BSNS105 Lecture 5 2013 Semester 1

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Department
Business Studies
Course
BSNS105
Professor
Diane Ruwhiu
Semester
Summer

Description
Lecture 5: Managing Organisations; Organisation of Operations Chapter 19, 20 Key Focuses of this lecture: - What is operations management? - Operations Strategy - Designing operational processes 1. What is operations management? “The field of management that focuses on the physical production of goods or services and uses specialised techniques for solving manufacturing* problems” The operations activity is either a competitive weapon or a corporate milestone (Skinner, 1969) * Contemporary understanding of operations management goes beyond mere manufacturing to all processes. In a ‘nutshell’ operations management in an organisational setting is the managing, decision- making, strategising about the following: * Resources and processes to - A person, asset, material or capital which can be used develop: to accomplish a goal. - A series of activities, changes, or functions * Capabilities to enhance the - Competencies, those activities, resources, etc. on which firm/organisation’s we base our advantage; what we are especially good at * Advantage or lead to improved - Market positioning, financial, faster, better, stronger etc. performance If you don’t get it right, it leads to chaos… for example, The Boeing 787 Dreamliner. Operations Management * Involves managing 80% of organisational resources (materials, machinery, people) – therefore has a major influence on: - Cash flow - Allocation of/investment in resources - Balances resources/capacity with required demand * Focuses on four major outcomes: - Achieving superior customer responsiveness - Achieving superior innovation with speed and flexibility - Achieving superior quality - Achieving superior efficiency Example of Operation Management in all types of organisations: - Automobile assembly factory: OM uses the machines to efficiently assemble products that satisfy current customer demands - Physician (general practitioner): OM uses knowledge to effectively diagnose conditions in order to treat real and perceived patient concerns - Management consultant: OM uses people to effectively create the services that will address current and potential client needs - Disaster relief charity: OM uses their own and their partners’’ resources to speedily provide the supplies and services that relieve community suffering - Advertising agency: OM uses staff knowledge and experience to creatively present ideas that delight clients and address their real needs In short, operations management uses resources to appropriately create outputs that fulfil defined market requirements. The process of transformation It also takes the form of “Inputs ☞ The ‘operation’ – process of transformation ☞ outputs”; all operations produce products and/or services by changing/transforming inputs into outputs. Differentiating between inputs * Transforming resources: - staff - facilities * Transformed resources: - material - information - customers Inputs: e.g. Kohu Road Ice Cream * Manufacturing * Creamery & Cafe - Transforming: staff, plant & equipment - Transforming: staff, plant & equipment, tables, - Transformed: ingredients, industry/regulatory cutlery information - Transformed: ingredients, industry/regulatory info, customers The process of transformation * University * Kohu Road Ice Cream - Course approval - Purchasing - Scheduling - Storage - Information technology - Mixing/making ice-cream - Utilities and cleaning - Marketing - Academic staff - Transport and distribution - Students Outputs - Graduates (with knowledge) - Manufacturing: tubs of ice cream, different - Research: applied flavours/sizes - Creamery & cafe: fed and happy customer As part of that process, there is a need to understand the nature of outputs; i.e. products/services. Pure goods Pure Services Tangible Intangible Can be stored Cannot be stored Production precedes consumption Production and consumption are simultaneous Low customer contact High customer contact Can be transported Cannot be transported Quality is evident Quality difficult to judge Modeling OM decision making OM model draws together four key decision areas: Input Resources ☞ 1. Operations strategy Output: products/services ☞ Customers 2. Design and layout 3. Planning and control 4. Operational improvement 2. Operations Strategy * Directing performance - Supports business strategy - Key decisions and policies - Facilities - Equipment - People * Links to other business/functional strategies: financial strategy, marketing strategy What is OM’s connection to our overall competitive success (competitive strategy)? To understand OM’s strategic contribution we must know- “what part is it expected to play within the business? ” For example: Reducing (managing cost) and adding value (responsiveness): efficiencies and effectiveness * Cost reduction (mgement) achieved through: * Increasing responsiveness - Reduced costs - Firms increasingly becoming more - Reducing waste responsive to customer needs; improving service levels - Reducing excess inventory - Reducing non-value added activities - Responsiveness improvement will come
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