Concepts for Operations Management

Transcription

1 116 Concepts for Operations Management BARBARA MORRIS An operating system may be defined as &dquo;a configuration of resources combined for the provision of goods or services&dquo; and operations management may be defined as the design and planning, operation and control of operating systems [ 1, p. 4]. The scope of operations management includes inter alia layout of facilities/resources, determination of capacity, design of jobs, activity scheduling, quality control, control and planning of inventories. The existing body of knowledge in operations management, as reflected in the teaching of the subject, largely consists of a number of techniques and practices for problem-solving, decision-making and analysis in these areas. These are fairly well developed yet there is, relatively, a lack of theory and a conceptual framework to allow the student or practitioner to determine the appropriateness or feasibility of such techniques and practices, to recognise the implications of action in one area for the entire operating system and corporate objectives, and to appreciate the constraints on the operations manager which limit his courses of action. The need to develop theories and concepts and to contribute to the development of such a body of basic knowledge is now widely recognised[2, 3, 4] and work at Henley over the past three years has sought to make such a contribution (see Wild, [ 1, 5]). Two frameworks of ideas have been developed relating to the nature of operating systems and their management. These are in two parts as shown below. (1) A framework comprising concepts of: (a) the structure of operating systems (b) the characteristic problem areas of operations management (c) the problem characteristics of operating systems (d) the objectives of operations management (e) operations strategies (f) the role of operations management (2) A simple policy framework relating to the above and comprising concepts of: (a) the relationship between business policy and operations management decisions (b) the policy decisions of operations management (c) system structure preferences and life cycles. This article briefly outlines some of the work on the framework by suggesting some definitions of concepts. Elements of Operating Systems An operating system has been defined as a configuration of resources combined for the provision of goods or services. All such systems, in effect, convert inputs in order to provide outputs which are required by a customer. Physical resources normally predominate and at the current stage of development of the concepts

2 117 only physical inputs are considered. The elements of an operating system are defined as follows: Function. The function of an operating system is the satisfaction of customer wants through the provision of goods or services having some utility. Conventionally, we find the terms manufacture and service used in the literature to differentiate between operations, but whilst manufacture is a fairly homogeneous category, the operations normally classified as service are extremely diverse and this classification tells us little about the fundamental similarities or differences. Hence further sub-division is needed if any insight into the nature of these systems is to be gained. By considering the function further it is possible to distinguish principal common characteristics in terms of what these systems are designed to do. This leads to the following four classes of function which can be used to categorize operating systems: 1. Manufacture. Here something is physically created - the output consists of goods which differ physically in form, content etc. from the materials input to the system. Manufacture therefore requires some physical transformation or a change in form of resources. 2. Transport. Here someone or something is moved from place to place and the resources will not normally be physically changed. The system provides for a change in location. 3. Supply. Unlike manufacture, goods output from the system are physically the same as those input. The system is designed primarily for a change in ownership or possession of a resource. 4..Service. The principal common characteristic is the treatment or accommodation of something or someone. There is no major transformation or change in location or ownership; the system is designed to change the state of a resource. These definitions can be used in general terms to describe organisations as a whole, or parts of those organisations for within systems having a particular function there may well be subsystems having a different function. Stock. Stock is a store of physical resources for input to and/or output from the function, and/or a store of goods for output to the customer. This is a broader definition than inventory which tends to apply only to materials, work in progress and finished goods. Resources. A resource is any physical item which is a necessary input to the system. For our purposes these consist of materials, machines (which includes all hardware e.g. tools, vehicles, buildings) and labour. Customers. A customer is the person or thing whose demand causes the function to be performed. Each individual function must have a customer, internal or external to the system or subsystem. Again this is a broader definition than the traditional one since, for example, it embraces the ideas that a machine could be a customer for a previous operation.

3 118 Some Concepts for Operating Systems and Operations Management l. System Structure The concept of function identifies the scope of operating systems but says little about their nature. This can be explored by examining their structure. Using simple systems terminology, all operating systems may be seen to comprise inputs, processes and outputs as shown below This simple structure can represent any operating system or subsystem, but it is a general descriptive device and analysis of an operating system will require more detail. A taxonomy of seven basic system structures has been developed and these are shown below -in single channel form. The principal distinguishing features are firstly, the existence and location of stocks and secondly, the customer influence. Seven Basic Structures for Operating Systems

