Book Cover Here
Business
Management
A contemporary approach
3rd Edition
Editors: Jessica Nell & Andreas de Beer
ISBN 978-1-48512-513-6
© Juta & Company 2018 Business Management 3e 1
Chapter 8: Operations Management
•Introduction
–Several stages:
•Adam Smith: specialisation of labour;Henry Gantt:the Gantt charts;
Gilbreth (scientific sampling):time an motion studies; Taylor:process
analysis;Shewart:statistical sampling.
–The broad definition of production and operations (POM)
management is all those value–adding actions, activities and
processes needed for the fulfilment of customer
expectations, requests and needs
–Operations management (OM) is for those who want to be
creative and make things happen, and not for those who just
dream, watch things happen and wonder what happened
2© Juta & Company 2018 Business Management 3e
Operations management is dynamic (1 of 7)
•The nature of operations:Any machine, factory,
workshop, plant, assembly line or combination of
these is associated with an operation.
•Creativity is always linked to operations:concerned
with creating the products and services upon which
we all depend:
–Operations management involves:
•Product and service design
•Demand and capacity planning
•Production system design
•Production planning and control
•Improvement, problem solving and maintenance.
3© Juta & Company 2018 Business Management 3e
Operations management is dynamic (2 of 7)
The nature of operations:
•Measurement is central to any operation.Some
of the gauges used for inspection are:
•digital gauges
•ring gauges (used to measure outside diameters of parts)
•line–graduated gauges (eg rulers and tapes)
•snap gauges
•gauge blocks (used as aprecision measurement standard for
calibration of other measuring instruments).
4© Juta & Company 2018 Business Management 3e
Operations management is dynamic (3 of 7)
Creative design is inherently part of operations.
•Everything that exists started as a design. Good things come
from good designs and good OM.Conversely, bad things
usually originate from bad designs.
•A good construction business can hardly build agood house
if the design is not good. If the design of a house is not
good, the construction will cause endless frustration. It is
difficult – or even impossible –to improve faulty designs of
products or systems. If the re–engineering ofadesign is not
necessary, the original design was not too bad. Operations
management therefore includes the science of design.
•Designers must try to design for ease of assembling, joining,
coupling and handling (for example one-way assembly).
5© Juta & Company 2018 Business Management 3e
Operations management is dynamic (4 of 7):
Operations are associated with technology and
innovation
•Technology is associated with new gadgets, devices, machines or
processing that make life easier. Technology involves all
applicable operations, materials, and knowledge in order to
satisfy a need with a view to improving people’s private or work
environments.
•Some examples of technology applications for automation:
–machining centres where machine tools are changed automatically as
part of the process
–product design using computer–aided design (CAD)
–industrial robots –programmable machines that can perform multiple
functions
–flexible manufacturing systems – facilities that are automated to some
extent, and produce awide variety of products
–information system technology in manufacturing –software systems
that help with enterprise resource planning (ERP), supply chain
management (SCM), customer.
6© Juta & Company 2018 Business Management 3e
Operations management is dynamic (5 of 7):
Value and time are of the essence for any operation
•All operations managers are value driven.
•The essence of any transformation process (be it micro-,
macro-, or any manufacturing system) is to add value and
eliminate waste.
•Most of these OM principles relate to the well-known just–
in-time (JIT) philosophy.
–Just–in–time systems eliminate waste, promote value–adding
activities and quality, and focus on lead time reduction.Just–in–
time is also referred to as ‘lean production’.
–Both JIT and total quality management (TQM) are seen as part
of the same movement to deliver what the internal and external
customer wants.
–TQM is aholistic and integrative approach to quality.It focuses
on all resources, processes, products, functions, and other
areas;with several objectives 7© Juta & Company 2018 Business Management 3e
Operations management is dynamic (6 of 7):
Principles that promote value and save time include:
1. Cutting flow time (lead time, waiting time, etc), distance, and
inventory (subassemblies and idle work-in-process) along the
chains of customers
2. Cutting set–up,changeover, get–ready and start–up lead times
3. Just-in-time production,or at the customer’s rate of use
4. Decreasing cycle intervals and lot size
5. Knowing and teaming up with the next and final customer, who
is referred to as the next process
6. Committing to continual and rapid improvement in quality,
cost, response time, flexibility, variability and service
7. Creating a unified purpose
8. Reducing the number of product or service components and
operations (processes) and the number of suppliers to afew
good ones
8© Juta & Company 2018 Business Management 3e
Operations management is dynamic (7 of 7):
Principles that promote value and save time include:
9. Organising resources into multiple chains of customers, each focused on
aproduct or service (or customer family); creating workflow teams,
cells and ‘plants in a plant’
10. Utilising human resource potential and creativity by investing in human
capital or capacity (as the internal customer) and QWL (quality of work
life)
11. Investing in cross–training for mastery of multiple skills
12. Maintaining and improving present equipment and human capital
before considering new resources
13. Automating incrementally when process variability cannot be reduced
by other means
14. Aiming for streamlining and simplicity by making it easy to provide
goods or services without error or process variation
15. Minimising administration and reporting by recording and processing
one’s own data at the workplace
16. Ensuring that process owners and front-line improvement teams have
the first chance at problem solving before experts are brought in. 9© Juta & Company 2018 Business Management 3e
Operations management defined (1 0f3)
Operations is the transformation function
•Some resources are for the transformation process
(transforming resources)while other resources are being
transformed (transformed resources).
•Any manufactured product we see around us, sit on, eat,
read, wear, buy, and enjoy comes to us courtesy of
operations managers who planned and controlled the
transformation processes (production systems)involved.
•It is clear that OM is a dynamic and creative discipline.
•Business life is primarily concerned with creating goods
and services, putting operations management at the
heart of its existence.
10© Juta & Company 2018 Business Management 3e
Operations management defined (2 0f 2)
Operations is the transformation function
•All operations should be value-adding processes in which
inputs are transformed into outputs.
•The single most important input-transforming resource is
the human component.
•Human beings act upon transformed resources, and are
present in all operations.
•Productivity depends directly on human capabilities
(competence, qualification and motivation) to produce
effectively and efficiently.
•These capabilities must be maintained and sustained.
11© Juta & Company 2018 Business Management 3e
Operations management defined (3 0f 3)
Operations is the transformation function
•Operations management deals with the planning and
control of the inputs, process and outputs of operations.
•Planning and control of inputs refer to transforming
resources (people, creativity, capital, R&D, technology,
Highly skilled artisans working
High degree of
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