Introduction to Operations

Management

Harry Kogetsidis

School of Business

Lecture’s topics

• What do we mean by ‘operations’?
• What is operations management?
• What are the challenges that operations

management is facing in today’s
environment?

Operations

At the heart of every organisation are the

activities

that make its products.

These activities are called

operations

.

Operations

Its

operations

describe what the organisation

does.

e.g.

- operations at Ryanair fly planes

- operations at McDonald’s make and serve

burgers

- operations at the BBC make and broadcast TV

programmes

Operations in a hospital

e.g.

- surgery

- lab tests
- x-rays
- monitoring
- food preparation
etc.

Operations in a university

e.g.

- lectures

- studying
- exams
- presentations
- marking
- food preparation
etc.

Operations function

The

operations function

is the ‘

doing

’ part of

the

organisation.

It is one of the most important functions of

the

organisation.

Operations function

To be successful, all organisations must

manage

their operations in a way that will achieve

high

levels of

effectiveness

and

efficiency

.

Effectiveness and Efficiency

Effectiveness

bring the right results.

Achieving effectiveness and efficiency at the

same time can often create conflict.

Efficiency

use the right

resources.

Operations Management

Operations management

is about the

management

of the operations that make a product.

Operations Management

Operations management

first emerged as a formal

discipline in the 1960’s, when the first textbooks in
the subject were published.

Although historically associated with

manufacturing,

there has been a shift in its theory and practice to
incorporate the services industry.

Operations Management

Transforming Resources - Facilities

e.g.

buildings, equipment, process

technology.

Transforming Resources - Staff

e.g.

workers in a car factory, sales assistants

in a

department store, pilots and cabin crew on a
plane.

Transformed Resources - Materials

Materials can be transformed in a number of

ways:

-

physically (e.g. manufacturing)

- by location (e.g. transportation)
- by ownership (e.g. retail)

Transformed Resources -

Information

Information can be transformed in a number

of

ways:

- by possession (e.g. market research)
- by storage (e.g. libraries)
- by location (e.g. telecommunications)

Transformed Resources -

Customers

Customers can be transformed in a number

of

ways:

- physically (e.g. by hairdressers)
- by storage (e.g. hotels)
- by location (e.g. airlines)
- by physiological state (e.g. hospitals)
- by psychological state (e.g. entertainment)

Output - Goods and Services

Transformations of organisational resources

result

into finished

products

.

goods services

Goods vs Services (Tangibility)

Goods are

tangible

– i.e. physical things that

you

can touch.

e.g.

A burger or a mobile phone.

Goods vs Services (Perishability)

Services are

perishable

– i.e. they must be

consumed when they are produced or they

will

perish.

e.g.

The service provided by the empty seat on an

airplane
cannot be stored for use later and any revenue
lost from
these unused resources can never be recovered.

Goods vs Services (Simultaneity)

Services are produced and consumed at the

same

time (

simultaneously

), with the service

provider

and the customer interacting during the

service

delivery process.

e.g. Having a haircut.

Goods vs Services

Every product is in fact a package that

contains a

mixture of both goods and services.

e.g.

When eating out in a restaurant we can make the

distinction between the food we eat (a

tangible

element)

and the service we get (an

intangible

and

perishable

element that involves

simultaneity

).

The hospital example

Inputs

Operations

Outputs

- surgery

- lab tests

- x-rays

- monitoring

- food preparation

The university example

Inputs

Operations

Outputs

- lectures

- studying

- presentations

- exams

- marking
- food preparation

Operations Management today

Advances in technology and the emergence

of the

Internet have changed the way operations

are

performed.

Operations Management today

The field of operations management continues

to

change as it tries to respond to continuous

challenges,

such as the impact of global competition,

increasing

customer demands, financial realities and wider
environmental concerns.

Group work

In small groups discuss how advances in

technology

and the emergence of the Internet have

changed the

way in which organisations perform their

operations.

Use examples of specific changes that you have
experienced as a customer.