Operations and process management nigel slack pdf

Nigel Slack Alistair Brandon-Jones Robert Johnston

Seventh Edition

OpeRAtiONS MANAgeMeNt

Seventh Edition

OpeRAtiONS MANAgeMeNt Nigel Slack Alistair Brandon-Jones Robert Johnston

www.pearson-books.com

Seventh EditionO

peRA tiO

N S M

A N

A g

eM eN

t Slack Brandon-Jones Johnston

Operations management is important, exciting, challenging … and everywhere you look!

• Important, because it enables organizations to provide services and products that we all need

• Exciting, because it is central to constant changes in customer preference, networks of supply and demand, and developments in technology

• Challenging, because solutions must be must be financially sound, resource-efficient, as well as environmentally and socially responsible

• And everywhere, because in our daily lives, whether at work or at home, we all experience and manage processes and operations.

Operations Management focuses on the sustainable and socially responsible imperatives of operations management, using over 120 cases and illustrations of real-life operations around the world, including Apple, Médecins Sans Frontières, Amazon, Ecover, Dyson, Disneyland Paris, Google, The North Face, and many more.

use with

Front cover image: © Lewis Mulatero/Getty Images

Join over 10 million students benefiting from pearson MyLabs.

This title can be supported by MyOMLab, an online homework and tutorial system designed to test and build your understanding. MyOMLab provides a personalized approach, with instant feedback and numerous additional resources to support your learning.

A student access code card may have been included with this textbook at a reduced cost. If you do not have an access code, you can buy access to MyOMLab and the eText – an online version of the book – online at www.myomlab.com.

CVR_SLAC6208_07_SE_CVR.indd 1 15/04/2013 14:14

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Welcome to OPERATIONS MANAGEMENT

Operations Management – it’s important, it’s exciting, it’s challenging, and everywhere you look!

Important, because it’s concerned with creating all of the products and services upon which we depend. Exciting, because it’s at the centre of so many of the changes affecting the world of business. Challenging, because the solutions that we fi nd need to work globally and responsibly within society and the environment. And everywhere, because every service and product that you use – the cereal you eat at breakfast, the chair you sit on, and the radio station you listen to while you eat – is the result of an operation or process.

Our aim in writing Operations Management is to give you a comprehensive understanding of the issues and techniques of operations management, and to help you get a great fi nal result in your course. Here’s how you might make the most of the text:

● Get ahead with the latest developments – from the up-to-the-minute Operations in practice features in every chapter to the focus on corporate social responsibility in the fi nal chapter – these put you at the cutting edge .

● Use the Worked examples and Problems and applications to improve your use of key quantitative and qualitative techniques, and work your way to better grades in your assignments and exams .

● Follow up on the recommended readings at the end of each chapter. They’re specially selected to enhance your learning and give you an edge in your course work.

And in particular, look out for the references to MyOMLab in the text, and log on to www.myomlab.com * where you can

● check and reinforce your understanding of key concepts using self-assessment questions, video clips and more;

● practise your problem-solving with feedback, guided solutions and an almost limitless supply of questions!

We want Operations Management to give you what you need: a comprehensive view of the subject, an ambition to put that into practice, and – of course – success in your studies. So, read on and good luck!

Nigel Slack Alistair Brandon-Jones

Robert Johnston

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OPERATIONS MANAGEMENT Seventh edition

Nigel Slack Alistair Brandon-Jones Robert Johnston

A01_SLAC6208_07_SE_FM.indd 3 15/04/13 1:55 PM

Pearson Education Limited Edinburgh Gate Harlow CM20 2JE United Kingdom Tel: +44 (0)1279 623623 Fax: +44 (0)1279 431059 Web: www.pearson.com/uk

First published under the Pitman Publishing imprint 1995 Second edition (Pitman Publishing) 1998 Third edition 2001 Fourth edition 2004 Fifth edition 2007 Sixth edition 2010 Seventh edition 2013

© Nigel Slack, Stuart Chambers, Christine Harland, Alan Harrison, Robert Johnston 1995, 1998 © Nigel Slack, Stuart Chambers, Robert Johnston 2001, 2004, 2007, 2010 © Nigel Slack, Alistair Brandon-Jones, Robert Johnston 2013

The rights of Nigel Slack, Alistair Brandon-Jones and Robert Johnston to be identified as authors of this work have been asserted by them in accordance with the Copyright, Designs and Patents Act 1988.

The print publication is protected by copyright. Prior to any prohibited reproduction, storage in a retrieval system, distribution or transmission in any form or by any means, electronic, mechanical, recording or otherwise, permission should be obtained from the publisher or, where applicable, a licence permitting restricted copying in the United Kingdom should be obtained from the Copyright Licensing Agency Ltd, Saffron House, 6–10 Kirby Street, London EC1N 8TS.

The ePublication is protected by copyright and must not be copied, reproduced, transferred, distributed, leased, licensed or publicly performed or used in any way except as specifically permitted in writing by the publishers, as allowed under the terms and conditions under which it was purchased, or as strictly permitted by applicable copyright law. Any unauthorised distribution or use of this text may be a direct infringement of the author’s and the publishers’ rights and those responsible may be liable in law accordingly.

All trademarks used herein are the property of their respective owners. The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affiliation with or endorsement of this book by such owners.

Pearson Education is not responsible for the content of third-party internet sites.

