Understanding operations management

Introduction

This note is prepared to provide you with a basic framework for understanding operations
management and its organisational and managerial context. It begins with a brief history of the
changing nature of operations in a manufacturing context, but emphasizes that the operations function
is significant in all types of organisation, whether they produce goods or provide services, and whether
they are in the private, public or voluntary sectors.

This note presents a process model of operations that describes inputs being transformed into outputs
within the boundary of an operations system. It also discusses the role of operations managers, in
particular the importance of focusing on suppliers and customers who are outside this boundary, as
well as on other aspects of the operations system's external environment.

Consider the ingredients of your breakfast this morning. Unless you live on a farm and produced them
yourself, they passed through a number of different processing steps between the farmer and your
table and were handled by several different organisations. Similarly, your morning newspaper was
created and delivered to you through the interactions of a number of different organisations.

Every day, you use a multitude of physical objects and a variety of services. Most of the physical
objects have been manufactured and most of the services have been provided by people in
organisations. Just as fish are said to be unaware of the water that surrounds them, most of us give
little thought to the organisational processes that produce these goods and services for our use. The
study of operations deals with how the goods and services that you buy and consume every day are
produced.

1: Operations, operations management and operations managers

Every organisation has an operations function, whether or not it is called ‘operations’. The goal or
purpose of most organisations involves the production of goods and/or services. To do this, they have
to procure resources, convert them into outputs and distribute them to their intended users. The term
operations embraces all the activities required to create and deliver an organisation's goods or
services to its customers or clients.

Within large and complex organisations operations is usually a major functional area, with people
specifically designated to take responsibility for managing all or part of the organisation's operations
processes. It is an important functional area because it plays a crucial role in determining how well an
organisation satisfies its customers. In the case of private-sector companies, the mission of the
operations function is usually expressed in terms of profits, growth and competitiveness; in public and
voluntary organisations, it is often expressed in terms of providing value for money.
Operations management is concerned with the design, management, and improvement of the systems
that create the organisation's goods or services. The majority of most organisations’ financial and
human resources are invested in the activities involved in making products or delivering services.
Operations management is therefore critical to organisational success.

Example 1

For each of the following businesses, identify the main output of the operation:

1. Brewery
2. Publisher
3. Hotel
4. Insurance company
5. Your organisation

Discussion/Hints

You probably found it quite easy to identify the main output of a brewery as beer, and of a publisher
as books or newspapers. However, the others are a bit trickier: a satisfied customer (hotel) and a
customer bearing less financial risk (insurance company). Operations management deals with
producing not only physical goods, but also satisfied customers.

An understanding of the principles of operations management is important for all managers, because
they provide a systematic way of looking at an organisation's processes. The need to manage
manufacturing and service operations efficiently and effectively has led to a considerable increase in
interest in operations management in recent years. However, the concept of operations is not new.

1.1: The historical development of operations management

Operations in some form has been around as long as human endeavour itself but, in manufacturing at
least, it has changed dramatically over time, and there are three major phases - craft manufacturing,
mass production and the modern period. Let's look at each of these briefly in turn.

Craft manufacturing

Craft manufacturing describes the process by which skilled craftspeople produce goods in low volume,
with a high degree of variety, to meet the requirements of their individual customers. Over the
centuries, skills have been transmitted from masters to apprentices and journeymen, and controlled
by guilds. Craftspeople usually worked at home or in small workshops. Such a system worked well for
small-scale local production, with low levels of competition. Some industries, such as furniture
manufacture and clockmaking, still include a significant proportion of craft working.

Mass production

In many industries, craft manufacturing began to be replaced by mass production in the 19th century.
Mass production involves producing goods in high volume with low variety – the opposite of craft
manufacturing. Customers are expected to buy what is supplied, rather than goods made to their own
specifications. Producers concentrated on keeping costs, and hence prices, down by minimising the
variety of both components and products and setting up large production runs. They developed
aggressive advertising and employed sales forces to market their products.

