Key Questions Flashcards
CH1
What is operations management
Operations management is the activity of managing the resources that are devoted to the creation
and delivery of service and products. It is one of the core functions of any business, although it may
not be called ‘operations management’ in some industries.
Operations management is concerned with managing processes. And all processes have internal
customers and suppliers. But all management functions also have processes. Therefore, operations
management has relevance for all managers.
Why is operations management important in all types of organisations?
Operations management uses the organisation’s resources to create outputs that fulfil defined market
requirements. This is the fundamental activity of any type of enterprise.
Operations management is increasingly important because today’s changing business environment
requires new thinking from operations managers, especially in the areas of new technology, supply
networks and environmental sustainability.
What is the input–transformation–output process?
All operations can be modelled as input–transformation–output processes. They all have inputs of
transforming resources, which are usually divided into ‘facilities’ and ‘staff’, and transformed resources,
which are some mixture of materials, information and customers.
Most operations create and deliver a combination of services and products, rather than being a ‘pure’
service or product operation.
All operations can be positioned by their intangibility, heterogeneity, inseparabilit, and perishability
characteristics.
What is the process hierarchy?
All operations are part of a larger supply network which, through the individual contributions of each
operation, satisfies end-customer requirements.
All operations are made up of processes that form a network of internal customer–supplier relationships
within the operation.
How do operations (and processes) differ?
Operations and processes differ in terms of the volume of their outputs, the variety of outputs, the
variation in demand for their outputs and the degree of ‘visibility’ they have.
High volume, low variety, low variation and low customer ‘visibility’ are usually associated with low
cost.
What do operations managers do?
Responsibilities can be classed in four categories – direct, design, deliver and develop.
Increasingly, operations managers have a responsibility for an operation’s environmental performance.
CH3
What is strategy and what is operations strategy?
is operations strategy?
Strategy is the total pattern of decisions and actions that position the organisation in its environment
and that are intended to achieve its long-term goals.
Operations strategy concerns the pattern of strategic decisions and actions that set the role, objectives
and activities of the operation. It can be used to articulate a vision for the (potential) contribution of
operations to organisational success (i.e. moving from stage 1 to stage 4 of the Hayes and Wheelwright
model of operations contribution).
Operations strategy has content and process. The content concerns the specific decisions that are taken
to achieve specific objectives. The process is the procedure that is used within a business to formulate
its strategy.
There are four key perspectives on operations strategy – the ‘top-down’, market requirements
(‘outside-in’), ‘bottom-up’ and operations resources (‘inside-out’).
It is important to engage with a wide range of stakeholders, within and outside of the organisation,
when developing operations strategy.
How does operations strategy align with business strategy (top-down)?
The ‘top-down’ perspective views strategic decisions at a number of levels. Corporate strategy sets the
objectives for the different businesses that make up a group of businesses. Business strategy sets the
objectives for each individual business and how it positions itself in its marketplace. Functional
strategies set the objectives for each function’s contribution to its business strategy.
It is important to consider correspondence between these different levels of strategy and coherence
both with other functional strategies and within itself.
The concepts of the ‘business model’ and ‘operating model’ are useful in understanding the top-down
perspective on operations strategy.
How does operations strategy align with market requirements (outside-in)?
A ‘market requirements’ (outside-in) perspective of operations strategy sees the main role of operations as satisfying markets. From this perspective, operations performance objectives and operations decisions should be primarily influenced by a combination of customers’ needs and competitors’ actions.
Market requirements are influenced by roduct/service differentiation and the stage at which a product or service is within its lifecycle.
How does operations strategy align with operational experience
(bottom-up)?
The ‘bottom-up’ view of operations strategy emphasises the ‘emergent’ view of strategy development based on day-to-day operational experience. While the ‘top-down’ perspective may describe how operations strategy (and other function strategies) should be developed, it often doesn’t describe how
it is developed.
Top-down and bottom-up perspectives are in fact complementary. In one direction, top-down
perspectives can be used to judge the extent to which operational day-to-day activities reflect the
higher-level strategies. In the other direction, experience gained from day-to-day activities can be accumulated and built into capabilities that can then be exploited strategically.
How does operations strategy align with operations resources
(inside-out)?
The ‘operations resource’ perspective (inside-out) of operations strategy is based on the resource-based
view (RBV) of the firm and sees the operation’s core competences (or capabilities) as being the main
influence on operations strategy.
An operations resource perspective should start by understanding existing capabilities and constraints
within the operation.
Identifying strategic decision areas can help support capability building for operations and their
extended supply networks.
Strategic resources (also called capabilities or competences) are critical in generating sustainable
competitive advantage. These resources are valuable, rare, costly to imitate and organised in a way to
allow the organisation to capture their value.
How are the four perspectives of operations strategy reconciled?
Combined, the four perspectives give a good idea of how the content of operations strategy is
developed and how operations excellence can act as a key source of competitive advantage. Among
the models to support this activity are the operations strategy matrix, the ‘line of fit’ and the
importance–performance matrix.
How can the process of operations strategy be organised?
Formulating operations strategy is often called ‘the process’ of operations strategy and is made up of
four stages – formulation, implementation, monitoring and control.
Formulation is the process of clarifying the various objectives and decisions that make up the strategy,
and the links between them. Implementation is the way that strategy is operationalised. Monitoring
involves tracking ongoing performance and diagnosing data to make sure that the changes are
proceeding as planned and providing early indications of any deviation from plan. Control involves
the evaluation of the results from monitoring so that activities, plans and performance can be assessed
with the intention of correcting future action if required.
CH4