ISBN: 978-0-273-77620-8 (print) 978-0-273-77628-4 (PDF) 978-0-273-77621-5 (eText)

British Library Cataloguing-in-Publication Data A catalogue record for the print edition is available from the British Library

Library of Congress Cataloging-in-Publication Data A catalog record for the print edition is available from the Library of Congress

10 9 8 7 6 5 4 3 2 1 17 16 15 14 13

Print edition typeset in 9.25/12 by Charter ITC Std by 75 Print edition printed and bound in Italy by L.E.G.O. S.p.A

NOTE THAT ANY PAGE CROSS REFERENCES REFER TO THE PRINT EDITION

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Guide to ‘operations in practice’, examples, short cases and case studies xii

Making the most of this book and MyOMLab xvi

Preface xx

To the Instructor . . . xxii

To the Student . . . xxiii

Ten steps to getting a better grade in operations management xxiv

About the authors xxv

Acknowledgements xxvi

Part One INTRODUCTION 3

1 Operations management 4

2 Operations performance 36

3 Operations strategy 68

Part Two DESIGN 95

4 Process design 96

5 Innovation and design in services and products 125

6 Supply network design 152 Supplement to Chapter 6 – Forecasting 183

7 Layout and flow 191

8 Process technology 223

9 People, jobs and organization 251 Supplement to Chapter 9 – Work study 279

Part Three DELIVER – PLANNING AND CONTROLLING OPERATIONS 287

10 The nature of planning and control 288

11 Capacity management 322 Supplement to Chapter 11 – Analytical

queuing models 361

12 Inventory management 368

13 Supply chain management 404

14 Enterprise resource planning (ERP) 439 Supplement to Chapter 14 – Materials

requirements planning (MRP) 456

15 Lean synchronization 464

16 Project management 495

17 Quality management 534 Supplement to Chapter 17 – Statistical

process control (SPC) 562

Part Four IMPROVEMENT 577

18 Operations improvement 578

19 Risk management 610

20 Organizing for improvement 640

Part Five CORPORATE SOCIAL RESPONSIBILITY 671

21 Operations and corporate social responsibility (CSR) 672

Notes on chapters 693 Glossary 700 Index 713

Brief contents

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Why is flexibility important? 52 Why is cost important? 55 Trade-offs between performance objectives 60

Summary answers to key questions 62 Case study: Operations objectives at the

Penang Mutiara 64 Problems and applications 65 Selected further reading 66 Useful websites 67

Chapter 3 Operations strategy 68 Introduction 68

What is strategy and what is operations strategy? 70 The ‘top-down’ and ‘bottom-up’ perspectives 73 The market requirements and operations resources

perspectives 77 How can an operations strategy be put together? 86

Summary answers to key questions 89 Case study: Long Ridge Gliding Club 91 Problems and applications 92 Selected further reading 93 Useful websites 93

Contents

Guide to ‘operations in practice’, examples, short cases and case studies xii

Making the most of this book and MyOMLab xvi

Preface xx

To the Instructor . . . xxii

To the Student . . . xxiii

Ten steps to getting a better grade in operations management xxiv

About the authors xxv

Acknowledgements xxvi

Part One

Part Two

INTRODUCTION 3

Chapter 1 Operations management 4 Introduction 4

What is operations management? 6 Operations management is important in all

types of organization 8 The input–transformation–output process 13 The process hierarchy 18 Operations processes have different characteristics 23 What do operations managers do? 26

Summary answers to key questions 30 Case study: Design house partnerships at Concept

Design Services 31 Problems and applications 34 Selected further reading 34 Useful websites 35

Chapter 2 Operations performance 36 Introduction 36

Operations performance is vital for any organization 38

Why is quality important? 46 Why is speed important? 47 Why is dependability important? 49

DESIGN 95

Chapter 4 Process design 96 Introduction 96

What is process design? 97 What objectives should process design have? 98 Process types – the volume–variety effect

on process design 101 Detailed process design 109

Summary answers to key questions 120 Case study: The Action Response Applications

Processing Unit (ARAPU) 121 Problems and applications 123 Selected further reading 124 Useful websites 124

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Chapter 5 Innovation and design in services and products 125 Introduction 125

How does innovation impact on design? 127 Why is good design so important? 130 The stages of design – from concept

to specification 131 What are the benefits of interactive design? 141

Summary answers to key questions 147 Case study: Chatsworth – the adventure

playground decision 148 Problems and applications 150 Selected further reading 150 Useful websites 151

Chapter 6 Supply network design 152 Introduction 152

The supply network perspective 153 Configuring the supply network 155 Where should an operation be located? 160 Long-term capacity management 168 Break-even analysis of capacity expansion 174

Summary answers to key questions 175 Case study: Disneyland Resort Paris (abridged) 176 Problems and applications 180 Selected further reading 182 Useful websites 182

Supplement to Chapter 6 Forecasting 183 Introduction 183

Forecasting – knowing the options 183 In essence forecasting is simple 184 Approaches to forecasting 185 Selected further reading 190

Chapter 7 Layout and flow 191 Introduction 191

What is layout? 193 The basic layout types 193 What type of layout should an operation choose? 200 How should each basic layout type be

designed in detail? 204

Summary answers to key questions 217 Case study: North West Constructive Bank (abridged) 218 Problems and applications 220 Selected further reading 222 Useful websites 222

Chapter 8 Process technology 223 Introduction 223

Operations management and process technology 225

What do operations managers need to know about process technology? 225

How are process technologies evaluated? 237 How are process technologies implemented? 242

Summary answers to key questions 246 Case study: Rochem Ltd 247 Problems and applications 249 Selected further reading 249 Useful websites 250

Chapter 9 People, jobs and organization 251 Introduction 251

People in operations 253 Human resource strategy 253 Organization design 256 Job design 259 Allocate work time 271