An important innovation in operations that made mass production possible was the system of
standardised and interchangeable parts known as the ‘American system of manufacture’ (Hounshell,
1984), which developed in the United States and spread to the United Kingdom and other countries.
Instead of being produced for a specific machine or piece of equipment, parts were made to a
standard design that could be used in different models. This greatly reduced the amount of work
required in cutting, filing and fitting individual parts, and meant that people or companies could
specialise in particular parts of the production process.

A second innovation was the development by Frederick Taylor (1911) of the system of 'scientific
management’, which sought to redesign jobs using similar principles to those used in designing
machines. Taylor argued that the role of management was to analyse jobs in order to find the ‘one
best way’ of performing any task or sequence of tasks, rather than allowing workers to determine how
to perform their jobs. By breaking down activities into tasks that were sequential, logical and easy to
understand, each worker would have narrowly defined and repetitious tasks to perform, at high speed
and therefore with low costs (Kanigel, 1999).

A third innovation was the development of the moving assembly line by Henry Ford. Instead of
workers bringing all the parts and tools to a fixed location where one car was put together at a time,
the assembly line brought the cars to the workers. Ford thus extended the ideas of scientific
management, with the assembly line controlling the pace of production. This completed the
development of a system through which large volumes of standardised products could be assembled
by unskilled workers at constantly decreasing costs – the apogee of mass production.

The modern period

Mass production worked well as long as high volumes of mass-produced goods could be produced and
sold in predictable and slowly changing markets. However, during the 1970s, markets became highly
fragmented, product life cycles reduced dramatically and consumers had far greater choice than ever
before.

An unforeseen challenge to Western manufacturers emerged from Japan. New Japanese production
techniques, such as total quality management (TQM), just-in-time (JIT) and employee involvement
were emulated elsewhere in the developed world, with mixed results.

More recently, the mass production paradigm has been replaced, but there is as yet no single
approach to managing operations that has become similarly dominant. The different approaches for
managing operations that are currently popular include:

Flexible specialisation (Piore and Sabel, 1984) in which firms (especially small firms) focus on separate
parts of the value-adding process and collaborate within networks to produce whole products. Such an
approach requires highly developed networks, effective processes for collaboration and the
development of long-term relationships between firms.

Lean production (Womack et al., 1990) which developed from the highly successful Toyota Production
System. It focuses on the elimination of all forms of waste from a production system. A focus on
driving inventory levels down also exposes inefficiencies, reduces costs and cuts lead times.

Mass customisation (Pine et al., 1993) which seeks to combine high volume, as in mass production,
with adapting products to meet the requirements of individual customers. Mass customisation is
becoming increasingly feasible with the advent of new technology and automated processes.

Agile manufacturing (Kidd, 1994) which emphasises the need for an organisation to be able to switch
frequently from one market-driven objective to another. Again, agile manufacturing has only become
feasible on a large scale with the advent of enabling technology.

In various ways, these approaches all seek to combine the high volume and low cost associated with
mass production with the product customisation, high levels of innovation and high levels of quality
associated with craft production

1.2: The role of the operations manager

Some people (especially those professionally involved in operations management!) argue that
operations management involves everything an organisation does. In this sense, every manager is an
operations manager, since all managers are responsible for contributing to the activities required to
create and deliver an organisation's goods or services. However, others argue that this definition is too
wide, and that the operations function is about producing the right amount of a good or service, at the
right time, of the right quality and at the right cost to meet customer requirements.

Example2

What do you think a typical operations manager does? Take a minute or so to consider.

Discussion/Hints

A stereotypical example of an operations manager would be a plant manager in charge of a factory,

such as an automobile assembly plant. But other managers who work in the factory – quality
managers, production and inventory control managers, and line supervisors – can also be considered
to be working in operations management. In service industries, managers in hotels, restaurants,
banks and stores are operations managers. In the not-for-profit sector, the manager of a nursing
home or day centre for older people is an operations manager, as is the manager of a local
government tax-collection office and the manager of a charity shop staffed entirely by volunteers.

