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Introduction to Operations Management • Objectives of lecture: – To understand what is operations 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 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 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 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 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 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 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 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 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 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 – 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 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. . 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 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 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