And everywhere, because every service and product you use – the cereal you eat at breakfast, the chair you sit on and the radio station you listen to while you eat – is the result of an operation or process. 114 The benefits of interactive design 129 Summary answers to key questions 134 Case study: Chatsworth – the adventure.
Remember not only what the issue is about, but also understand why! Read the text and apply your
Use the critical comments in the text to understand some alternative views. He is the author of the seminal text Service Operations Management (with Graham Clark), now in its third edition (2008), published by Financial Times Prentice Hall.
Key operations questions
What are the performance objectives of operations and what are the internal and external benefits that result from excellence in each of them.
INTRODUCTION
Introduction
Chapter 1
Operations management
Key questions
IKEA's philosophy goes back to the original company, which was started in Sweden in the 1950s by Ingvar Kamprad. Both operating principles still form the basis of IKEA's retail activities today.
What is operations management?
This leads to some confusion as to where the boundaries of the operating function should be drawn. Working effectively with the other parts of the organization is one of the most important responsibilities of operations management.
Operations management is important in all types of organization
Automotive assembly plant – Operations management uses machines to efficiently assemble products that meet current customer requirements. Operations management is just as important in small organizations as it is in large ones.
The input–transformation–output process
However, most of the bank's activities are concerned with processing inputs of information about its customers' financial affairs. There are two types that the. building blocks of all operations:. facilities – the buildings, equipment, plant and process technology of the operation;. staff – the people who operate, maintain, plan and manage the operation.
The processes hierarchy
The idea of the internal network of processes is seen by some as too simplistic. Operations as a function, means the part of the organization that produces products and services for external customers of the organization;.
Operations processes have different characteristics
But even customer processing operations have a choice about how visible they want their operations to be. If they perceive a member of the operations staff being rude to them, they are likely to be displeased (even if the staff member meant no injustice), so high-visibility operations require staff with good customer contact skills.
Two very different hotels
These rarely seen staff perform the important but few contact tasks in the back office of the operation. To some extent, the position of an operation in the four dimensions is determined by the demand of the market it serves.
The activities of operations management
We can now combine the two ideas to develop the operations management model that will be used throughout this book. The first is the input-transformation-output model and the second is the categorization of operations management activity areas.
Summary answers to key questions
Even though we have urgent orders, the designers' needs always take priority.' (Sandra White). The first was the role of the design department and its influence on new product development.
Problems and applications
Compare and contrast Acme Whistles and Pret A Manger in terms of the way they will need to manage their operations. Compare them based on the volume of demand they have to handle, the variety of menus they serve, the variation in demand over the course of the day, week and year, and the visibility you have into food preparation.
Selected further reading
You can find more practice problems as well as worked examples and guided solutions in MyOMLab at www.myomlab.com. Think about and discuss the impact of volume, variety, variation and visibility on the day-to-day management of each of the operations and consider how each operation tries to cope with its volume, variety, variation and visibility.
Useful web sites
Chapter 2
Operations performance
The chaos at the terminal on its opening days made headlines worldwide and was seen by many as one of the most public failures of basic operational management in the modern history of aviation. T3 opened so quietly', said one journalist, 'that passengers would only know the terminal was new if they touched the still-dry paint.'
Operations performance is vital for any organization
It is also useful to think about what an individual organization or company wants from the stakeholder groups themselves. Broadly speaking, they should expect all their operations managers to contribute to the success of the organization by using resources effectively.
The quality objective
You would like to get things done in time to meet the delivery promises you have made. You would like to be able to change what you are doing; that is, the ability to change or adapt the operation's activities to cope with unexpected circumstances or to deal with customers individually.
The speed objective
Then it waits to be painted, and then waits again to be transported to the assembly line. Once again he waits along the track until he is finally mounted on the car.
When speed means life or death 4
Steel for the vehicle's door panels is delivered to the press shop, pressed into shape, transported to the paint area, coated for color and protection, and moved to the assembly line where it is fitted to the car. Finally, it is taken to the press area, pressed into shape, and again waits to be transported to the paint area.
The dependability objective
Dabbawalas hit 99.9999%
So entirely because of that one security of supply failure, a significant portion of the operation's time has been wasted dealing with the outage. 9.00–11.00. The grouped boxes are put into the train cars with markings to identify the box's destination (usually there is a designated car for the boxes).
The flexibility objective
For example, Dell is one of the largest volume manufacturers of personal computers in the world, yet it allows every customer to "design". although in a limited sense) their configuration. For example, Paris Miki, an upmarket retailer that has the largest number of eyewear stores in the world, uses its Mikissimes design system to capture a digital image of the customer and analyze facial characteristics.
Flexibility and dependability in the newsroom 6
Along with a list of customers' personal preferences, the system then recommends a particular design and shows it on the image of the customer's face. The time of the hospital's resources is saved because they are flexible to 'switch' from one task to the next.
The cost objective
Productivity can also be improved by making better use of inputs to operations. Flexible operations adapt to changing circumstances quickly and without disrupting the rest of the operation.
Trade-offs between performance objectives
Chapter 3
Operations strategy
All aircraft in the fleet are identical, providing savings through standardization of parts, maintenance and servicing. We modeled Ryanair after Southwest Airlines, the most profitable airline in the US," says Michael O'Leary, CEO of Ryanair.
What is strategy and what is operations strategy?
The better the operation does these things, the more support it provides to the company's strategy. Yet Hayes and Wheelwright suggest another phase: phase 4, in which the company views the operations function as the foundation for its competitive success.
The ‘top-down’ and ‘bottom-up’ perspectives
But together they provide an idea of the pressures that go to shape the content of operations strategy. So one perspective on operations strategy is that it should take its place in this hierarchy of strategies.