Summary answers to key questions 273 Case study: Service Adhesives try again 274 Problems and applications 276 Selected further reading 277 Useful websites 277

Supplement to Chapter 9 Work study 279 Introduction 279

Method study in job design 279 Work measurement in job design 282

Part Three

DELIVER – PLANNING AND CONTROLLING OPERATIONS 287

Chapter 10 The nature of planning and control 288 Introduction 288

What is planning and control? 290 The effect of supply and demand on

planning and control 293 Planning and control activities 299 Controlling operations is not always routine 314

Summary answers to key questions 316

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Case study: subText Studios, Singapore (abridged) 317

Problems and applications 320 Selected further reading 321 Useful websites 321

Chapter 11 Capacity management 322 Introduction 322

What is capacity management? 324 How is capacity measured? 326 Coping with demand fluctuation 334 How can operations plan their capacity level? 343 How is capacity planning a queuing problem? 348

Summary answers to key questions 353 Case study: Blackberry Hill Farm 354 Problems and applications 358 Selected further reading 360 Useful websites 360

Supplement to Chapter 11 Analytical Queuing Models 361 Introduction 361

Notation 361 Variability 361 Incorporating Little’s law 363 Types of queuing system 363

Chapter 12 Inventory management 368 Introduction 368

What is inventory? 370 Why should there be any inventory? 372 How much to order – the volume decision 376 When to place an order – the timing decision 388 How can inventory be controlled? 392

Summary answers to key questions 398 Case study: supplies4medics.com 400 Problems and applications 401 Selected further reading 402 Useful websites 402

Chapter 13 Supply chain management 404 Introduction 404

What is supply chain management? 406 The activities of supply chain management 409 Single- and multi-sourcing 413

Relationships between operations in a supply chain 419

How do supply chains behave in practice? 424 How can supply chains be improved? 426

Summary answers to key questions 433 Case study: Supplying fast fashion 434 Problems and applications 437 Selected further reading 438 Useful websites 438

Chapter 14 Enterprise resource planning (ERP) 439 Introduction 439

What is ERP? 440 How did ERP develop? 441 Implementation of ERP systems 449

Summary answers to key questions 451 Case study: Psycho Sports Ltd 452 Problems and applications 454 Selected further reading 455 Useful websites 455

Supplement to Chapter 14 Materials requirements planning (MRP) 456 Introduction 456

Master production schedule 456 The bill of materials (BOM) 458 Inventory records 459 The MRP netting process 459 MRP capacity checks 461

Summary 463

Chapter 15 Lean synchronization 464 Introduction 464

What is lean synchronization? 465 How does lean synchronization

eliminate waste? 471 Lean synchronization applied throughout

the supply network 484 Lean synchronization compared with

other approaches 486

Summary answers to key questions 489 Case study: The National Tax Service (NTS) 490 Problems and applications 492 Selected further reading 493 Useful websites 494

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Chapter 16 Project management 495 Introduction 495

What is project management? 497 How are projects planned and controlled? 500 What is network planning? 514

Summary answers to key questions 526 Case study: United Photonics Malaysia Sdn Bhd 527 Problems and applications 531 Selected further reading 532 Useful websites 533

Chapter 17 Quality management 534 Introduction 534

What is quality and why is it so important? 536 How can quality problems be diagnosed? 540 Conformance to specification 541 Achieving conformance to specification 541 Total quality management (TQM) 548

Summary answers to key questions 556 Case study: Turnround at the Preston plant 557 Problems and applications 559 Selected further reading 560 Useful websites 560

Supplement to Chapter 17 Statistical process control (SPC) 562 Introduction 562

Control charts 562 Variation in process quality 563 Control charts for attributes 568 Control chart for variables 569 Process control, learning and knowledge 573

Summary 574 Selected further reading 574 Useful websites 574

The key elements of operations improvement 584

The broad approaches to managing improvement 588

What techniques can be used for improvement? 598

Summary answers to key questions 603 Case study: GCR Insurance 605 Problems and applications 608 Selected further reading 609 Useful websites 609

Chapter 19 Risk management 610 Introduction 610

What is risk management? 612 Assessing the potential causes of and

risks from failure 613 Preventing failure 624 How can operations mitigate the effects

of failure? 631 How can operations recover from the

effects of failure? 632

Summary answers to key questions 635 Case study: Slagelse Industrial

Services (SIS) 636 Problems and applications 638 Selected further reading 638 Useful websites 639

Chapter 20 Organizing for improvement 640 Introduction 640

Why the improvement effort needs organizing 642

Linking improvements to strategy 643 What information is needed

for improvement? 645 What should be improvement priorities? 652 How can organizational culture affect

improvement? 657 Key implementation issues 659

Summary answers to key questions 664 Case study: Re-inventing Singapore’s

libraries 666 Problems and applications 667 Selected further reading 668 Useful websites 668

Part Four

IMPROVEMENT 577

Chapter 18 Operations improvement 578 Introduction 578

Why is improvement so important in operations management? 580

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Part Five

CORPORATE SOCIAL RESPONSIBILITY 671

Chapter 21 Operations and corporate social responsibility (CSR) 672 Introduction 672

What is corporate social responsibility? 674 The wider view of corporate social responsibility 679

How can operations managers analyse CSR issues? 686

Summary answers to key questions 689 Case study: CSR as it is presented 690 Problems and applications 691 Selected further reading 691 Useful websites 691

Notes on chapters 693

Glossary 700

Index 713

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Guide to ‘operations in practice’, examples, short cases and case studies

Chapter Location Company/example Region Sector/activity Company size

Chapter 1 Operations management

p. 5 IKEA Global Retail Large p. 11 Torchbox UK Web design Small p. 12 MSF Global Charity Large p. 15 First Direct UK Banking Large p. 18 Pret A Manger Europe/USA Retail Medium p. 24 Formule 1 Europe Hospitality Large p. 25 Anantara Bangkok Riverside

Resort & Spa Thailand Hospitality Medium

p. 28 To be a great operations manager you need to . . .