So operations managers are responsible for managing activities that are part of the production of
goods and services. Their direct responsibilities include managing both the operations process,
embracing design, planning, control, performance improvement, and operations strategy. Their
indirect responsibilities include interacting with those managers in other functional areas within the
organisation whose roles have an impact on operations. Such areas include marketing, finance,
accounting, personnel and engineering.

Operations managers' responsibilities include:

Human resource management – the people employed by an organisation either work directly to create
a good or service or provide support to those who do. People and the way they are managed are a key
resource of all organisations.

Asset management – an organisation's buildings, facilities, equipment and stock are directly involved
in or support the operations function.

Cost management – most of the costs of producing goods or services are directly related to the costs
of acquiring resources, transforming them or delivering them to customers. For many organisations in
the private sector, driving down costs through efficient operations management gives them a critical
competitive edge. For organisations in the not-for-profit sector, the ability to manage costs is no less
important.

Decision making is a central role of all operations managers. Decisions need to be made in:

1. designing the operations system

2. managing the operations system
3. improving the operations system.

The five main kinds of decision in each of these relate to:

1. the processes by which goods and services are produced

2. the quality of goods or services
3. the quantity of goods or services (the capacity of operations)
4. the stock of materials (inventory) needed to produce goods or services
5. the management of human resources.
Example 3

Use the matrix below to analyse your role as an operations manager. In as many of the cells in the
matrix as you can, jot down an example of a decision you have made in the last month.

A Designing the operations system B Managing the operations system C Improving the operations
system

1 Processes

2 Quality

3 Capacity

4 Inventory

5 Human resources

Discussion/Hints
You will almost certainly have left some of the cells in the matrix blank. For example, you may not
have been involved (at least in the last month) in designing the operations system, so you may not
have made any decisions that belong to the cells in Column A, though you will almost certainly have
found some examples to put in Column B and perhaps in Column C also. Similarly, if your area of work
does not involve any stocks of materials, you will not have found any for cells in Row 4 (Inventory).
However, it is likely that you will have been able to identify decisions you have made that fall in at
least a third of the cells of this matrix. If so, you are fulfilling many of the roles of an operations
manager.

2: The transformation model

The discussion above has highlighted the role of operations in creating and delivering the goods and
services produced by an organisation for its customers. This section introduces the transformation
model for analysing operations. This is shown in Figure 1, which represents the three components of
operations: inputs, transformation processes and outputs. Operations management involves the
systematic direction and control of the processes that transform resources (inputs) into finished goods
or services for customers or clients (outputs). This basic transformation model applies equally in
manufacturing and service organisations and in both the private and not-for-profit sectors.

Figure 1 The transformation model

Let's look at each of the components of Figure 1 in a little more detail.

2: The transformation model

2.1: Inputs

Some inputs are used up in the process of creating goods or services; others play a part in the
creation process but are not used up. To distinguish between these, input resources are usually
classified as:

1. transformed resources – those that are transformed in some way by the operation to produce
the goods or services that are its outputs
2. transforming resources – those that are used to perform the transformation process.
Inputs include different types of both transformed and transforming resources.

Three types of resource that may be transformed in operations are:

1. materials – the physical inputs to the process

2. information that is being processed or used in the process
3. customers – the people who are transformed in some way.

Many people think of operations as being mainly about the transformation of materials or components
into finished products, as when limestone and sand are transformed into glass or an automobile is
assembled from its various parts. But all organisations that produce goods or services transform
resources: many are concerned mainly with the transformation of information (for example,
consultancy firms or accountants) or the transformation of customers (for example, hairdressing or
hospitals).

Galloway (1998) defines operations as all the activities concerned with the transformation of
materials, information or customers.

The two types of transforming resource are:

1. staff – the people involved directly in the transformation process or supporting it

2. facilities – land, buildings, machines and equipment.

The staff involved in the transformation process may include both people who are directly employed
by the organisation and those contracted to supply services to it. They are sometimes described as
‘labour’. The facilities of an organisation – including buildings, machinery and equipment – are
sometimes referred to as ‘capital’. Operations vary greatly in the mix of labour and capital that make
up their inputs. Highly automated operations depend largely on capital; others rely mainly on labour.

