Operations Management

An International Perspective

David Barnes

• Publisher: Bloomsbury Academic
• Year: 2018
• Print ISBN: 9781137525789
• eBook ISBN: 9781350305212
• Edition: 1
• Topic: Business
• Subtopic: Business Strategy
• Index: Business

This fascinating new core textbook, authored by a highly respected academic with over a decade of industry experience, takes a global and strategic approach to the important topic of operations management (OM). Integrating contemporary and traditional theories the text covers everything a student needs to understand the reality of operations in the modern world and combines the latest cutting-edge thinking with innovative learning features. Written in a concise and engaging style and based on up-to-date research in the field, the book provides a range of international case studies and examples that help students to apply theoretical knowledge to real-world practice. This is a must-have textbook for students studying operations management modules on undergraduate, postgraduate and MBA programmes. In addition, this is an ideal textbook to accompany modules on operations strategy, production management and services management.

PART 1

INTRODUCTION TO OPERATIONS MANAGEMENT

Part 1 introduces the academic discipline of operations management. Operations management is concerned with those activities that produce the goods and/or deliver the services required by customers. These activities are at the core of any organization and typically involve the management of the vast majority of its assets, employees and expenditure. A commonly held misconception is that operations management is only concerned with manufacturing activities. However, services are increasingly important, and the contribution of services to most national economies far outstrips that of manufacturing. Similarly, the overwhelming majority of employment is provided by service industries.

Getty Images/iStockphoto Thinkstock Images/DimaSobko

Although there are some important differences between manufacturing and service operations, the operations management curriculum contains areas of interest to both. In Part 1:

Chapter 1, ‘Operations Management’, introduces some of the basic concepts of operations management, noting that these apply to services as much as to manufacturing. The chapter also highlights that the forces of globalization have created a changing context for the practice of operations management, leading to the increasing internationalization of operations.

Chapter 2, ‘Operations Performance’, considers the issue of operations performance, noting the different performance objectives that might be seen as important for particular operations within organizations. The chapter also explores how operations performance is assessed and measured.

Chapter 3, ‘Operations Strategy’, examines operations strategy. It considers the nature and role of operations strategy and its relationship with business strategy, setting this discussion in the increasingly international context in which most businesses operate.

CHAPTER 1

OPERATIONS MANAGEMENT

LEARNING OBJECTIVES

On completion of this chapter, you should be able to:

•explain what is meant by the term operations management;

•understand some of the basic concepts of operations management;

•distinguish between different types of operations;

•appreciate the growing importance of service operations; and

•understand the impact of globalization on the practices of operations management.

H&M: A GLOBAL FASHION COMPANY

From its humble beginnings in 1947 as a single shop in Sweden, H&M is now one of the biggest names in the retail fashion industry. H&M employs over 130,000 people, both in Sweden and in its nearly 4,000 stores, which are in over 60 countries, right the way across the globe, including most countries in Europe, as well as many in the Middle East, Africa, Asia and the Americas. It plans to open further stores (it has a target of increasing the number of stores by 10–15 per cent each year), as well as expanding its online sales operations by rolling out its digital presence to an increasing number of countries. H&M’s digital ambition means setting up not only a dedicated website to serve each new country, but also the physical systems that can ensure goods ordered on it will be delivered to customers in that country.

The most visible part of H&M’s operations is its stores. The company says it wants these to provide an ‘inviting, inspiring and exciting experience’ to shoppers. While every store is unique, any is immediately recognizable as H&M from its signage, window displays and internal layouts. All stores seek to place the clothes centre stage through the use of internal displays that aim to provide styling tips and inspiration. H&M’s online stores try to emulate this experience in the virtual world, while providing additional accessibility for customers who can’t easily get to H&M physical stores, and enhanced levels of service by enabling customers to view and order a much wider range of merchandise (and in many more sizes) than would be possible in any physical store.

However, the stores are only the end point of a much longer supply process. This starts with design. All of H&M’s garments are designed in Stockholm by its in-house team of clothing designers, pattern-makers and print designers. They aim to provide something for men, women, teenagers and children, whatever their taste or style.

