Operations Management: Transforming Resources

Kpl 1 Operations Management

• Operations management involves managing resources to create and deliver services/products.
• Operations managers oversee the resources within the operations function.

Input Resources

• Customers: Operations may alter customer physical properties (hairdressers), accommodate them (hotels), transform location (airlines), physiological state (hospitals), or psychological state (entertainment).
• Materials: Operations can transform physical properties (manufacturing), location (parcel delivery), possession (retail), or store materials (warehouses).
• Information: Operations may transform informational properties (accountants), change information possession (market research), store information (archives), or change location (telecommunications).

Transforming Resources

• Facilities: Buildings, equipment, plant, and process technology.

• Staff: People who operate, maintain, plan, and manage the operation.

• Operations processes transform inputs, differing in volume, variety, variation in demand, and visibility.

Kpl 2 Operations Strategy

• Strategic decisions impact the entire organization, defines its position, and facilitates progress towards goals.

• A four-stage model is used to evaluate operations, progressing from negative impact (stage 1) to being central to competitive strategy (stage 4).

• Stage 1: Internal Neutrality: Operations aim to be ignored by avoiding mistakes, contributing little competitively.

• Stage 2: External Neutrality: Operations compare themselves to external competitors, implementing 'best practices'.

• Stage 3: Internally Supportive: Operations align with company strategy, developing appropriate resources to be 'internally supportive'.

• Stage 4: Externally Supportive: Operations drive competitive success through innovation, proactivity, and forecasting market changes to be 'externally supportive'.

• Perspectives of operations strategy:

• Top-down: Corporate strategy guides business objectives and functional contributions.

• Bottom-up: Strategy emerges from daily operational experiences.

• Market requirements: Operations focuses on satisfying market demands.

• Operations resources: The resource-based view (RBV) emphasizes core competencies and capabilities.

• Emphasis is put on cost performance if customers value low prices.

• Resource-based view (RBV) posits that firms can gain an advantage based on their competencies.

Kpl 3 Social, Environmental, and Economical Performance

• The 'triple bottom line' involves measuring impact on people, the planet, and profit.

Kpl 4 Service and Product Design

• Design involves: concept, component services/products, and process for creation/delivery. Customers' needs should be met with the design.
• Quality function deployment (QFD) ensures the overall service or product will still meet customer needs.

Kpl 5 Process Design

• Throughput rate measures units emerging from a process per time unit.
• Throughput time: Time taken for inputs to become outputs.
• Utilization is the proportion of available time resources are performing work.

Manufacturing process types

• Project processes deal with customized products and have a long completion time.
• Jobbing processes focus on high variety and low volumes and share resources.
• Batch Processes produce more than one product each time.
• Mass Processes make goods in high volume and low variety.
• Continuous Processes involve high volume and low variety whilst operating constantly.

Service process types

• Professional Services are high-contact that need customer needs with customization.

• Service Shops combine customer contact, volumes, personalization, and staff discretion.

• Mass Services involve limited contact time as equipment-based.

• Job rotation increases flexibility, whereas job enlargement allocates more tasks. Job enrichment allocates decision-making tasks, whereas, empowerment grants authority to change how jobs are performed. Team based organisations has skilled colleagues that perform collective tasks.

Kpl 6 Location, Layout, and Flow

• Layout is how transformed resources are positioned and tasks allocated. A good layout will have safety, length of flow, clarity, staff conditions, use of space and long term flexibility.
• Fixed-position layout: Here, the recipient of processing is stationary; the equipment moves. The product is too delicate to move
• Functional layout: Similar resources/processes are located together for patient needs. Processes achieve staff and bed utilisation.
• Cell layout: Transformed resources are pre-selected to move to a cell for specific needs. The products are then located so that customers can find them.
• Line layout: Customers follow a prearranged route in which the route and processes match the operation. Self-service cafeterias use the same customer requirements and layouts.
• Mixed layouts combine different layout types.