General General N/A

p. 31 Concept Design Services UK Design/manufactur- ing/distribution

Medium

Chapter 2 Operations performance

p. 37 A tale of two terminals UK Airport Medium p. 44 Patagonia, a B Corp Global Garment

manufacturing Large

p. 49 Organically good quality UK Agricultural Small p. 50 When speed means life or

death General Health care Medium

p. 51 How UPS maintains its dependability

Global Distribution Large

p. 53 566 quadrillion individual muesli mixes

German Web retail Small

p. 56 Everyday low prices at Aldi Europe Retail Large p. 57 Can cost cutting go too far? China Manufacturing Large p. 64 The Penang Mutiara Malaysia Hospitality Medium

Chapter 3 Operations strategy

p. 69 Flextronix and Ryanair Europe MSC/airline Large p. 76 Apple’s retail operations

strategy Global Retail Large

p. 83 Amazon, so what exactly is your core competence?

Global Web retail Large

p. 85 Apple’s supply operations strategy

Global Manufacturing Large

p. 89 Sometimes any plan is better than no plan

European Military Large

p. 91 Long Ridge Gliding Club UK Sport Small

Chapter 4 Process design

p. 97 Fast-food drive-throughs USA Quick service restaurant Large p. 101 Ecover’s ethical operation

design Belgium/ France

Manufacturing Large

p. 109 Space4 housing processes UK Construction Medium p. 119 Heathrow delays caused by

capacity utilization UK Airport Large

p. 121 The Action Response Appli- cations Processing Unit

UK Charity Small

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Chapter Location Company/example Region Sector/activity Company size

Chapter 5 Innovation and design in services and products

p. 126 Innovative design from Dyson Global Design/manufacturing Large p. 129 The sad tale of Kodak and its

digital camera Global Manufacturing Large

p. 133 Square watermelons! Global Agriculture/retail Large p. 136 Daniel Hersheson Blow Dry

Bar UK Hairdresser Small

p. 138 Customizing for kids UK Media Small p. 144 The troubled history of the

Airbus A380 Global Aerospace Large

p. 148 Chatsworth UK Tourism Medium

Chapter 6 Supply network design

p. 153 Dell Global Computer manufacturing

Large

p. 159 HTC Taiwan Design/telecoms Large p. 162 Tata Nano India Car manufacturing Large p. 164 Counting clusters Global Various Various p. 170 Economies of scale in heart

surgery and shipping Various Health care/shipping Medium/Large

p. 176 Disneyland Resort Paris France Entertainment Large

Chapter 7 Layout and flow

p. 192 Tesco UK Retail Large p. 195 ‘Factory flow’ helps surgery

productivity UK Health care Medium

p. 199 Apple’s shop-within-a-shop in Harrods

UK Retail Large

p. 201 Cadbury’s UK Entertainment/ manufacturing

Large

p. 204 The transparent factory Germany Manufacturing Large p. 218 North West Constructive

Bank UK Financial services Medium

Chapter 8 Process technology

p. 224 I, Robot All Various Various p. 228 Customers are not always

human Netherlands Agriculture Medium

p. 229 QB House Asia Hairdressing Medium p. 244 Who’s in the cockpit? All Airlines Large p. 247 Rochem Ltd UK Food processing Medium

Chapter 9 People, jobs and organization

p. 252 W.L. Gore Global Manufacturing Large p. 255 Google Global Internet Large p. 266 McDonald’s UK Restaurants Large p. 268 Lloyds TSB UK Banking Large p. 274 Service Adhesives Europe Manufacturing Large

Chapter 10 The nature of planning and control

p. 289 BMW dealership UK Service and repair Medium p. 293 Air France Global Airline Large p. 297 Taxi App replaces dispatch-

ing office Germany Software development Medium

p. 302 Can airline passengers be sequenced?

Global Airlines Large

p. 304 The hospital triage system All Health care Large p. 309 Chicken salad sandwich –

part one All Food processing Large

p. 317 subText Studios Singapore CGI Small

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Chapter Location Company/example Region Sector/activity Company size

Chapter 11 Capacity management

p. 323 Amazon’s ‘Cyber Monday’ UK Web retailing Large p. 328 Raining on their parade Global Various Various p. 334 The London Eye UK Tourism Medium p. 335 Panettone Italy Manufacturing Medium p. 339 Annualized hours help

Lowaters to retain its core team

UK Horticulture Small

p. 342 Getting the message All Design Large p. 354 Blackberry Hill Farm UK Tourism Small

Chapter 12 Inventory planning and control

p. 369 UK’s National Blood Service UK Health care Large p. 378 Mountains of grit UK Local government Medium p. 386 Howard Smith Paper Group UK Distribution service Large p. 400 supplies4medics.com Belgium Distribution Medium