In contrast to the design process, H&M does not produce any of its garments in-house. Rather, it draws on a network of over 1,900 factories owned by as many as 900 independent suppliers, which are based in countries such as China, Turkey, Bangladesh, Cambodia and India. H&M views its suppliers as long-term strategic partners who manufacture its products, including being responsible for sourcing the necessary

fabrics (mainly cotton) and the other components needed. H&M’s logistics and distribution operation must then ensure that the right goods end up in the right quantity as required by each store. Factory shipments are transported, mostly by sea and rail, to H&M’s logistics centres, which are strategically located in the geographic vicinity of its stores in each region. Stores do not hold backup stocks, and so must replenish as required from the distribution centres. In 2013, H&M launched its Garment Collecting Initiative, which enables customers to hand in clothes that they no longer want for reuse or recycling. This is aimed at creating a closed loop in textiles, so that nothing ever goes to waste. The first H&M garments containing materials from the Garment Collecting Initiative were launched in 2014 – denim garments that contained 20 per cent recycled cotton.

Source: www.hm.com (accessed 8 September 2016).

POINTS TO PONDER AS YOU READ THIS CHAPTER:

»Notice the different types of operations occurring throughout H&M’s business (e.g. design, production, logistics and distribution, retail). Some of these are manufacturing operations, and some are service operations. Each uses different types of resources to produce different kinds of outputs.

»Notice how H&M’s shops rely on a complex interconnected global supply network to ensure that goods are available to customers.

»Think about what led H&M to operate on such a vast global scale and about the challenges posed in managing all of these operations, both individually and collectively.

INTRODUCTION

Operations management is crucial to the lives of all of us. That is because operations management is responsible for the creation and delivery of all the products and services that we need for our daily lives, including all the food that we eat, the clothes that we wear, the transport we use, the health services that we receive, and so on. All of these were brought to you courtesy of operations management. Unless you live as a self-sufficient hermit in an isolated cave, there is unlikely to be any aspect of your life that is not entirely dependent upon operations management. That is because nearly every physical product or intangible service that you consume or use is created and delivered by some kind of business organization. And the operations function is the part of that organization that is responsible for producing the goods and services it supplies to its customers. All organizations have operations functions, although they often go under other names. These often reflect the specific activities that they carry out, for example catering, distribution or nursing. There is a misconception that operations management is only concerned with manufacturing activities. Although many of the concepts on which the academic study of operations management is based do have their origins in the manufacturing industries, many are equally applicable to services. Conversely, recent advances in the study of service operations have yielded valuable insights into the management of manufacturing operations. The distinction between manufacturing and services is in many respects artificial and increasingly irrelevant because most products have some element of service accompanying them. For example, when you buy a new computer (an entirely physical product), you assume that you are also buying access to aftersales services, such as operating guidance, software updates and repairs. Equally, many services have a tangible product as an integral part of what is delivered to the customer. For example, as a passenger on an airline (an entirely intangible service), your flight, especially if it is long-haul, is usually accompanied by the provision of on-board food and drink (an entirely physical product).

Operations management is concerned with the management of the resources and processes required by an organization to produce goods or services for customers.

The operations function is that part of the organization that has the responsibility for operations management.

Operations management is the most exciting of the business disciplines. Marketing is concerned with identifying and creating customer needs. Finance is concerned with ensuring that the organization has the necessary financial resources to conduct its business. Similarly, human resource management is concerned with ensuring that the organization has the...

Table of contents

• Cover
• Half Title
• Series Title
• Title Page
• Copyright
• Dedication
• Editor Title
• Contents
• Tables and Figures
• Preface
• Letter to the Student
• Letter to the Lecturer
• Case Study Grid
• Tour of the Online Resource Centre
• About the Author
• Guided Tour of the Book
• Author’s Acknowledgements
• Publisher’s Acknowledgements
• Part 1: Introduction to Operations Management
• Part 2: Structural Issues
• Part 3: Infrastructural Issues
• Part 4: The Future of Operations Management
• Glossary
• Author Index
• Subject Index