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What is Operations Management?

Operations management is the field concerned with the

efficient and effective

planning, scheduling, and control of

manufacturing and service entities


it is concerned with managing the process that converts inputs into outputs


What is a process? How does this allow for process thinking and improvement?

A process is the sequence of operations and events, taking up time, space, expertise or other resources, which lead to the production of some outcome


Anything which repeats in the operation can be seen as a process.

The repetitive nature of processes allows for improvement!


What does the management in operations management entail?

  • Design
  • Planning (provision of resources)
  • Scheduling (allocation of resources to tasks)
  • Control and improvement


What factors influence process performance?

Internal objectives: "shareholder value"

  • 100% effective use of resources
  • Minimal operating expenses: zero defects, zero stock

External objectives

  • Quality
  • Speed
  • Dependability
  • Flexibility
  • Cost 


What are the various cost implications of OM decisions?

Cost of :

  • inventory: cost of capital, handling, obsolescence
  • production: batch size, labour, set ups
  • logistics and distribution: transportation
  • sales: opportunity cost of lost sales


What are the qualities of a company competing on cost?

  • low price
  • high volume
  • limited product range, little customisation
  • automation to reduce costs
  • low skill labour
  • not necessarily low quality


What are the qualities of a company competing on quality?

  • Quality is often subjective
  • Service quality is meeting/exceeding customer requirements
  • High quality services demonstrate:
    • superior product features
    • excellent customer service
    • consistent delivery
    • process quality


Competing on speed?

  • rapid delivery
  • on time delivery
  • availability


competing on flexibility

  • easily customise product/service to meet requirements
  • ability to ramp capacity up and down to match market demands


What are the different meanings of flexibility?

Operation's ability to change

  • product
  • mix
  • volume
  • delivery


Describe the order of the 'Sandcone' cumulative capabilities model



Whats the difference between structural and infrastructural operations decisions?

Structural: LONG TERM decisions related to the delivery process, flow of goods and services
e.g. Location, capacity, technology, vertical integration


Infrastructural: SHORT TERM decisions relating to the planning and control of the systems of operation
e.g. Workforce, QC, organisation structure


What are the 4Vs that affect different types of operations?

Variation in demand


The single most important feature of a process in a business operation is the trade off between production volume and product variety. What does it define?

-    Types of job design required
-    Necessary tools and technology
-    Define cost structure
-    Defines relationship with suppliers
-    Establishes customer expectations: cheap or customised


Name the different manufacturer-service combinations

  • Service-led producers – Rolls-Royce

revenues in non production                              costs in production

  • Service manufacturers – IBM (consultant)

revenues in non production
costs in non production

  • System integrators – Innomech

revenues in production
costs in non production

  • Product manufacturers – P&G

revenues in production
costs in production


Explain the difference between pure goods and services?

Pure Goods: Tangible, can be stored, production precedes consumption, low customer contact, can be transported, quality is evident


Pure Services: Intangible, cannot be stored, production and consumption are simultaneous, high customer contact => inherent variability, cannot be transported, quality difficult to judge.


Describe Schmenner's Service process matrix

Schmenner’s Service Process Matrix (Degree of customisation vs Labour intensity)

  • Service Factory [L,L] – costs from equipment – airlines, hotels 
  • Service Shop [H,L] – Customised mass services – car repair, ‘Routine hospitals’
  • Mass Service [L,H] – Customers treated as similar – Retailing, banking
  • Professional Service [H,H] – Costs principally for ‘elite’ labour – Lawyers, accountants