Chapter 13 Supply chain management

p. 405 Ocado UK Web retail Large p. 412 The North Face Global Manufacturing Large p. 417 Levi Strauss Global Garment design/

retailing Large

p. 418 TDG Europe Logistics services Large p. 430 Seven-Eleven Japan Japan Retail Large p. 432 Tsunami disrupts Japan’s

global supply chains Japan/ global

Various Large

p. 434 Supplying fast fashion: H&M, Benetton and Zara

Global Design/manufactur- ing/distribution/retail

Large

Chapter 14 Enterprise resource planning

p. 440 Butcher’s Pet Care UK Pet food Medium p. 443 SAP and its partners Global Various Various p. 444 Chicken salad sandwich –

part two All Food processing Large

p. 447 SAP at Rolls-Royce Global Aerospace Large p. 449 Waste management USA Waste disposal Large p. 452 Psycho Sports All Manufacturing Small

Chapter 15 Lean synchro- nization

p. 465 Toyota Global Auto manufacturing Large p. 477 Bolton Hospitals NHS Trust UK Health care Large p. 479 Torchbox UK Web design Small p. 490 The National Tax Service

(NTS) Not specified

Government Large

Chapter 16 Project management

p. 496 The Millau bridge France Construction Large p. 503 The National Trust UK Heritage Various p. 513 Imagineering projects at

Disney Global Leisure Large

p. 527 United Photonics Malaysia Sdb Bgd

Malaysia Research and development

Medium

Chapter 17 Quality management

p. 535 Four Seasons Hotel Global/UK Hospitality Large p. 538 Tea and Sympathy USA Hospitality Small p. 539 Magic Moments Not speci-

fied Photography services Small

p. 544 The Swiss Army Knife Switzerland Mfg Large p. 546 Surgical statistics USA Healthcare Medium p. 547 What a giveaway Various Food processing Various p. 551 Google Global Internet Large p. 553 Deliberate defectives Canada/

Japan Computer hardware Large

p. 557 Preston plant Canada Paper processing Medium

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Chapter Location Company/example Region Sector/activity Company size

Chapter 18 Operations improvement

p. 579 TNT Global Logistics Large p. 583 The Checklist Manifesto Global Health care Various p. 589 Heineken International Netherlands Brewery Large p. 595 Six Sigma at Xchanging UK Financial services Medium p. 605 GCR Insurance Global Insurance Large

Chapter 19 Risk management

p. 611 Cadbury UK Food Large p. 614 Risk and human error All Airlines Large p. 630 Otis Maintenance

Management System Global Facilities services Large

p. 636 Slagelse Industrial Services (SIS)

Denmark Manufacturing Large

Chapter 20 Organizing for improvement

p. 641 Sonae Corporation Portugal Retail Large p. 649 Taxing quality Denmark Government service Large p. 660 Learning from Formula 1 Global Distribution Large p. 662 Work-Out at GE Global Various Large p. 666 Re-inventing Singapore’s

Libraries Singapore Government services Large

Chapter 21 Corporate social responsibility

p. 673 Marmite UK Food processing Large p. 676 Holcim Global Quarrying Large p. 679 Hewlett-Packard USA Information systems Large p. 684 The Gap Global Retail Large p. 690 CSR as it is presented:

HSBC, Orange, John Lewis Partnership and Starbucks

Various Various Large

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Making the most of this book and MyOMLab

Check your understanding Each chapter opens with a set of Key questions to identify major topics. Summary answers conclude the chapter. You can check your understanding of each chapter by taking the Sample tests of self-assessment questions on MyOMLab at www.myomlab.com .

Figure 3.1 ygetarts snoitarepo senimaxe retpahc sihT

3 ygetarts snoitarepO INTRODUCTION

ro tnerruc sti fo tcepsa yreve liated ni nalp nac noitazinagro oN future actions, but all organizations need some strategic direction and so can benefit from some idea of where they are heading and how they could get there. Once the operations function has understood its role in the business and after it has articulated its performance objectives, it needs to formulate a set of general principles which will guide its decision making. This is the operations strategy of the company. Yet the concept of ‘strategy’ itself is not straightforward; neither is operations strategy. Here we consider four perspectives, each of which goes partway to

1.3 erugiF .ygetarts snoitarepo epahs taht secrof eht gnitartsulli shows the position of the ideas described in this chapter in the general model of operations management.

Operations performance

Operations strategy

Operations management

Topic covered in this chapter

Operations management

Direct

Design Develop

Deliver

❯ si tahw dna ygetarts si tahW ?ygetarts snoitarepo

❯ neewteb ecnereffid eht si tahW a ‘top-down’ and a ‘bottom-up’

?ygetarts snoitarepo fo weiv

❯ neewteb ecnereffid eht si tahW a ‘market requirements’ and an ‘operations resources’ view of

?ygetarts snoitarepo

❯ ygetarts snoitarepo na nac woH ?rehtegot tup eb

Key questions

Check and improve your understanding of this chapter using self-assessment questions and a personalized study plan, a video case study, and an eText – all at www.myomlab.com .

