Operasi Bisnis - Week 1 - What Is OM

Chapter 1
What is operations management?
Slack, Chambers and Johnston, Operations Management 5th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Chapter Coverage:
Operations management in important
Operations management is about process
management
Operations processes have different
characteristics
Operations Management
Operations management is about how organizations produce
goods and services.
Definitions
The operations function of the organization is the
arrangement of the resources which are devoted to the
production and delivery of its products and services.
Operations managers are the staff of the organization who
have particular responsibility for managing some, or all, of
the resources which comprise the operations function.
Operations management is the term used for the activities,
decisions and responsibilities of operation managers
Operations management defined
Operations management is the activity

of managing the resources which are
devoted to the production and delivery of
products and services.
The consultancy services market % of world
revenues of 40 largest consultancy firms
Financial Marketing / sales

6 2
Organizational
design
Operations and process
11
management
31
Benefits / actuarial
16
IT strategy Corporate strategy

17 17
The operations function is fashionable!
Operations Management Basic Principles
Materials
producing and
Information delivering products Products and
services
and services
Customers
All types of enterprise have an operations function, even if it isnt

called operations.
Back office operation Kitchen unit
in a bank manufacturing
operation
They are
Retail operation
all
Take-out / restaurant
operations operation
Operations Management is Important
Reduce costs of producing products and service by being
efficient.
Increase revenue by increasing customer satisfaction through
good quality and service.
Reduce need for investment by increasing the effective
capacity of the operation and by being innovative in how it
uses its physical resources
Enhance innovation by building a solid base of operations
skills and knowledge within the business.
Creating Customer Value
Operations management at IKEA
Design a store layout
which gives smooth Ensure that the jobs of
Design elegant
and effective flow all staff encourage
products which can be
flat-packed efficiently their contribution to
business success
Site stores of an Continually examine

appropriate size in and improve
the most effective operations practice
locations
Maintain cleanliness Monitor and enhance

and safety of storage quality of service to
area customers
Arrange for fast
replenishment of
products
Operations Management is About Managing Processes -
transformation processes
TRANSFORMED ENVIRONMENT
RESOURCES
MATERIALS
INFORMATION
CUSTOMERS
TRANSFORMATION GOODS
INPUT OUTPUT AND
PROCESS
SERVICES
FACILITIES
STAFF
TRANSFORMING
RESOURCES
ENVIRONMENT
Inputs to the Process
1. Transformed resources resources that are treated,
transformed or converted in the process. They are a mixture of
Materials
Information
Customers
2. Transforming resources these are the resources which act
upon the transformed resources. They are two types:
Facilities
Staff
Within the Process
1. Materials processing transforms materials physical
properties, location, possession or materials are stored.
2. Information processing transforms information properties,

possession, location or information is stored.
3. Customer processing transforms customers physical

properties, location, physiological state, psychological state or
store (accommodate) customers.
Outputs from the Process
1. Outputs from process can be differentiate between products and
service based organization tangibility of products and
intangibility of services
2. Most operations produce both products and services
3. Services and products are merging all operations are service

providers who may produce products as a means of serving
customers.
Case: Prt a Manger
Transformed
resources
?
Input Served and
resources satisfied
customers
Transforming
resources
?
Characteristics of Goods v Services
Contrast the characteristic differences between Manufacturing and
Services over the following factors:-
Manufacturing <> Service

Product
Inventory
Customer Contact
Response times
Markets
Facilities
Capital
Labour
Quality
Differences within sectors are often greater than the
differences between sectors
Financial services
An account Financial analyst
management centre at advising a client at an
a large retail bank investment bank
Furniture manufacturing
Mass production of Craft production of

kitchen units reproduction
antique furniture
Hotels
Value-for-money Lobby of an
hotel international
luxury hotel
Operations Functions
Three core functions: Support functions:
1. The marketing function responsible for 1. The accounting and

communicating the organizations product finance function provides
and services to its markets in order to the information to help
generate customer request for goods and economic decision making
services. and manages the financial
2. The product/service development resources of the organization
function responsible for creating new and 2. The human resources
modified products and services in order to function - recruits and
generate future customers requests. develops the organizations
3. The operations functions responsible for staff as well as looking after
fulfilling customer requests for service their welfare.
throughout the production and delivery of
goods and services.
The activities of core functions in some organization
Core functional Internet service Fastfood chain Furniture
activities provider manufacturer
Promotes service to Advertise in
users and get Advertise on TV magazines
Marketing and registration Device promotional Determine pricing
sales
Sell advertising materials policy
space Sell to stores
Design Design new
Device new services hamburgers, pizzas. furniture
Product/service
and commission new
development information content Design dcor for Coordinate with
restaurants fashionable colours
Make burgers,
pizzas, etc. Make components
Maintain hardware,
Operations Serve customers Assemble furniture
software and content
Maintain Deliver furniture
equipments
A Typology of Operations
Low Volume High

High
High Variety Low
Variation in
High Low
demand
High Visibility Low
Implications
A Typology of Operations Implications
Low repetition High repeatability
Each staff member Specialization
performs more of job Low Volume High
High
Capital intensive
Less systemization
Low unit costs
High unit costs
Well defined
Flexible
Routine
Complex
High Variety Low Standardized
Match customer needs
Regular
High unit costs
Low unit costs
Changing capacity Stable

Anticipation Routine
Variation in
Flexibility High Low Predictable
In touch with demand demand High utilization
High unit costs Low unit costs
Short waiting tolerance Time lag between

production and
Satisfaction governed by consumption
customer perception Standardization
Customer contact skills High Visibility Low Low contact skills
needed
Received variety is high High staff utilization
High unit costs Centralization
Low unit costs
4 Vs profile of two operations
Low Volume High
High Variety Low
High Variation Low
High Visibility Low

Mwagusi Formule 1
Safari Lodge Hotel
Important to understand how different operations are positioned

on the 4 Vs.
Is their position where they want to be?
Do they understand the strategic implications?
Decisions in Operations
Five major decision areas:
Process
Quality
Work force
Inventory
Capacity
Schroeder Section 1.6 - page 16
Operations ManagementSlack, Chambers and Johnston, Operations Management 5th

th Edition Nigel Slack, Stuart Chambers, and Robert Johnston 2007
R G Schroeder, Operations Management, 4 edition,1993, McGraw Hill
Some interfunctional relationships between the operations
function and other core and support functions
Engineering/ Product/service
technical development
function function
Accounting
and finance
function
Operations
function
Marketing
function
Human Information
Micro Environment
resources technology
function (IT) function

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Chapter 1

What is operations management?

Operations management is the activity

Financial Marketing / sales

IT strategy Corporate strategy

The operations function is fashionable!

All types of enterprise have an operations function, even if it isnt

Site stores of an Continually examine

Maintain cleanliness Monitor and enhance

2. Information processing transforms information properties,

3. Customer processing transforms customers physical

2. Most operations produce both products and services

3. Services and products are merging all operations are service

Manufacturing <> Service

Mass production of Craft production of

1. The marketing function responsible for 1. The accounting and

Low Volume High

High Variety Low

High Visibility Low

Changing capacity Stable

Short waiting tolerance Time lag between

Low Volume High

High Variety Low

High Variation Low

High Visibility Low

Important to understand how different operations are positioned

Operations ManagementSlack, Chambers and Johnston, Operations Management 5th

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