Organisational Decision Making

and Operations Management

 Week 1:
Introduction to Operations
Management (OM) &
Operations Strategy
 Introduction to OM
Operations Operations in
Strategy Context Sustainable Operations
Product/Service Design Agile Operations
Process Design
Lean Operations
Operations Improvement

◼ Operations and the processes

are transformation systems that
take in inputs and use process
resources to transform them into
outputs.

Operations System Design ◼ Resources both in an

Global Network Operations organisation’s operations as a
whole and in its individual
processes need to be managed
Capacity Management, in terms of how they are
Operations Planning & Control, directed, how they are designed,
Supply Chain Management how delivery is planned and
controlled and how they are
developed and improved
 OM in Context
Key Topics:

◼ Defining OM

◼ Scope of OM

◼ Different Types of Operations and A

Process View
◼ Historical Development and New Trends

Core Reading: Textbook Chapter 1

 OM Definition
OM is the activity of managing the resources which are
devoted to the production and delivery of products and
services for internal and external processes.
 OM Definition

◼ Managing the process of production

◼ Ensuring efficient & effective business

operations

◼ Using as few resources as needed

◼ Meeting customer requirement

Supply Chain Management (SCM)

“…so that merchandise is produced and distributed at the right quantities, to the
right locations, and at the right time, in order to minimize system-wide costs while
satisfying service level requirements.”
 OM Definition
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 processed 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.
Some Examples
 Some Examples
Back office operation Kitchen unit
in a bank manufacturing
operation

Retail operation
They are all Take-out / restaurant
operation
OPERATIONS
Scope of OM?
 Scope of Operations in entire supply chain:
A Supply Chain Model
The SCOR Model

SCOR, Supply-Chain Operations Reference, is a model developed and endorsed by The Supply-
Chain Council (SCC) as the cross-industry standard for supply chain management. SCOR
defines the supply chain as the integrated processes of Plan, Source, Make, Deliver, and Return,
spanning from your suppliers’ supplier to your customers’ customer, aligned with Operational
Strategy, Material, Work, and Information Flows.
-Supply Chain Council 2007
 Scope of Operations in entire supply chain:
A Supply Chain Model
The SCOR Model

SCOR, Supply-Chain Operations Reference, is a model developed and endorsed by The Supply-
Chain Council (SCC) as the cross-industry standard for supply chain management. SCOR
defines the supply chain as the integrated processes of Plan, Source, Make, Deliver, and Return,
spanning from your suppliers’ supplier to your customers’ customer, aligned with Operational
Strategy, Material, Work, and Information Flows.
-Supply Chain Council 2007
How many countries does it
take to make a Pfizer vaccine?
Three-stage manufacturing
• The first stage involves the molecular cloning of DNA plasmids that code for the spike protein.
• The second stage is to build the desired mRNA strands using the DNA.
• The third stage is to combine the mRNA with lipid nanoparticles etc.
How many countries does it
take to make a Pfizer vaccine?

The manufacturing process requires 280 components and relies upon 25 suppliers
located in 19 different countries.
 From Production to OM

The scope of OM has

expanded from focusing on
processes in manufacturing
organisations to include
service organisations,
processes in other functions
(such as marketing, finance
and HRM) and how
operations interact with
each other in supply
networks and chains

ent – Slide 21
 Differences Between Goods and Services

CHARACTERISTICS OF SERVICES CHARACTERISTICS OF GOODS

Intangible: Ride in an airline seat Tangible: The seat itself

Produced and consumed simultaneously: Beauty salon Product can usually be kept in inventory (beauty
produces a haircut that is consumed as it is produced care products)

Unique: Your investments and medical care are unique Similar products produced (iPods)

High customer interaction: Often what the customer is Limited customer involvement in production
paying for (consulting, education)

Inconsistent product definition: Auto Insurance changes Product standardized (iPhone)

with age and type of car

Often knowledge based: Legal, education, and medical Standard tangible product tends to make
services are hard to automate automation feasible

Services dispersed: Service may occur at retail store, local Product typically produced at a fixed facility
office, house call, or via Internet

Quality may be hard to evaluate: Consulting, education, and Many aspects of quality for tangible products are
medical services easy to evaluate (strength of a bolt)

Reselling is unusual: Musical concert or medical care Product often has some residual value
How do organizations view OM?
 A Process View
The “Input-Transformation-Output” model

All operations are transformation processes…

Some operations described in terms of their inputs, purpose and outputs

The Process Hierarchy

Some operations described in terms of their inputs, purpose and outputs
 The process perspective at the
level of the individual process

Some examples of processes in non-operations functions

 At McDonald’s
Transformed
resources …
• Ingredients
• Packaging
• Customers CUSTOMERS

Output
Input Served and
resources satisfied
customers
Transforming
resources …
• Equipment
• Fittings
• Staff
 At UoB?

Transformed
resources?
CUSTOMERS?