● tcudorp fo seitivitca yratnemelpmoc eht fi lufsseccus eb ot ylekil erom si ytivitca ngised sihT .detanidrooc era ngised ssecorp dna ngised ecivres ro

❯ ?evah ngised ssecorp dluohs sevitcejbo tahW

● gniveihca hguorht sremotsuc fo sdeen eht teem ot si ngised ssecorp fo esoprup llarevo ehT .tsoc dna ytilibixe fl ,ytilibadneped ,deeps ,ytilauq fo slevel etairporppa

● -imaxe edulcni esehT .seussi latnemnorivne fo tnuocca ekat osla tsum ytivitca ngised ehT nation of the source and suitability of materials, the sources and quantities of energy consumed, the amount and type of waste material, the life of the product itself, and the

.tcudorp eht fo etats efil-fo-dne

❯ ?ngised ssecorp tceffa yteirav dna emulov od woH

● ti tahw fo yteirav dna emulov eht yb decneu flni ylgnorts si ssecorp yna fo erutan llarevo ehT .ssecorp ot sah

● ssecorp llarevo tceffa yteirav dna emulov woh sezirammus sepyt ssecorp fo tpecnoc ehT .ngised

● gnisaerced dna emulov gnisaercni fo redro ni( era sepyt ssecorp eseht ,gnirutcafunam nI variety) project, jobbing, batch, mass and continuous processes. In service operations, although there is less consensus on the terminology, the terms often used (again in order of increasing volume and decreasing variety) are professional services, service shops and mass

.secivres

❯ ?liated ni dengised sessecorp era woH

● netfO .seitivitca laudividni rieht otni nwod meht gnikaerb yb yllaitini dengised era sessecorP common symbols are used to represent types of activity. The sequence of activities in a process is then indicated by the sequence of symbols representing activities. This is called ‘process mapping’. Alternative process designs can be compared using process maps and

.sevitcejbo ecnamrofrep snoitarepo rieht fo smret ni deredisnoc sessecorp devorpmi

● era emit elcyc dna ,ssergorp-ni-krow ,emit tuphguorht fo smret ni ecnamrofrep ssecorP related by a formula known as Little’s law: throughput time equals work-in-progress multi-

.emit elcyc yb deilp

● -noitaler eht ylralucitrap ,sessecorp fo ecnamrofrep eht no tceffe tnac fiingis a sah ytilibairaV .noitazilitu dna emit gnitiaw neewteb pihs

120 PART TWO DESIGN

SUMMARY ANSWERS TO KEY QUESTIONS

a dna snoitseuq tnemssessa-fles gnisu retpahc siht fo gnidnatsrednu ruoy evorpmi dna kcehC ta lla – txeTe na dna ,yduts esac oediv a ,nalp yduts dezilanosrep www.myomlab.com .

❯ ?ngised ssecorp si tahW

● dna stcudorp htob fo esoprup dna mrof lacisyhp eht sepahs hcihw ytivitca eht si ngiseD .meht ecudorp taht sessecorp eht dna secivres

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Practice makes perfect Worked examples show how quantitative and qualitative techniques can be used in operations management. Problems and applications at the end of the chapter allow you to apply these techniques, and you can get more practice as well as guided solutions from the Study plan on MyOMLab at www.myomlab.com .

CHAPTER 20 ORGANIZING FOR IMPROVEMENT 655

Worked example

-leved dna hcraeser tuo seirrac tI .ynapmoc scinortcele na fo yraidisbus a si seirotarobaL LXE opment as well as technical problem-solving work for a wide range of companies, including companies in its own group. It is particularly keen to improve the level of service which it gives to its customers. However, it needs to decide which aspect of its performance to improve first. It has devised a list of the most important aspects of its service:

● snoitulos lacinhcet sti fo ytilauq ehT .sremotsuc yb ssenetairporppa deviecrep eht – ● The quality of its communications with customers fo ssenlufesu dna ycneuqerf eht –

.noitamrofni ● The quality of post-project documentation hcihw noitatnemucod eht fo ssenlufesu eht –

.troper lanif eht htiw seog ● Delivery speed .troper lanif eht fo yreviled eht dna tseuqer remotsuc neewteb emit eht – ● ytilibadneped yrevileD .etad desimorp eht no reviled ot ytiliba eht – ● Delivery flexibility .etad desiver a no troper eht reviled ot ytiliba eht – ● ytilibixelf noitacificepS .noitagitsevni eht fo erutan eht egnahc ot ytiliba eht – ● Price .remotsuc eht ot egrahc latot eht –

dna 8.02 erugiF ni debircsed elacs 9–1 eht gnisu srotcaf eseht fo hcae ot erocs a dengissa LXE then turned their attention to judging the laboratory’s performance against competitor organi- zations. Although they have benchmarked information for some aspects of performance, they

. 01.02 erugiF ni nwohs era serocs eseht htoB .srehto eht rof setamitse ekam ot evah fo hcae ot nevig dah ti sgnitar ecnamrofrep dna ecnatropmi eht dettolp seirotarobaL LXE tI . 11.02 erugiF ni nwohs si sihT .xirtam ecnamrofrep–ecnatropmi na no srotcaf evititepmoc sti

shows that the most important aspect of competitiveness – the ability to deliver sound tech- nical solutions to its customers – falls comfortably within the appropriate zone. Specification flexibility and delivery flexibility are also in the appropriate zone, although only just. Both delivery speed and delivery dependability seem to be in need of improvement as each is below the minimum level of acceptability for their respective importance positions. However, two competitive factors, communications and cost/price, are clearly in need of immediate improvement. These two factors should therefore be assigned the most urgent priority for improvement. The matrix also indicates that the company’s documentation could almost be regarded as ‘too good’.

Figure 20.10 ’srotitepmoc tsniaga ecnamrofrep‘ dna ’sremotsuc ot ecnatropmi‘ gnitaR seirotarobaL LXE rof selacs tniop-enin eht no

608 PART FOUR IMPROVEMENT

erom dnif nac uoY .snoitarepo fo sisylana ruoy evorpmi ot pleh lliw snoitacilppa dna smelborp esehT practice problems as well as worked examples and guided solutions on MyOMLab at www.myomlab.com .

