Introduction to Operations Management • Objectives of lecture: – To understand what is operations management – Describe the role of OM within the organisation – To understand the relationship between operations management and the division of labour – To know the constitutive elements of an operation system – To discuss the difference between products and services MGT 3303 Michel Leseure
What is Operations Management? • OPERATIONS MANAGEMENT is the design and operations of production/service systems • Without operations management: – A normal queue at a bank would take 1 to 2 hours … – A 3 hours ferry crossing could require 9 hours, if not several days! – The Eurostar would take 15 hours to go from London to Paris… – Mail would rarely be delivered… • In other words: – Unless we could totally revise our every day’s perceptions of time and performance… – … we could not live in such a world MGT 3303 Michel Leseure
Contemporary Issues • Shift in balance of power to consumers – Achieving higher levels of productivity • • Creating higher quality products Delivering better customer service Achieving shorter delivery times Reducing labor and material costs • Globalization of business and markets • E-commerce • • From a primary sector to a secondary sector economy From a manufacturing to a service economy E-service economy Case of developing economies: can we leap-frog the manufacturing stage? MGT 3303 Michel Leseure
International Division of Labour Source: From Joseph E. Stiglitz, Principles of Microeconomics, 2 nd ed. (New York: W. W. Norton and Company, 1997), p. 58. MGT 3303 Michel Leseure
The Value Chain and Its Support Functions Role of OM within an Organisation MGT 3303 Michel Leseure
Division of Labour • The objective is to specialise jobs by reducing them to their most elementary tasks • Results from the simultaneous application of two principles – horizontal division of labour • (Smith, Babbage) – vertical division of labour • (Taylor, introduction of management science; Gilbreth, time and motion studies) • The vertical division of labour implies: – A design and planning activity – A control activity – A co-ordination role for operations management MGT 3303 Michel Leseure
The Transformation Process within OM MGT 3303 Michel Leseure
Input-Transformation-Output Relationships for Typical Systems Components are also called resources MGT 3303 Michel Leseure
OM and the Service Industry • Application of OM to Service Operations – Batch cooking operations at Mc. Donald’s – Telephone Banking – Call Centres Service Product Good MGT 3303 Michel Leseure
Most Products Are a “Bundle” of Goods and Services Exhibit 1. 8 MGT 3303 Michel Leseure
Differences Between Goods and Services • Goods – Tangible – Can be inventoried – No interaction between customer and process 1 -6 • Services – Intangible – Cannot be inventoried – Direct interaction between customer and process MGT 3303 Michel Leseure
Product Delivery Systems • Manufacturing Processes - customer are separate from the place of production both geographically and in terms of time – Exceptions: B 2 B transactions Materials Manufacturing process Goods Customer MGT 3303 Michel Leseure
Service Delivery Systems • There are two basic structures of service delivery system. . . – 1. where customers participate – 2. where customers' goods are processed Goods Customer Service delivery system Customer Processed Goods MGT 3303 Michel Leseure
Front & Back Office Key feature of service industry. Nowadays front and back offices are often separated geographically - and may even be in different continents Front Office - Servers Customers Division of labour (receptionist / dispatcher / cashier etc. ) Back Office MGT 3303 Michel Leseure
Suggested Homework • Is a public service (e. g. land registry, customs, ONE) an operations system? – How does it differ from a business operations system? • Question 1 -2 p. 27 • Have the globalisation of operations taken place yet in Morocco? How, Why, Examples? • Question 1 -8 p. 27 • Question 1 -15 p. 27 • Case Problem 1. 2 p. 29 MGT 3303 Michel Leseure
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