Example 4

Identify the principal inputs (both transformed and transforming resources) used by each of the
following organisations, and their principal outputs.

• Organisation Inputs Outputs

• Restaurant
• University
• Doctor's surgery
• Nuclear fuel reprocessing plant

Discussion/Hints

The transformed resources of a restaurant include food and drink, and its transforming resources
include equipment such as cookers, refrigerators, tables and chairs, and the chefs and waiters. In a
university, the transformed resources include students and knowledge and the transforming resources
include lecturers, tutors and support staff, as well as classrooms, books and instructional materials.
2.2: Outputs
The principal outputs of a doctor's surgery are cured patients; the outputs of a
nuclear reprocessing plant include reprocessed fuel and nuclear waste. Many
transformation processes produce both goods and services. For example, a
restaurant provides a service, but also produces goods such as food and drinks.

Transformation processes may result in some undesirable outputs (such as nuclear

waste in the example above) as well as the goods and services they are designed to
deliver. An important aspect of operations management in some organisations is
minimising the environmental impact of waste over the entire life cycle of their
products, up to the point of final disposal. Protecting the health and safety of
employees and of the local community is thus also the responsibility of operations
management. In addition, the operations function may be responsible for ethical
behaviour in relation to the social impact of transformation processes, both locally
and globally. For example, in the United States, manufacturers of sports footwear
have come under fire for employing child labour and paying low wages to workers
employed in their overseas factories.

2.3: Transformation processes

A transformation process is any activity or group of activities that takes one or more
inputs, transforms and adds value to them, and provides outputs for customers or
clients. Where the inputs are raw materials, it is relatively easy to identify the
transformation involved, as when milk is transformed into cheese and butter. Where
the inputs are information or people, the nature of the transformation may be less
obvious. For example, a hospital transforms ill patients (the input) into healthy
patients (the output).

Transformation processes include:

• changes in the physical characteristics of materials or customers

• changes in the location of materials, information or customers
• changes in the ownership of materials or information
• storage or accommodation of materials, information or customers
• changes in the purpose or form of information
• changes in the physiological or psychological state of customers.
• Often all three types of input – materials, information and customers – are
transformed by the same organisation. For example, withdrawing money from
a bank account involves information about the customer's account, materials
such as cheques and currency, and the customer. Treating a patient in
hospital involves not only the ‘customer's’ state of health, but also any
materials used in treatment and information about the patient.

One useful way of categorising different types of transformation is into:

1. manufacture – the physical creation of products (for example cars)

 2. transport – the movement of materials or customers (for example a taxi
service)
3. supply – change in ownership of goods (for example in retailing)
4. service – the treatment of customers or the storage of materials (for example
hospital wards, warehouses).

Several different transformations are usually required to produce a good or service.

The overall transformation can be described as the macro operation, and the more
detailed transformations within this macro operation as micro operations. For
example, the macro operation in a brewery is making beer. The micro operations
include:

1. milling the malted barley into grist

2. mixing the grist with hot water to form wort
3. cooling the wort and transferring it to the fermentation vessel
4. adding yeast to the wort and fermenting the liquid into beer
5. filtering the beer to remove the spent yeast
6. decanting the beer into casks or bottles.

Example 5

Identify the principal resources (inputs), the type of transformation process and the
principal outputs (goods or services) in each of the following operations.

Inputs Type of transformation

Outputs

Refining steel

Assembling cars

Delivering cars to dealers

Repairing cars

Designing cars

Discussion/Hints

You may have identified various inputs such as materials, energy, machines,
equipment, buildings and people. For example, the inputs used by a car assembly
plant include components, equipment, buildings, labour and energy. You may also
have included less tangible inputs to the transformation process, such as
information and skills.
You might have noticed that, midway down the list, the activities changed from
primarily the production of goods to the provision of services. In the case of car
designing, the principal inputs are ideas and the outputs are materials used to
communicate the finished idea, such as blueprints or computer models.

2.4: Feedback

A further component of the transformation model in Figure 1 is the feedback loop.