1 hcum os dneps ot evah I dluohs‘ thguoht ehs ,’yhW‘ .etummoc yliad reh fo kcis saw eihpoS time in a morning stuck in traffic listening to some babbling halfwit on the radio? We can work flexi-time after all. Perhaps I should leave the apartment at some other time?’ So resolved, Sophie deliberately varied her time of departure from her usual 8.30. Also, being an organ- ized soul, she recorded her time of departure each day and her journey time. Her records are

.1.81 elbaT ni nwohs (a) .tnemtrapa reh evael ot emit tseb eht no ediced eihpoS pleh lliw taht margaid rettacs a warD (b) ot netsil ot gnivah morf devas eb ot tcepxe ehs dluohs keew )yad 5( rep emit hcum woH

?tiwflah gnilbbab a

SNOITACILPPA DNA SMELBORP

Table 18.1 )setunim ni( semit yenruoj s’eihpoS

Day gnivaeL time

yenruoJ time

yaD gnivaeL time

yenruoJ time

yaD gnivaeL time

yenruoJ time

1 51.7 91 6 54.8 04 11 53.8 64

2 51.8 04 7 55.8 32 21 04.8 54

3 03.7 52 8 55.7 13 31 02.8 74

4 02.7 91 9 04.7 22 41 00.8 43

5 04.8 64 01 03.8 94 51 54.7 72

2 stcudorp ytilauq-hgih rof noitatuper sti fo duorp saw ynapmoc retnirp resaL deepsotnirP ehT and services. Because of this it was especially concerned with the problems that it was hav- ing with its customers returning defective toner cartridges. About 2,000 of these were being returned every month. Its European service team suspected that not all the returns were actu- ally the result of a faulty product, which is why the team decided to investigate the problem. Three major problems were identified. First, some users were not as familiar as they should have been with the correct method of loading the cartridge into the printer, or in being able to solve their own minor printing problems. Second, some of the dealers were also unaware of how to sort out minor problems. Third, there was clearly some abuse of Printospeed’s ‘no-questions-asked’ returns policy. Empty toner cartridges were being sent to unauthorized refilling companies who would sell the refilled cartridges at reduced prices. Some cartridges were being refilled up to five times and were understandably wearing out. Furthermore, the toner in the refilled cartridges was often not up to Printospeed’s high quality standards. (a) yna dna ,denoitnem sesuac elbissop eht htob sedulcni taht margaid tceffe–esuac a warD

.gnitagitsevni htrow kniht uoy taht sesuac elbissop rehto (b) ycilop snruter ’deksa-snoitseuq-on‘ eht fo esuba degella eht fo noinipo ruoy si tahW

?deepsotnirP yb detpoda

3 -nevnocni fo eerged emos uoy desuac taht eruliaf ecivres ro tcudorp tsal eht ot kcab knihT ience. Draw a cause–effect diagram that identifies all the main causes of why the failure could have occurred. Try to identify the frequency with which such causes happen. This could be done by talking with the staff of the operation that provided the service. Draw a Pareto dia- gram that indicates the relative frequency of each cause of failure. Suggest ways in which the

.eruliaf fo secnahc eht ecuder dluoc noitarepo

A01_SLAC6208_07_SE_FM.indd 17 15/04/13 1:55 PM

xviii

Analyse operations in action The Operations in practice and Case study features in each chapter illustrate and encourage you to analyse operations management in action. You can see and hear more about how theory is applied in practice in the video clips in the Multimedia library in MyOMLab at www.myomlab.com .

126 PART TWO DESIGN

OPERATIONS IN PRACTICE

a rehtegot tup relgnapS yarruM dellac rotinaj a 7091 nI pillowcase, a fan, an old biscuit tin, and a broom han- dle. It was a great innovation – the world’s first vacuum cleaner – but not one that he ever capitalized on. One year later he had sold his patented idea to William Hoover whose company went on to dominate the vac- uum cleaner market for decades, especially in its United States homeland. Yet between 2002 and 2005 Hoover’s market share dropped from 36 per cent to 13.5 per cent. Why? Because a futuristic-looking and comparatively expensive rival product, the Dyson vacuum cleaner, had jumped from nothing to over 20 per cent of the mar- ket. In fact, the Dyson product dates back to 1978 when James (now Sir James) Dyson noticed how the air filter in the spray-finishing room of a company where he had been working was constantly clogging with power parti- cles ( just like a vacuum cleaner bag clogs with dust). So he designed and built an industrial cyclone tower, which removed the powder particles by exerting centrifugal

‘ ,saw mih gniugirtni noitseuq ehT .secrof Could the same principle work in a domestic vacuum cleaner? ’

evif dna sraey eviF thousand eh retal sepytotorp had a working design, since praised for its ‘uniqueness and functionality’. However, existing vacuum cleaner manufacturers were not as impressed – two rejected the design outright. So Dyson started making his new design himself. Within a few years Dyson cleaners were, in the UK, outselling the rivals who had once rejected them. The aesthetics and functionality of the design help to keep sales growing in spite of a higher retail price. To

‘ ngised doog ,nosyD is about looking at everyday things with new eyes and working out how they can be made bet- ter. It’s about challenging existing technology. ’

eno ygolonhcet eht koot neht sreenigne nosyD ehT stage further and developed core separator technology to capture even more microscopic dirt. Dirt now goes through three stages of separation. Firstly, dirt is drawn into a powerful outer cyclone. Centrifugal forces fling larger debris such as pet hair and dust particles into the clear bin at 500Gs (the maximum G-force the human body can take is 8Gs). Second, a further cyclonic stage, the core separa- tor, removes dust particles as small as 0.5 microns from the airflow; particles so small you could fit 200 of them on this full stop. Finally, a cluster of smaller, even faster cyclones generate centrifugal forces of up to 150,000G – extracting particles as small as mould and bacteria.

