Operations Management: Policy, Practice and Performance Improvement

Steve Brown, Kate Blackmon, Paul Cousins, Harvey Maylor

• Publisher: Routledge
• Year: 2013
• ISBN:
  9781136375460
• Edition: 1
• Topic: Negocios y empresa
• Subtopic: Negocios en general

'Operations Management: policy, practices, performance improvement' is the latest state-of-the-art approach to operations management. It provides new cutting edge input into operations management theory and practice that cannot be found in any other text. Discussing both strategic and tactical inputs it combines and balances service and manufacturing operations.* Cutting edge techniques accompanied by brand new case studies
* Challenges standard approaches
* Comprehensive coverage of strategic supply management
* Critical sample questions to aid discussion
* Reading lists and articles to support learning
* Additional lecturer support materialThis outstanding author team is from the Operations Management Group at the University of Bath. Their expertise and knowledge is apparent in the text, and they bring to it their original research and experience in the field of operations management.

Part One Overview

1 Operations Management: Content, History and Current Issues

DOI: 10.4324/9780080497594-1

Introduction

Who comes to mind when you think of successful organizations? Perhaps Amazon.com for their level of customer service, Nokia or Sony for their innovative electronics, Toyota for their reliable automobiles, Dell for their ability to customize PCs to individual requirements, Andersen Consulting for their brand image, Sky TV for the variety of television programmes available, or McDonald's for sheer ubiquity, come to mind. These companies – or others you may have thought of – have come to dominate their market segments through offering the best goods or services, or have provided you with product or service that you think is excellent.

High-recognition firms like these are heavily marketed and constantly brought to our attention. Marketing hype alone isn't enough, however, to create excellence – organizations have to deliver on their promises or face disillusioned (and, increasingly, litigious) customers. In each case, the organization cannot be excellent without excellent operations. This is true for all organizations – those that help and protect us, such as hospitals, fire, police, ambulance and coastguard emergency services; those who provide general public services, such as schools, public utilities, transportation, and universities; and those who provide goods and services to customers and other organizations. Operations are at the forefront of service delivery in each case.

Successful operations management contributes substantially to organizational success or failure: operations is where, to use a metaphor, ‘the rubber hits the road’. Imagine what would happen if Sega took too long to develop their next computer game – their old games would be made obsolete by new games from competitors and wouldn't sell, and the company would quickly cease to exist. Similarly, the pizzeria that takes twice as long to deliver your pizza as expected, or the accountant who makes mistakes with your taxes, will soon go out of business. Operations is vitally important because it links what the business does with the needs and desires of the organization's customers or clients, as shown in Figure 1.1.

Figure 1.1 Linking the business of the organization with customers via operations.

The role of operations has become increasingly important in recent times, because the needs and wants of customers and clients have increased. This was described in a book called Funky Business (Ridderstrale and Nordstrom, 2000, p. 157):

Let us tell you what all customers want. Any customer, in any industry, in any market wants stuff that is both cheaper and better, and they want it yesterday.

We'd probably all agree with that statement, but we tend to take it for granted how products are made better, cheaper and more quickly than before. The point is that all of these are achieved by operations capabilities, and that's why operations are so vitally important for businesses today.

Aims and Objectives

Welcome to the world of operations management. Most of us probably think of operations management as having little to do with our lives and work, but each of us comes constantly into contact with aspects of operations management every day.

The purpose of this chapter is to explore the nature of operations and operations management today, and to:

• Define operations, operations management, and operations managers
• Explore the history and context today of operations management
• Introduce you to the key concepts and ideas that this book will cover.

After reading this chapter, you will be able to:

• Describe the role of operations in different sorts of organizations
• Show how operations management is relevant to organizations, managers and individuals
• Explain how operations managers bring together different contributions to satisfy customers.

The next section begins with a formal definition of operations, and then introduces some basic concepts for describing and analysing operations. Next, the roles and responsibilities of operations managers are described more fully. Succeeding sections consider the limits to operations management, its usefulness, and how operations management can help people manage complex organizations in highly competitive environments. The chapter closes with a brief overview of the important themes to be covered in this book, and presents a model for bringing all of these themes together.

What Is Operations Management?