Input
Outputs?
resources

Transforming
resources ?
Different Types of
Ops Processes
 Draw a process map for
Customised Sandwich Making
 Draw a process map for
Standard Sandwich Making
Are processes managed to
reflect their operating
circumstances?
Characteristic of Operations
Processes: 4Vs

Low Volume High

High Variety Low

High Variation in Low

demand

High Visibility Low

 Characteristic of Operations
Processes: 4Vs
Four Vs analysis for some retail banking processes
 What are the implications for retail banking
Task
services from branch-based to online

Shift from ……..

Branch banking To Online banking
Implications
Implications

Low Volume High

High Variety Low

High Variation Low

High Visibility Low

 The Four Vs analysis for the changing emphasis of
retail banking services from branch-based to online

Shift from ……..

Branch banking To Online banking
Implications
Implications

Low repetition High repetition

Individuals perform more of job Specialisation
Low Volume High Systemisation
Less systemisation
High unit costs Capital intensive
Low unit costs

Flexible Well defined

Complex Routine
High Variety Low Standardised
Match customer needs
Regular
High unit costs
Low unit costs

Changing capacity Stable

Anticipation Routine
Flexibility High Variation Low Predictable
In touch with demand High utilisation
High unit costs Low unit costs
Short waiting tolerance Time lag between
Customer perception important production and
Customer contact skills needed High Visibility Low consumption
High unit costs Standardised
High utilisation
Low unit costs
 Critical thinking practice

I want you continually to be looking for the operations

implications of every operation you enter.

You are going to be turned into sad people who cannot go

anywhere without thinking of how you could improve the
process
 Type of
Date Period Output The Discipline

1700
Bespoke
Pre 1750

Factory

1800
Process
INDUSTRIAL School Management
REVOLUTION

The
19th Century

1900
Scientific

Evolution of
Management
School Mass/Low

1920
Variety

Operations Human
Relations
School
Production
Management

Management
1940

Operational
Research
School
1960

Mass/
High
Advanced Variety Operations
The Service
1980

Computer Management
Revolution
Applications
2000

Contemporary Developments
Evolution
‘The First OM Textbook’
Example of continuous flow
processes in De Re Metallica
(1556)
A, workman carrying broken rock in a barrow;
B, first chute;
C, first box;
D, its handles;
E, its bales;
F, rope;
G, beam;
H, post;
I, second chute;
K, second box;
L, third chute;
M, third box;
N, first table;
O, first sieve;
P, first tube;
Q, second table;
R, second sieve;
S, second tub;
T, third table;
V, third sieve;
X, third tub;
Y, plugs

(Hoover & Hoover 1950)

Frederick W. Taylor
(1856 – 1915)

 Known as “the father of

scientific management.
 In 1881, as chief engineer
for Midvale Steel, studied
how tasks were done.
 Began first motion and
time studies
 Created efficiency
principles
 Henry Ford
(1863 - 1947)

 In 1903, created Ford

Motor Company
 In 1913, first used moving
assembly line to make
Model T
 Unfinished product moved
by conveyor past work
station
T Model:
‘Make them  Paid workers very well for
all alike!’ 1911 ($5/day!)
Discover the world at Leiden University
 New Trends in OM

Globalisation, Collaboration, Digitisation, Servisitation,

Industrial Sustainability…
 Summary
◼ Operations and process managers manage transformation processes at three levels:
the level of the supply network, the level of the operation itself (or ‘the organisation’ if
that is more understandable to students) and the level of the individual process (some
of which will be within the operations function, and the rest of which will be in other
functions).

◼ Operations management activities can be analysed with a process view. Operations

and processes differ in terms of their volume, variety, variation and visibility (the four
Vs).

◼ Operations and process managers must perform four sets of activities to ensure that
their operations and processes contribute to overall strategic impact: Direct operations
strategy, Design operations and processes, Deliver products and services by planning
and controlling operations and process and Develop the performance and capability of
operations and processes.

◼ Emerging trends of development, including globalisation, digitisation, servitisation and

sustainable operations, require a more dynamic and resilient approach to system
design and operations.
 To do Tasks
◼ Review the lecture reader and Read textbook – Chapter 1
◼ Complete the review questions Q1.1 – Q1.3 based on your learning
(before the next lecture to be discussed in the class)
◼ Read the Kaston Trenton Service (KTS) Case Study on page 35 of the
textbook and prepare answers for the questions to be discussed with your
group peers during the Seminar of Week 2.
◼ Read the two 4Vs cases using the template on Canvas to be discussed
with your group peers during the Seminar of Week 2.
 Review Questions
Q1.1 You are interviewed for the OM manager job in a small
manufacturing company producing car components. Can you tell
the CEO how you will contribute to the business on this post?

Q1.2 What is the process view of OM and how will the view help
manage an airport in the future?

Q1.3 “OM concepts that were developed from the traditional

manufacturing context are less useful in service operations”. Do
you agree with the above statement? If yes, why? If no, why you
don’t?