Feedback information is used to control the operations system, by adjusting the
inputs and transformation processes that are used to achieve desired outputs. For
example, a chef relies on a flow of information from the customer, through the
waiter, about the quality of the food. Adverse feedback might lead the chef to
change the inputs (for example by buying better quality potatoes) or the
transformation process (for example by changing the recipe or the cooking
method).

Feedback is essential for operations managers. It can come from both internal and
external sources. Internal sources include testing, evaluation and continuously
improving goods and services; external sources include those who supply products
or services to end-customers as well as feedback from customers themselves.

3: The boundary of the operations system

The simple transformation model in Figure 1 provides a powerful tool for looking at
operations in many different contexts. It helps us to analyse and design operations
in many types of organisation at many levels.

This model can be developed by identifying the boundaries of the operations

system through which an organisation's goods or services are provided to its
customers or clients. Figure 3, shows this boundary and added three components
that are located outside it:

• suppliers
• customers
• the environment.

The operations boundary

Suppliers provide inputs to the operations system. They may supply raw materials
(for example a quarrying company providing limestone to transform into glass),
components (as in car assembly), finished products (for example a pharmaceutical
company providing drugs to a hospital, or an office supplies company providing it
with stationery) or services (as in the case of a law firm providing legal advice).

The customers (or clients) are the users of the outputs of the transformation
process. The boundary drawn in Figure 3 around the transforming process can be
thought of as the boundary of the organisation, so that the whole organisation is
viewed as an operations system, with its customers external to it. This may be an
appropriate way of viewing a small organisation, whose outputs go directly to its
external customers.

However, most macro operations are made up of a number of micro operations, or

sub-systems. Only the outputs of the final micro operation go directly to a customer
or client who is not part of the organisation that is carrying out the macro operation.
The final user or client of the good or service is the organisation's external
customer, and the users or clients of the outputs of the other micro operations
internal customers. Most of the operations in a large organisation serve internal,
rather than external customers. For example, if you are the manager of a human
resources department, a printing unit or a building maintenance section within a
large organisation, your customers are internal: they are other sub-systems within
the larger organisation that are external to your operations system but internal to
the organisation as a whole.

All operating systems are influenced by the organisation's environment. This

environment includes both other functional areas within the organisation, each with
its own policies, resources, forecasts, goals, assumptions and constraints, and the
wider world outside the organisation – the legal, political, social and economic
conditions within which it is operating. Changes in either the internal or the external
environment may affect the operations function.

Traditionally, organisations have kept the operations function separate from both its
customers and its suppliers, in order to protect it from environmental disturbances
(Thompson, 1967). This can lead to a ‘closed system’ mentality, in which the
operations function loses contact with external customers and suppliers, and
focuses only on the transformation process that it controls. A closed system tends
to limit flexibility and result in a loss of competitiveness. An ‘open system’
mentality, in which communication with customers and suppliers is encouraged,
seeks to reduce the barriers between the operations function and its environment,
in order to enhance the organisation's competitiveness.

An added complication is that, as organisations become more complex, it becomes

increasingly difficult to draw neat boundaries around the operations function.
Operations management must therefore focus its attention on key interfaces within
the organisation, as well as on interfaces between the organisation and its external
customers and suppliers. Most operations systems are part of a supply chain that
involves materials, information and customers, and the distribution of finished
goods or services to customers or clients. It is therefore the responsibility of the
operations function to co-ordinate the flow of information that links these activities
through the supply chain. Thus, while some operations managers are concerned
only with the transformation process within a single organisational unit, such as a
factory or service outlet, many are involved in managing operations across several
organisational units or even across separate organisations.

3.1: A process perspective on organisations

The overall transformation process can be broken down into a series of micro-
processes. Attention to processes within organisations can provide a powerful tool
for understanding organisational performance. In the extract below, David Garvin
discusses how attention to work processes can yield new insights for managers
about the ways in which performance may be improved.

Example 6

Read the extract below and make your own notes about the key points Garvin
makes and their application to your own organisation.