Every organization has an operations function, whether it is explicitly called operations or not. A traditional view of operations is that it is:

Those activities concerned with the acquisition of raw materials, their conversion into finished product, and the supply of that finished product to the customer (Galloway, 1998, p. 2).

Another way to think about operations is that operations is what the company does. To identify the role of operations with an individual organization, ask the question, ‘what do you do?’ Amazon.com might answer that question with ‘we sell books and other goods on-line’. Isn't selling different from operations? In this case no, because here selling involves the operations of transferring the ownership of products from the retailer to the buyer. Amazon.com's front-line sales process works so well that the company's customers come back over and over again. A hospital treats patients, and so we might ask: ‘isn't that medicine?’ It is, but if you look beyond the doctors and nurses who treat patients, a whole organization exists to supports their work – facilities management, staffing, catering and so on. All of this comes under the responsibility of operations management. So it's important to bear in mind that operations take place throughout an organization. It's often impossible to speak of operations taking place in just one specific area. Operations will take place in different ways in the entire organization and, as you'll see throughout the book, we will provide ways for you to understand the nature of the operations taking place in each case.

Within organizations, operations management describes the functional area responsible for managing the operations that produce the organization's goods and services for internal or external customers or clients. Operations management gives us a way of thinking about operations that helps us design, manage and improve the organization's operations in an orderly fashion. Operations managers are the people who design, manage and improve how organizations get work done.

A key aspect of operations management is that it focuses on processes. A definition of processes is, as Hewlett Packard describes, ‘the way we work’. Due to the significant role that processes play in operations, operations managers frequently use tools and techniques developed for analysing processes, and we shall see a range of these in the book.

Operations management also describes the academic study of the different operations practices used by organizations. In this context, operations management draws lessons from organizational success and failures and makes those lessons available to students and managers. Studying operations management gives us the tools to analyse the operations of an individual organization or groups of organizations and to prepare them to compete in the future.

The study of operations management is highly relevant to whatever work you do or plan to do. Most managers are involved in some aspect of operations every day, but many never realize it. Familiarity with operations enables managers to manage their responsibility better, whether they are directly responsible for the organization's goods and service outputs or not.

Similarly, studying operations management is useful for all management students, because you can apply operations concepts to everyday aspects of your study and work activities. Also, because operations management is at the core of what any organization does, it has important connections with other functions including marketing, human resource management and finance

Policies, Practices and Performance: the Four ‘P's of Operations Management

Operations managers manage processes via the four ‘P's of operations: Policies, Practices, Processes and Performance. Figure 1.2 defines each ‘P’ and shows the relationship between all of them. The four key elements and their relationships are described below.

Figure 1.2 The Four ‘P's of Operations Management.

Policies are the stated aims, objectives and strategies for the organization including operations. Policies are based on the desired state of affairs that an organization wants to achieve. The organization's mission statement has an important part in articulating the organization's policy. Strategy is concerned with how the organization will get there. Policies define the practices – the systems, procedures and technological capabilities – that need to be in place within the organization, and between the organization and its suppliers and customers. Policies cannot be realized without the support of appropriate practices. For example, the American department store Nordstrom's is famous for its policy of providing a high level of customer service at all times. This might require the store to employ additional staff to make sure that someone is always available to serve customers.

Policies also need to be aligned with performance. Performance describes how the organization does in terms of time, cost,...

Table of contents

• Cover Page
• Half Title Page
• Title Page
• Copyright Page
• Contents
• Acknowledgements
• Part One Overview
• 1 Operations Management: Content, History and Current Issues
• 2 Operations Strategy: the Strategic Role of Operations
• Part Two Policy
• 3 Innovation: Developing New Products and Services
• 4 Operations Processes: Process Choice and Layout; Developing New Products and Services
• 5 Managing Supply
• Part Three Practice
• 6 Managing Capacity: Managing Transforming Resources
• 7 Managing throughput: improving material, customer and information flows
• 8 Project management: content, history and current issues
• Part Four Performance Improvement
• 9 Managing Quality
• 10 Performance Measurement and Improvement
• 11 World-Class Operations
• S1 Analysing Manufacturing Operations: Quantitative Methods
• S2 Analysing Service Operations: Service Delivery, Queuing And Shift Scheduling
• Index