eht emac 6002 nI .dewollof snoitavonni rehtO Dyson Airblade TM naht rehtaR .reyrd dnah cirtcele na , using a broad, relatively unfocused hot air jet , the Dyson engineers decided to use a ‘blade’ of cool air that emerges from the dryer at around four hundred miles per hour (643 km/hr). The advantage of this

innovation is that it dries hands quicker (around 10 seconds) and uses less electricity than conventional hand dryers. Then came the Dyson Air Multiplier™. These are fans and fan heaters that work very differ- ently to conventional fans and electric heaters. They don’t have fast-spinning blades that chop the air and cause uncomfortable buffeting. Instead, they use Air Multiplier™ technology to draw in air and amplify it up to 18 times, producing an uninterrupted stream of smooth air. Sir James, who remains chief engineer and sole shareholder in Dyson, is enthusiastic about the Air Multiplier™. ‘ This ]sretaeh cirtcele[ business is at least as large as the vacuum cleaner sector and I hope we will do as well in this as we have done in floor cleaners’, eh said. ‘ One of the benefits of the new device is that it will heat all the air in the room to reduce the effect of hot and cold spots. Sensors measure the temperature of the surrounding air so that once the desired temperature is reached, the system cuts out, making the product much more efficient and useful than comparable heaters. eH ’ said the new heater was part of the company’s effort to turn itself into a ‘ broad-line technology company rehtar ’

‘ .rekam ecnailppa na ylno sa nees gnieb naht I would not limit the company to particular areas of technology or markets. We are developing a range of technologies to improve both industrial and consumer products so that the people using them get a better experience than with the comparable items that currently exist.’

nosyD morf ngised evitavonnI 1

So u

rc e:

D ys

o n

L td

.

CASE STUDY Rochem Ltd

‘ .repmet sih gnisol saw sedohR rD It should be a simple enough decision. There are only two alternatives. You are only being asked to choose a machine! ’

dekool eettimmoC tnemeganaM ehT abashed. Rochem Ltd was one of the largest independent companies supplying the food- processing industry. Its initial success had come with a food preservative used mainly for meat- based products and marketed under the name of ‘Lerentyl’. Other products were subsequently developed in the food colouring and food container coating fields, so that now Lerentyl accounted for only 25 per cent of total company sales, which were now slightly over £10 million.

The decision detaler ysrevortnoc hcus saw ereht hcihw revo melborp ehT

to the replacement of one of the process units used to manufacture Lerentyl. Only two such units were used; both were ‘Chemling’ machines. It was the older of the two Chemling units which was giving trouble. High breakdown figures, with erratic quality levels, meant that output-level requirements were only just being reached. The problem was: should the company replace the ageing Chemling with a new Chemling, or should it buy the only other plant on the market capable of the required process, the ‘AFU’ unit? The Chief Chemist’s staff had drawn up a comparison of the

. 5.8 elbaT ni nwohs ,stinu owt ylwen eht saw melborp eht gniredisnoc ydob ehT

formed Management Committee. The committee consisted

of the four senior managers in the firm: the Chief Chemist and the Marketing Manager, who had been with the firm since its beginning, together with the Production Manager and the Accountant, both of whom had joined the com- pany only six months before.

noitamrofni eht fo noisrev desnednoc a si swollof tahW presented by each manager to the committee, together

.noisiced eht ot sedutitta rieht htiw

The Marketing Manager dehcaer dah evitavreserp fo epyt siht rof tekram tnerruc ehT

a size of some £5 million, of which Rochem Ltd supplied approximately 48 per cent. There had, of late, been signifi- cant changes in the market – in particular, many of the users

Table 8.5 senihcam evitanretla owt eht fo nosirapmoc A

CHAPTER 8 PROCESS TECHNOLOGY 247

GNILMEHC UFA

Capital cost 000,095£ 000,088£

Processing costs htnom/000,51£ :dexiF htnom/000,04£ :dexiF

gk/057£ :elbairaV gk/006£ :elbairaV

Design capacity htnom/gk 501 htnom/gk 041

89 ; 0.7% purity 5.99 ; 0.2% purity

Quality gnitset launaM gnitset citamotuA

Maintenance gnicivres sdeen tub etauqedA doog ylbaborp – nwonk toN

After-sales services doog yreV doog eb ot ylekilnu – nwonk toN

Delivery shtnom eerhT etaidemmI

So u

rc e:

P re

ss A

ss o

ci at

io n

I m

a g

e s

(P A

P h

o to

s)

Making the most of this book and MyOMLab (continued)

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xix

Take a different view Critical commentaries , together with Selected further reading and Useful websites at the end of each chapter, show a diversity of viewpoint and encourage you to think critically about operations management. You can link to the Useful websites in the Multimedia library of MyOMLab at www.myomlab.com .

332 PART THREE DELIVER – PLANNING AND CONTROLLING OPERATIONS

-liava ni noitcuder eht fo emoS .retpahc suoiverp eht ni 4.01 erugiF ni desu erew sa emit ’tsol‘ able capacity of a piece of equipment (or any process) is caused by time losses such as set-up and changeover losses (when the equipment or process is being prepared for its next activity), and breakdown failures when the machine is being repaired. Some capacity is lost through speed losses such as when equipment is idling (for example, when it is temporarily waiting for work from another process) and when equipment is being run below its optimum work rate. Finally, not everything processed by a piece of equipment will be error free. So some capacity is lost through quality losses.