4 119 These can be used to describe operating systems at any level from the company in general to the single work place. They can also be extended to incorporate multiple channel inputs and outputs, and can be used together in series or parallel to describe more complex systems. 2. Characteristic Problem Areas and System Problem Characteristics It is hypothesised that there exist certain distinguishing or characteristic problem areas which take different forms in different structures. By contrast, other on structure and problem areas, such as the design of work, are not dependent may yield to common procedures and practices regardless of the structure of the system. Three such characteristic problem areas have been distinguished; these are capacity management, inventory management and activity scheduling. They are characteristic in that decisions and actions in these areas can influence system structure and the structure itself can influence the decisions and actions required. For example, in customer push systems the opportunity to schedule customer arrivals and the effectiveness of such scheduling may enable the system to operate without customer queueing (structure F rather than G). Conversely, structure F requires effective arrival scheduling or a change to structure G may result. These three are closely interdependent; decisions taken in one area will directly affect performance in others. This adds to their complexity and underlines their critical importance in operations management. The characteristics of these problems are also dependent on structure. Taking the example of activity scheduling again, in demand pull systems where no output stocks exist, activity scheduling will be directly related to customer demand, whilst the absence of input stocks demands activity scheduling of supplies. Where scheduling is directly related to customer demand, activities will normally need to be back-scheduled from a due date or externally oriented but where output stocks exist activity scheduling can be internally oriented. The basic difference here is that externally oriented scheduling is related to output timing and customer service whilst internally oriented scheduling is normally related to the timing of the function and generally leads to higher resource productivity. 3. General Operations Objectives Certain organisations must make a profit and profit may be a sufficient basis for establishing objectives, but some operating systems, such as hospitals and fire services, cannot easily be judged against the concept of profit and other objectives are established. Even in profit-oriented organisations some more immediate operational objectives are desirable, for example customer service and resource productivity. Since operating systems are designed to meet customer needs, customer satisfaction must be an objective. However, given infinite resources any system might satisfy the customer; there is also a need to achieve efficient use of resources, by maximising their effect or minimising their loss, underutilisation or waste. This is the concept of resource productivity. It is rarely possible to maximise both customer service and resource

5 120 productivity. The emphasis placed on each will vary according to the organisation and is influenced by considerations such as market/demand characteristics which lie outside the operations manager s immediate control. 4. Operations Management Strategies In each of the problem areas operations management will have a choice of possible actions. For example, there are two basic strategies for capacity planning viz.: (a) Provide for efficient adjustment of capacity. (b) Eliminate or reduce the need for adjustment. and there are various techniques which may be used to pursue these strategies. The determination of which strategies are feasible will depend on the system structure whilst customer service and resource productivity requirements will determine which is appropriate. 5. The Role of the Operations Manager It is widely recognised that the nature of operations management i.e. the techniques used, the relative importance and difficulty of problems etc. is a function of the operating circumstances. It is hypothesised that whilst this role is partly common to all structures, it is also dependent directly on the system problem characteristics and indirectly on the operations management objectives. The problem characteristics will directly influence the operations manager s activities whilst the objectives will influence such activities through their influence on the strategies adopted. A Framework of concepts for Operations Management

6 Integration of Concepts It will be apparent that all these concepts are interrelated. The diagram above shows the nature of these interrelationships and provides a framework which can be used to understand the nature of operations. Application of Concepts The principal application is description. The seven basic structures can be used to model any operating system and the characteristics, strategies and roles of operations management can be described using our terminology. In addition given a knowledge of a system structure and objectives it is possible to predict the problem characteristics, the strategies which might be employed, and the operations management role. The concepts also facilitate comparison of existing or proposed systems and selection of systems. To a limited extent they can also be used for explanation. The concepts may help practitioners to develop appropriate strategies, procedures etc. to deal with new system structures, while comparison of predicted and actual strategies etc. for an existing situation may reveal opportunities for improvement. This work is of value in understanding the nature of operations but it does not explain how to manage such systems. It provides a background for the teaching of techniques and practices and a framework within which the appropriateness and usefulness of such techniques can be assessed. Implications for Operation and Policy Little seems to have been written about operations policy or the interrelationship between corporate policy and operations, and it is this area which is the focus of the second framework of ideas. Whilst these ideas are not discussed here it is perhaps pertinent to indicate their nature. The framework is based on the hypothesis that business policy decisions influence operations management by determining the feasibility of system structures and the nature of objectives. Operations management contributes to business policy decisions by seeking to match structures and strategies to given product/service and market/demand characteristics. It follows that operations policy decisions are principally concerned with the choice of system structure and strategies. Given that operations managers have a choice it is further hypothesised that they exercise this choice preferentially using similar criteria to those proposed by Thompson[6] for organisational design. It is also hypothesised that just as organisations grow through various stages[7, 8] so there may be a life cycle pattern for maturing or declining operating systems. Conclusion Both these sets of ideas aim to contribute towards filling perceived gaps in the current body of knowledge about operations management. The first set is an attempt to provide a new, simple, descriptive treatment of operations - an attempt 121

7 122 to identify basic concepts. The second set attempts to develop basic understanding about policy aspects of operations management. References [1] WILD, RAY, Concepts for Operations Management, Wiley [2] SSRC., Social Science Research Council: Management and Industrial Relations Committee Seminar Group in Production and Operations Management. Final Report, November, [3] WILD, RAY, Developing Production Managers, The Production Engineer, May 77, pp [4] PERSSON, G., A Tentative Conceptual Framework for the Study of Production Management Systems. Working paper, 76/112, Bedriftsøkonomisk Institutt, Oslo. [5] WILD, RAY, Operations Management - a Policy Framework, forthcoming [6] THOMPSON, JAMES D., Organizations in Action, McGraw-Hill, [7] CHANDLER, A. D., Strategy and Structure, MIT Press, [8] SALTER, M. S. Stages of Corporate Development in Taylor, B. and Macmillan, K. (Eds.) Business Policy: Teaching and Research, Bradford University Press, 1973.