Kpl 7 Supply Network Management

• Supply network perspective views an operation in context with customers and suppliers, forming supply chains.
• First-tier suppliers provide materials, information, etc. Second-tier suppliers supply the first-tier.
• First-tier customers are the main customer group that second-tier customers supply.
• Business process outsourcing (BPO) involves indirect processes like payroll.
• Dual Sourcing involves using suppliers for similar goods and services.
• Global Sourcing has expanded in the proportion of services and services.
• The 'bullwhip effect' involves small disturbances that cause volatility.
• Back-loading involves transportation with empty return vehicles.
• Vendor-managed inventory (VMI) has upstream suppliers that manage downstream the customer inventory.

SCOR Model (Supply Chain Operation Reference)

• 'Source' refers to procurement, delivery, receipt, and the transfer of material items. 'Make' refers to the transformation process to products, whereas, 'Deliver' means the processes perform customer-facing ordering management and logistics.
• Return processes move material reverse because of defects, or post-delivery.
• Plan manages links and reconciliation.

Kpl 8 Capacity Management

• Capacity is the maximum value-added activity level achieval under normal operating conditions.

• Capacity constraint is often the ceiling set for the whole operation. Capacity management is dealing with fluctuations in seasonal change and fluctuations in demand The usage of capacity is measured by overall equipment effectiveness (OEE).

• Ways to Cope with Demand Fluctuation: – Level capacity plan: Ignore fluctuations and keep activity levels constant. – Chase demand plan: Adjust capacity to reflect demand fluctuations.

• Using part-time staff varies from recruiting full-time. Operations also might buy capacity in periods of high demand (subcontracting.) The spent time can be reduced in overtime. Demand management has the ability to attempt to change demand to fit the capacity availability.

Kpl 9 Inventory Management

• Inventory (stock) is the stored accumulation of resources within a transformation system. Inventory is created for the difference in timing.

• Reasons for inventory

  • To cope with unexpected interruptions or demand (buffer)

• To cope with inability to make the products at the same time(cycle)

• To operate at different speeds (de-coupling)

• To cope with supply or demand fluctuations (anticipation)

• To cope with transportations delays (pipeline)

• Other types

  • Buffer : Compensates by using safety
  • Cycle: the need to provide in batches.
  • Anticipation: is used for when demand predications can be large.
  • Pipeline: Material cannot instantly move between supply and demand.

• The raw materials, components inventories provide goods from the supplier. Economic Order Quantity (EOQ) is used to decide the amount of stock. The re-order point refers to when the stockfalls, whilst ABC inventory management helps focus.

Kpl 10 Planning and Control

• Planning formalizes future events, whereas, control manages changes when the plan is false. Supply is with dependent and independent factors. It creates/makes planning and design.

• Loading is allocated, whereas, sequencing is LIFO and FIFO.

• Forward scheduling starts work. Backward scheduling prevents lateness. A Push system moves on, whereas, a Pull system wants.

Kpl 11 Quality Management

• Quality has many definations, but one is conformance to customer expectations.

• Here are Gaps to note:

• Customer-operation specification gap: Mismatch between internal specification and customer expectations.

• Concept gap: Mismatch quality internally and concept.

• Quality-Specification gap: Mismatch internal quality specification and actual quality.

• Quality communicator gap: Gap between image and quality

• Integration and maintaining quality allows is economical (TQM). It integrates development and includes everything and everyone whilst covering all costs. Furthermore, it is improves through systems, procedures and a continuous process.

  • Agreement to internal agreements improves concepts.
  • Prevention Cost prevent failures and errors. Meanwhile appraisal costs avoid quality failures. Internals failures will result internally in material whilst external failures will effect goodwill. The ISO aims to establish requirements.

Kpl 13 Operations of improvement

• Are total quality management (TQM), lean, business process re-engineering (BPR) and Six Sigma

  • Business can be better applied to the technology. -Benchmarking can involved learning and comparing.

• The variance for six-sigma has deviations that have process and the sigma indicates such.