1. Strategic Operations Management. Introduction Production and service operations have a central...
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Transcript of 1. Strategic Operations Management. Introduction Production and service operations have a central...
1. Strategic Operations Management
Introduction
Production and service operations have a central role in most firms (services and manufacturing).
They typically account for 70 - 80% of a firm’s assets, expenditure and people.
The nature of operations differs widely between industries and organisations
Evolution of Operations
Socially, production - though important - is often undervalued;
Seen as a career for male, engineer-types who enjoy getting their hands dirty!
Are views changing? The growth of services encourages rethinking the production concept
Technological innovation is raising the status of manufacturing.
In the UK people employed in 'operations' are far fewer today
Yet employment here is greater still than other functions. A major part of total revenue and capital investment
expenditure is spent on production operations.
Operations as Transformation: Four Types:
builders, gardeners and manufacturers transform raw materials & components
suppliers, wholesales, retailers change the nature of "ownership"
hauliers, postal/courier and telephone services transform "place"
insurance provides people with security, building societies lend for housing, physios improve physical well-being
The boundary concerns of operations
management include discussion of:
Innovation Purchasing Marketing Finance/Accounting Personnel (HR) Product/Service Design CAD Standardization Location Decisions The State &
Manufacturing
Ops Management & Technology
Flexible Manufacturing Systems
Signs of De-Industrialization in UK
Design of Operations Environment
Production Technology & Job Issues
1) Innovation
New product development - What the design is and how it can be produced are important development decisions.
Innovative designs have to be made within cost and skill parameters.
2) Purchasing
Procuring and storing raw materials, components & equipment is a key role.
3) Marketing
Production staffs need marketing and sales information: total demand for the product, when is it required?
Customer feedback helps R&D design and create future products.
4) Accounting & Finance
Production department must budget. The cost of each element of
expenditure/ activity must be known for price and wage determination and profit/loss identification.
Capital equipment has to be replaced, maintained and disposed
5) Personnel
Recruitment, training, the design of reward systems, health and safety and industrial relations
6) Product & Service Design
Products must be designed to function well.
The range of products or degree of standardisation must be decided.
Materials for the product must be chosen
7) CAD
CAD (computer aided design) evaluates designs with fast computer graphics offering 3-D perspectives.
Specifications are more accurate. CAD can store standard designs, names
and dimensions of components (information needed for purchasing specifications, machine and tools set-up).
8) Standardization/Modularization
Modular systems are a form of standardisation - a means of cost reduction.
A college with many under-subscribed evening courses - may rationalise its "product mix" around the most popular courses reducing staff costs and overheads.
Standardisation means longer production runs (economies of scale), discounts on bulk supplies.
The consumer however may have less choice.
9) Location
A department store groups similar products to maximise staff product knowledge and satisfy customer expectations.
Fast-moving goods and those bought on impulse are located on the ground floor.
Furniture can be located on upper floors Where production is located depends on
factors ranging from raw material and power supply to transport and labour availability.
10) The State & Manufacturing
Government encouragement of manufacturing, attempts to regenerate industries/firms and evidence for deindustrialisation?
Does manufacturing drive economic growth? What are the links between manufacturing output & GDP?
11) Technology
Technology has developed exponentially, and this has a bearing on Ops management: Computerised Numerical Control
(CNC). CAD Robotics
12) Flexible Manufacturing Systems
FMS involves advanced manufacturing engineering directed towards better consumer choice & a quicker response to customer demand using less working capital. It embraces: CNC based equipment automated transport systems for moving tools & work
pieces at exactly the moment they are needed the whole system is computer-controlled with
software for scheduling, tool/part selection, fault finding, machine breakdown detection, etc.
13) Signs of Deindustrialization in the UK?
There are signs Other countries?
14) Design of the Operations Environment
The production function – is influenced by business and technological environments:
Equipment has to be selected. How much product should we make ourselves?
How much to we buy in? Product design, capacity planning, employee skills
and accounting procedures all have a bearing. Decisions extend to automation and
computerisation, job security and employee stress.
The type of equipment used influences work design.
15) Production technology & Job/Employment Issues
Issues include attitudes/alienation, training, industrial relations, redundancy and job loss, the quality of working life and payment systems, social responsibility to the community.
Changes: From Talyor to Herzberg: Scientific Management Job Enrichment
The Japs
Japanese economic and export success stems from well-planned and executed methods of production management in manufacture
attention to detail and importance given to quality control (JIT & TQM/QCCs)
total integrated production systems from delivery of materials/parts to final distribution
Supported by cultural aspects of labour
More…
The discussion of boundary concerns of operation management leads us to conclude that operations is tied up with all aspects of the organization
Hence, operations is tied up with overall corporate/business strategy of the organization
With globalization and the speed of change, and the increased intensity of competition, overall strategy (and hence, operations) need to be flexible