The work process approach, which has roots in industrial engineering and work
measurement, focuses on accomplishing tasks. It starts with a simple but powerful
idea: organizations accomplish their work through linked chains of activities cutting
across departments and functional groups. These chains are called processes and
can be conveniently grouped into two categories: (1) processes that create,
produce, and deliver products and services that customers want, and (2) processes
that do not produce outputs that customers want, but that are still necessary for
running the business. I call the first group ‘operational processes’ and the second
group ‘administrative processes’. New product development, manufacturing, and
logistics and distribution are examples of operational processes, while strategic
planning, budgeting, and performance measurement are examples of administrative
processes.

Operational and administrative processes share several characteristics. Both involve

sequences of linked, interdependent activities that together transform inputs into
outputs. Both have beginnings and ends, with boundaries that can be denned with
reasonable precision and minimal overlap. And both have customers, who may be
internal or external to the organization. The primary differences between the two lie
in the nature of their outputs. Typically, operational processes produce goods and
services that external customers consume, while administrative processes generate
information and plans that internal groups use. For this reason, the two are
frequently considered independent, unrelated activities, even though they must
usually be aligned and mutually supportive if the organization is to function
effectively. Skilled supply chain management, for example, demands a seamless
link between a company's forecasting and logistics processes, just as successful
new product development rests on well-designed strategy formation and planning
processes.

The work processes approach is probably most familiar to managers. It draws

heavily on the principles of the quality movement and re-engineering. Both focus on
the need to redesign processes to improve quality, cut costs, reduce cycle times, or
otherwise enhance operating performance. Despite these shared goals, the two
movements are strikingly similar on some points, but diverge on others.
The similarities begin with the belief that most existing work processes have grown
unchecked, with little rationale or planning, and are therefore terribly inefficient.
Hammer, for example, has observed: ‘Why did we design inefficient processes? In a
way, we didn't. Many of our procedures were not designed at all; they just
happened …. The hodgepodge of special cases and quick fixes was passed from one
generation of workers to the next.’ The result, according to one empirical study of
white-collar processes, is that value-added time (the time in which a product or
service has value added to it, as opposed to waiting in a queue or being reworked to
fix problems caused earlier) is typically less than 5 per cent of total processing time.

To eliminate inefficiencies, both movements suggest that work processes be

redesigned. In fact, both implicitly equate process improvement with process
management. They also suggest the use of similar tools, such as process mapping
and data modelling, as well as common rules of thumb for identifying improvement
opportunities. First, flow charts are developed to show all the steps in a process; the
process is then made more efficient by eliminating multiple approvals and
checkpoints, finding opportunities to reduce waiting time, smoothing the handoffs
between departments, and grouping related tasks and responsibilities. At some
point, ‘process owners’ with primary responsibility for leading the improvement
effort are also deemed necessary. Their role is to ensure integration and overcome
traditional functional loyalties; for this reason, relatively senior managers are
usually assigned the task. The differences between the two movements lie in their
views about the underlying nature and sources of process change. The quality
movement, for the most part, argues for incremental improvement. Existing work
processes are assumed to have many desirable properties; the goal is to eliminate
unnecessary steps and errors while preserving the basic structure of the process.
Improvements are continuous and relatively small-scale. Re-engineering, by
contrast, calls for radical change. Existing work processes are regarded as
hopelessly outdated; they rely on work practices and a division of labor that take no
account of modern information technology.

For example, the case management approach, in which ‘individuals or small teams
… perform a series of tasks, such as the fulfillment of a customer order from
beginning to end, often with the help of information systems that reach throughout
the organization,’ was not economically viable until the arrival of powerful,
inexpensive computers and innovative software. For this reason, re-engineering
focuses less on understanding the details of current work processes and more on
‘inventing a future’ based on fundamentally new processes.

Perhaps the most dramatic difference between the two approaches lies in the
importance they attach to control and measurement. Quality experts, drawing on
their experience with statistical process control in manufacturing, argue that well-
managed work processes must be fully documented, with clearly defined control
points. Managers can improve a process, they believe, only if they first measure it
with accuracy and assure its stability. After improvement, continuous monitoring is
required to maintain the gains and ensure that the process performs as planned. Re-
engineering experts, on the other hand, are virtually silent about measurement and
control. They draw on a different tradition, information technology, that emphasizes
redesign rather than control.