The market requirements and operations resources perspectives
As a result, cost and productivity issues, along with reliability of supply, are likely to be the main concerns of the operation. The fourth and final perspective we will take on operational strategy is based on a particularly influential theory of business strategy – the resource firm view (RBV). average' strategic performers are likely to derive their sustainable competitive advantage from the core competencies (or capabilities) of their resources.
Amazon, what exactly is your core competence? 8
How should the company decide which products or services to develop and how the development process should be managed. How should operations decide how much inventory to have and where to place it.
The process of operations strategy
How many geographically separated sites should the operation have and where should they be located. How responsibility for operations function activities should be divided among the various groups in the operation.
Sometimes any plan is better than no plan 9
Ken Platts of the University of Cambridge has written about the nature of the operational strategy formulation process. What is the difference between a 'market requirements' and an 'operational resource' view of operational strategy.
DESIGN
Chapter 4
Process design
In 1975, McDonald's had no drive-throughs, but now more than 90 percent of its US restaurants incorporate a drive-through process. Perhaps the most notable experiment in making drive-through process times smoother is being conducted by McDonald's in the US.
What is process design?
Small changes in the design of products and services can have profound consequences for the way the company will ultimately produce them. Overlapping product and process design has implications for the organization of the design activity, as will be discussed in Chapter 5.
What objectives should process design have?
There may be aspects related to the objectives or the broad positioning of the process that will have to be modified after its more detailed analysis. When Daimler-Chrysler began to investigate the feasibility of the Smart town car, the challenge was not only to investigate the economic feasibility of the product, but also to build environmental sensitivity into the design of the product and the process that produced it. would make
Process types – the volume–variety effect on process design
Dealing with a very high volume of requests requires some kind of structuring of the customer communication process. The matrix diagonal shown in Figure 4.4 represents a "natural" lowest cost position for an operation.
Detailed process design
When customers join the queue in the process, the work-in-process (or work-in-progress) is sometimes written as WIP. Although the process achieves a turnaround time of 3 days (which seems reasonable for this type of process), applications are only worked on 1.7 percent of the time they are in the process.
Heathrow delays caused by capacity utilization 6
It also demonstrates an important point related to the day-to-day management of the process - the only way to guarantee one hundred percent utilization of resources is to accept an infinite amount of work-in-progress and/or waiting time. Design processes often involve making decisions prior to the final process, and so the designer is often not entirely sure of the consequences of his or her decisions.
The Central Evaluation Unit
Chapter 5
The design of products and services
April 27, 2005 – The plane makes its maiden flight, taking off in Toulouse and circling the Bay of Biscay for four hours before returning to Toulouse. October 2007 – The super-jumbo finally takes off in full service as a commercial airliner for Singapore Airlines.
Why is good design so important?
The articulation, development and testing of the concept is therefore a decisive stage in the design of products and services. One can describe the goals of the design activity in the same way as we do any transformation process.
The stages of design – from concept to specification
Likewise, the design activity attempts to produce designs for the same objectives. In summary, the idea of the design funnel does not describe what actually happens in the design activity.
The Daniel Hersheson Blowdry Bar at Top Shop 6
Once in the pod, customers can choose from a photo menu tailored to nine trendy styles with names like "The Super Straight," "The Classic Big and Bouncy" and "Wavy Gravy." It is the confidence they gain that is so important in helping them become fully qualified and successful designers in their own right.'
The benefits of interactive design
Earlier in the chapter we described the design process as essentially a set of individual, predetermined stages. As head of marketing he is closely involved in the design and development of new services and facilities.
Chatsworth – the adventure playground decision
Chapter 6
Supply network design
Most importantly, it allowed Dell to learn how to manage its supply chain so that products can move quickly and efficiently through the supply chain to the end customer, reducing Dell's level of inventory and giving Dell a significant cost advantage. Other commentators have pointed out that Dell's competitors have also now learned to manage efficient supply chains ("Getting a 20-year competitive advantage from your knowledge of how to manage supply chains isn't too bad.") One of however, the main factors were seen as the shift in the nature of the market itself.
The supply network perspective
Any operation has only two options if it wants to understand its end customers' needs at the end of the network. After this, the upstream parts of the network that contribute most to end customer service will need to be identified.
Configuring the supply network
Whether referred to as make-or-buy, vertical integration or no vertical integration, in-house or outsourced supply, the choice of operations is rarely simple. Outsourcing means deciding to buy in products or services instead of performing the activities in-house.
The location of capacity
Outsourcing to another lower-cost region of the world is usually done to reduce the overall cost of the operation, as is outsourcing to a supplier that has more expertise or scale, or both.5. Another incentive to move is changes in the cost or availability of supply of operating inputs.
The Tata Nano finds a new home 6
Transportation costs include both the cost of transporting inputs from their source to the site of operation, and the cost of transporting goods from the site to customers. For example, the location of a luxury tourist hotel, which offers holiday accommodation in the market, depends very much on the internal characteristics of the area.
Developing nations challenge Silicon Valley 9
He named his hotel chain Hyatt; it is now one of the most famous hotel chains in the world. Similarly, the weights are an indication of how important the company finds each criterion in the circumstances in which it finds itself.
Long-term capacity management
Forecasting
The same applies to a factory manager who has to buy new equipment to meet increasing demand. The first question is knowing how far ahead you should look, and this will depend on the options and decisions available to you.
In essence forecasting is simple
3 A key factor influencing the birth rate in an area is the amount and type of housing stock. So not only the existing housing stock will have an impact on the child population, but also the type of housing developments under construction, planned and proposed.
Approaches to forecasting
If this is taken from the data, as in Figure S6.3(b), we are left with a cyclical seasonal variation. We will examine two of the most common forecasting approaches, which are based on projecting forward from past behavior.
