Staff
costs
Technology
and facilities
costs
Bought-in
materials
and
services

Rights Reserved
…. a supermarket?
What does Cost mean in………
Staff
costs
Technology
and facilities
costs
Bought-in
materials
and
services
Rights Reserved
External and internal benefits of performance
objectives

Rights Reserved
Polar diagrams
Polar diagrams are used to indicate the relative
importance of each performance objective to an operation
or process.
They can also be used to indicate the difference between
different products and services produced by an operation
or process.
Cost
Quality Flexibility
Dependa
bility
Speed
Rights Reserved
Polar diagrams for a taxi service versus a bus
service

Rights Reserved
Polar diagrams for police performance
Rights Reserved
Rights Reserved
The measures used in the balanced scorecard
Rights Reserved
Trade-offs
‛Do you want it good, or do you want it Tuesday’?
‘No such thing as a free lunch’.
‘ You can’t have an aircraft which flies at the speed of
sound, carries 400 passengers and lands on an aircraft
carrier. Operations are just the same’. (Skinner)
‘Trade-offs in operations are the way we are willing to

sacrifice one performance objective to achieve excellence in
another’.
Rights Reserved
The ‘efficient frontier’ view of trade-offs
Rights Reserved
8th edition
Part One
Directing the operation
Chapter 1
Rights Reserved
What is operations management?

Rights Reserved
Slack et al.’s model of operations management
Rights Reserved
In Chapter 1 – Operations management – Slack et al.
identify the following key questions…
organization?
-transformation-output process?
Key questions
Rights Reserved

Operations management is the activity
of managing the resources which are
devoted to the production and delivery of
products and services.
Operations management defined
Rights Reserved
Core functional
activities
Internet service
provider (ISP)
Fast food
chain
International
aid charity
Furniture
manufacturer
Operations

Marketing
and sales
Product /
service
develop-
ment
Maintain hardware
software and
content
Implement new
links and services
Make
burgers, etc.
Serve
customers
Maintain
equipment
Give service

to the
beneficiaries
of the charity
Make
components
Assemble
furniture
Promote services
to users and get
registrations
Sell advertising
space
Advertise on
TV
Devise
promotional
materials
Develop funding

contracts
Mail out
appeals for
donations
Advertise in
magazines
Determine
pricing policy
Sell to stores
Devise new
services and
commission
new information
content
Design
hamburgers,
pizzas, etc.
Design decor

for restaurants
Develop new
appeals
campaigns
Design new
assistance
programmes
Design new
furniture
Co-ordinate
with fashionable
colours
The activities of core functions in some organizations
Rights Reserved
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.
Operations are everywhere
Rights Reserved
‘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… ’

Example – Pret A Manger
Source: Getty Images: Bloomberg / Chris Ratcliffe
Rights Reserved
Automobile assembly factory – Operations
management uses machines to efficiently
assemble products that satisfy current
customer demands
Operations management in all types of organization
Source: Shutterstock.com: Supergenijalac
Rights Reserved
Physician (General practitioner)
– Operations management uses
knowledge to effectively diagnose
conditions in order to treat real
and perceived patient concerns

Source: Shutterstock.com: Stuart Jenner
Rights Reserved
Management consultant – Operations
management uses people to effectively
create the services that will address
current and potential client needs
Source: Shutterstock.com: Indianstockimages
Rights Reserved
Disaster relief
charity – Operations
management uses
ours and our partners’
resources to speedily

provide the supplies
and services that
relieve community
suffering
Source: Getty Images: AFP / Romeo Gacad
Rights Reserved
Advertising agency – Operations
management uses our staff’s knowledge
and experience to creatively present
ideas that delight clients and address
their real needs
Source: Alamy Images: Adrian Sherratt
Rights Reserved

machines
Operations management uses…
to efficiently assemble products
effectivelyknowledge
to treat real and
perceived patient
concerns
diagnose
conditions
to
people create services that will
address current and
potential client
needs
effectivelyto
ours and our
partners’
resources
speedily provide supplies and

services that relieve
community suffering
to
our staff’s
knowledge and
experience
creatively ideas that delight
clients and address
their real needs
presentto
Rights Reserved
The business environment is
changing, for example…
Prompting operations responses, for
example…
-based competition

rvice
introduction
transparent
-based technologies
-based integration of operations
activities

-to-market methods
development
Operations management is changing
Rights Reserved
Operations input resources and outputs
Rights Reserved
Predominantly
processing inputs of
materials
Predominantly

information
Predominantly
customers
All manufacturing
operations
Mining companies
Retail operations
Warehouses
Postal services
Container shipping line
Trucking companies
Accountants
Bank headquarters
Market research
company
Financial analysts
News service

