INTRO

TO OM
PART 1
A MAT 1 6 7
OM
• Three core functions of an organization:
– product/service development
– operations
– marketing
• Suppport functions of an org:
– accounting and finance
– human resources
– technical and information systems
OM

• Operations: production and delivery of products and/or

services.
– includes sourcing products and services from suppliers and
transporting products and services to customers
• Operations management: managing the processes and the
resources which produce and deliver products and services.
Part One Introduction

Figure 1.2 Operations management uses resources to appropriately create outputs that fulfil defined market
equirements
stand far enough away from a hospital or a car plant, they might look very similar, but move
closer and clear differences do start to emerge. One is a manufacturing operation producing
INPUT–TRANSFORMATION–OUTPUT
‘products’, and the other is a service operation producing ‘services’ that change the physio-
logical or psychological condition of patients. What is inside each operation will also be

(I-T-O) PROCESS
T
Y
P
O
L
O
G
Y
HIERARCHY OF
OPERATIONS
HIERARCHY OF
OPERATIONS
HIERARCHY OF
OPERATIONS
HIERARCHY OF
OPERATIONS
 STAKEHOLDERS
Chapter 2 Operations performance

Figure 2.3 Stakeholder groups with a ‘legitimate interest in the operation’s activities’
CHALLENGE

organizations require
INNOVATION
from operations managers
INTRO
TO OM
PART 2
A MAT 1 6 7
THE PIE OF MANAGEMENT

http://www.grossmont.edu/college-info/planning/images/PIE%20graphic.jpg
 Goals dictate the
Key
Performance
Indicators
(KPIs)
http://www.cognology.com.au/wp-content/uploads/2014/09/SmartGoals.jpg
S
T
R
A
T
E
G
O
S
BASIC PERFORMANCE OBJECTIVES
FOR OPERATIONS
• Quality Advantage
• Speed Advantage
• Dependability Advantage
• Flexibility Advantage
• Cost Advantage
These objectives
affects cost and profit
EXAMPLE
MEASURES
MEASURES
A health-check clinic has five employees and services 200
patients per week. Each employee works 35 hours per week.
The clinic’s total wage bill is PhP 234,000 and its total
overhead expenses are PhP 120,000 per week.

𝐿𝑎𝑏𝑜𝑟 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦
200
=
5
= 40 Patients/Employee/Week
MEASURES
A health-check clinic has five employees and services 200
patients per week. Each employee works 35 hours per week.
The clinic’s total wage bill is PhP 234,000 and its total
overhead expenses are PhP 120,000 per week.

𝐿𝑎𝑏𝑜𝑟 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦
200
=
5(35)
≈ 1.14 Patients/Labor hour
MEASURES
A health-check clinic has five employees and services 200
patients per week. Each employee works 35 hours per week.
The clinic’s total wage bill is PhP 234,000 and its total
overhead expenses are PhP 120,000 per week.

𝑀𝑢𝑙𝑡𝑖 − 𝑓𝑎𝑐𝑡𝑜𝑟 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦

200
=
234 + 120
≈ 0.56 Patients/Thousand pesos
approx one patient per 2k pesos
MEASURES

How to improve productivity?

 MEASURES

Relation to efficiency

𝑢𝑠𝑒𝑓𝑢𝑙 𝑜𝑢𝑡𝑝𝑢𝑡
𝐸𝑓𝑓𝑖𝑐𝑖𝑒𝑛𝑐𝑦 =
𝑡𝑜𝑡𝑎𝑙 𝑖𝑛𝑝𝑢𝑡
𝑡𝑜𝑡𝑎𝑙 𝑜𝑢𝑡𝑝𝑢𝑡 − 𝑑𝑒𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑜𝑢𝑡𝑝𝑢𝑡
=
𝑡𝑜𝑡𝑎𝑙 𝑖𝑛𝑝𝑢𝑡

Measures how much input is conserved in a process

 THERE IS NO SUCH THING AS
A FREE LUNCH
Benefit

Cost efficiency
 THERE IS NO SUCH THING AS
A FREE LUNCH
Benefit

Benefit
Cost efficiency Cost efficiency
OTHER IDEAS FOR INCREASING COMPETITIVENESS
Chapter 2 Operations performance
 P&C
IN OM
A M AT 1 6 7
PLANNING AND CONTROL IN OM

provide the systems, procedures and decisions which

reconcile supply (what the operation’s resources can
deliver) and demand (what market requires).
PLANNING AND CONTROL IN OM

• Planning concerns what should happen

in the future
• Control copes with changes
(intervention)
RESPONDING
TO DEMAND
• D: length of time
customers have to
wait between
asking for the
product or service
and receiving it
• P: the total
throughput time
and control

P & C ACTIVITIES
 TO KNOW MORE ABOUT OM, YOU CAN READ
t, exciting, challenging … and sixth
edition
of all organisations, no matter how large or

OPERATIONS MANAGEMENT
ducts that we all need; it is central to changes
emand, and developments in technology; and
al and environmental. Whether at work or at
nd operations ...

rations Management paint a vivid picture

-enhanced 6th edition of the market-leading

as such as:
responsible imperatives of operations

al-life operations, from fast fashion at Zara

na to European agriculture and safari tours

ement’, making the discipline directly

n’s activity sixth edition
nce in applying quantitative and qualitative

OPERATIONS MANAGEMENT
And get exclusive access to
Nigel Slack
online resources in MyOMLab Stuart Chambers
which will enable you to check
your understanding, apply Robert Johnston
knowledge and techniques,
and prepare for exams and
assessments – all in your own
time and at your own pace.

Just visit www.myomlab.com

and register using the access Slack
code included with this book.
Chambers
Johnston

ACCESS
CODE INSIDE
unlock valuable
online learning
resources
www.pearson-books.com
ront cover image: © Getty Images

20/10/09 09:38:10
Unless otherwise stated, the figures in the slides are from
Slack N., Chambers S. & Johnston R. 2010. Operations Management, 6th ed. Essex: Financial Times
Prentice Hall.