Insights for Managers

The work processes perspective has led to a number of important insights for
managers. It provides an especially useful framework for addressing a common
organizational problem: fragmentation, or the lack of cross-functional integration.
Many aspects of modern organizations make integration difficult, including
complexity, highly differentiated sub-units and roles, poor informal relationships,
size, and physical distance. Integration is often improved by the mere
acknowledgment of work processes as viable units of analysis and targets of
managerial action. Charting horizontal work flows, for example, or following an
order through the fulfillment system, are convenient ways to remind employees that
the activities of disparate departments and geographical units are interdependent,
even if organization charts, with their vertical lines of authority, suggest otherwise.

In addition, the work processes perspective provides new targets for improvement.
Rather than focusing on structures and roles, managers address the underlying
processes. An obvious advantage is that they closely examine the real work of the
organization. The results, however, have been mixed, and experts estimate that a
high proportion of these programmes have failed to deliver the expected gains.

My analysis suggests several reasons for failure. Most improvement programmes

have focused exclusively on process redesign; the ongoing operation and
management of the reconfigured processes have usually been neglected. Yet even
the best processes will not perform effectively without suitable oversight, co-
ordination, and control, as well as occasional intervention. In addition, operational
processes have usually been targeted for improvement, while their supporting
administrative processes have been overlooked. Incompatibilities and
inconsistencies have arisen when the information and plans needed for effective
operation were not forthcoming. A few companies have used the work processes
approach to redefine their strategy and organization. The most progressive have
blended a horizontal process orientation with conventional vertical structures.

Source: Garvin, D. A. (1998), ‘The processes of organization and management’,

Sloan Management Review, Cambridge; Summer, pp.35–37

Now read the Comments

When I read the article I pulled out a number of points I felt were important. You
may have identified others.

• The distinction between operational and administrative processes.

 • Two different approaches to process improvement: the quality movement
approach (incremental – focuses on measurement and control) and the re-
engineering approach (radical – focuses on redesign).
• The process perspective can encourage more effective cross-functional
integration.
• Attempts at process improvement are not always successful, in part because
of insufficient attention to supporting management and control systems and
to the supporting administrative processes.

4: Summary

The aim of this Unit has been to give you an introductory overview of operations
management. Operations is one of the central functions of all organisations The first
learning outcome was that you should be able to ‘define “operations” and
“operations management”’. I took the view in this session that operations embraces
all the activities required to create and deliver an organisation's goods or services to
its customers or clients.

The second outcome was that you should be able to ‘identify the roles and
responsibilities of operations managers in different organisational contexts’.

The third outcome was that you should be able to ‘identify the operations
management aspects of your own work’. Some managers have a specific and
central role in the management of operations such as a production manager in a
factory or an operations manager in a hotel chain. However, as you may have
discovered from Activity 3, most managers have at least some operations
management aspect to their job.

The fourth outcome was that you should be able to ‘apply the “transformation
model” to identify the inputs, transformation processes and outputs of an
organisation’. The transformation model is a tool for analysing any type of
organisation in terms of the inputs, transformation process and outputs involved in
the operations function. Section 2 of this session described the transformation
model and Activity 4 gave you the chance to apply it to a number of very different
organisations.

The fifth outcome was that you should be able to ‘identify the operational and
administrative processes in your own organisation’. David Garvin's article discussed
the way in which a process perspective can enable managers to gain greater insight
into the management of organisational performance. As you read the extract I hope
you took notes on how this could be applied in your own organisation.

The final objective was that you should be able to ‘describe the boundaries of an
operations system and recognise its interfaces with other functional areas within the
organisation and with its external environment’. In Section 3 , I extended the
transformation model to include suppliers, customers and the external environment.
I also drew an important distinction between the closed system mentality that keeps
the operations function separated from suppliers and clients, and the open systems
mentality where communication with customers and suppliers is encouraged.