University research unit
Telecoms company
Hairdressers
Hotels
Hospitals
Mass rapid transports
Theatres
Theme parks
Dentists
Examples of dominant transformed resource inputs
Rights Reserved
Figure 1.4
Changes in the business environment are
shaping a new operations agenda
Rights Reserved

Most operations produce products and services
Rights Reserved
Operation Some of the operation’s
inputs
Some of the operation’s
processes
Some of the
operation’s outputs
Airline Aircraft
Pilots and air crew
Ground crew
Passengers and freight
Check passengers in
Board passengers
Fly passengers and freight
around the world

Care for passengers
Transported
passengers and freight
Department
store
Products for sale
Sales staff
Information systems
Customers
Source and store products
Display products
Give sales advice
Sell products
Customers and
products ‘assembled’
together
Police Police officers
Computer systems

Information systems
Public (law-abiding and
criminals)
Crime prevention
Crime detection
Information gathering
Detaining suspects
Lawful society, public
with a feeling of
security
Frozen food
manufacturer
Fresh food
Operators
Processing technology
Cold storage facilities
Source raw materials
Prepare food

Freeze food
Pack and freeze food
Frozen food
Some operations described in terms of their processes
Rights Reserved
The supply network-flow between operations
Broadcasting
company
Promotion
agency
Studios
Casting
agency
Creative
agency
The programme
and video

supply network
Programme
/ video
maker
The
programme
and video
operation
The operation-flow between processes
Example of analysis at three levels (1 of 3)
Rights Reserved
The supply network-flow between
operations
Programme
and video
operation

The operation-flow between processes
Production
unit
Set and props
manufacture
Engineer
-ing
Marketing
and sales
Finance and
accounting
Post
production
The programme and
video operation
Rights Reserved
The supply network-

flow between
operations
Programme
and video
maker
The operation-
flow between
processes
Set and props
manufacture
Set
design
Props
acquisition
Set
construction
Set
finishing

The ‘Set and
props
manufacturing’
process
Rights Reserved
Table 1.4
Some examples of processes in non-operations functions
Rights Reserved
Two ‘end-to-end’ business processes
Rights Reserved
High
Implications
• Low repetition
• Each staff member

performs more of
each task
• Less systemization
• High unit costs
Implications
• High repeatability
• Specialization
• Capital intensive
• Low unit costs
VolumeLow High
A typology of operations and processes (1 of 4)
The implications of high and low Volume in operations and
processes…
Rights Reserved
High
Implications
• Flexible

• Complex
• Match customer
needs
• High unit costs
Implications
• Well defined
• Routine
• Standardized
• Regular
• Low unit costs
VarietyHigh Low
The implications of high and low Variety in operations and
processes…
Rights Reserved
High
Implications

• Changing
capacity
• Anticipation
• Flexibility
• In touch with
demand
• High unit costs
Implications
• Stable
• Routine
• Predictable
• High utilization
• Low unit costs
Variation in
demand
High Low
The implications of high and low Variation in operations and
processes…

Rights Reserved
High
Implications
• Short waiting
tolerance
• Satisfaction
governed by
customer
perception
• Customer contact
skills needed
• Received variety is
high
• High unit costs
Implications
• Time lag between
production and
consumption
• Standardization
• Low contact skills
• High staff
utilization

• Centralization
• Low unit costs
VisibilityHigh Low
The implications of high and low Visibility in operations and
processes…
Rights Reserved
It is important to understand how different operations are
positioned on the four Vs.
Is their position where they want to be?
Do they understand the strategic implications of their position?
Rights Reserved
Slack et al.’s general model of operations
management

Rights Reserved
To be a great Operations Manager you need to…
• Enjoy getting things done – Operations management is about
doing things.
• Understand customer needs – Operations management is about
understanding what ‘value’ means for customers.
• Communicate and motivate – Operations managers must be
‘people people’.
• Learn all the time – Operations management is about learning,
because
without learning there can be no improvement.
• Commit to innovation – Operations management is about
being creative,
imaginative, and (sometimes) unconventional.
• Know your contribution – Operations management is about
contributing to
the effective working of other functions.
• Be capable of analysing – Operations management is about
evaluating
decisions.

• Keep cool under pressure – Operations managers need to be
able to remain
calm no matter what problems occur.

Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Right.docx

Recomendados

Recomendados

Más contenido relacionado

Similar a Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Right.docx

Similar a Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Right.docx (20)

Más de dickonsondorris

Más de dickonsondorris (20)

Último

Último (20)

Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Right.docx