Essentials of E s s Essentials of e OperatiOns ManageMent n t ia OperatiOns ManageMent l s Nigel Slack Alistair Brandon-Jones Robert Johnston o f O Operations management is critical to the success of all organizations, no matter how large or small. It enables Nigel Slack p them to provide services and products that we all need; it is central to changes in customer preference, e networks of supply and demand, and developments in technology; and its responsibilities are fi nancial and Alistair Brandon-Jones r logistical, social and environmental. Whether at work or at home, we all experience and manage processes and a operations… t Robert Johnston i O n Thousands of students worldwide have benefi tted from the expert approach of the s market-leading text Operations Management. The ‘grand master’ authors now transfer M the same winning formula to this concise textbook, based on the bestselling Operations a Management and particularly aimed at those studying just the essentials of the subject. n • Focus on the sustainable and socially responsible imperatives of operations a management. g e • Over fi fty cases and illustrations of real-life operations around the world. M • Greater emphasis on ‘process management’, making the discipline directly relevant e to all areas of an organization’s activity. n t • Worked examples to give you confi dence in applying qualitative and quantitative problem-solving techniques. S l a c k Get exclusive access to online B resources in MyOMLab, which r will enable you to check a n your understanding, apply d knowledge and techniques, o n and prepare for exams and - assessments – all in your own J o time and at your own pace. n e s Just visit www.myomlab.com to register. J o h n s t o n Access valuable online learning resources at wwwwww..mmyyoommllaabb..ccoomm www.pearson-books.com Front cover image: © Getty Images CVR_SLAC2424_01_SE_CVR.indd 1 05/04/2011 09:58 WELCOME TO Essentials of OPERATIONS MANAGEMENT Operations Management is important, exciting, 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 Essentials of Operations Management is to give you a comprehensive understanding of the key 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 third chapter – these put you at the cutting edge. ● Use the Worked examples and Learning exercises 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 reading at the end of each chapter. The texts are 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, audio summaries, animations, video clips and more; ● practice your problem-solving with feedback, guided solutions and a limitless supply of questions! ● look up key terms in the online glossary (key terms are highlighted in red in the margins of this book). We want Essentials of Operations Management to give you what you need: a comprehensive view of the key areas 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 * P.S. In order to log in to MyOMLab, you’ll need to register with the access code found within the access card included with this book or available to buy online at www.myomlab.com Further reading in OPERATIONS MANAGEMENT Take your study and interest in operations management further with these leading texbooks written by the same team of expert authors. Essentials of OPERATIONS MANAGEMENT Nigel Slack Alistair Brandon-Jones Robert Johnston Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE England and Associated Companies throughout the world Visit us on the World Wide Web at: www.pearsoned.co.uk First published 2011 © Nigel Slack, Alistair Brandon-Jones and Robert Johnston 2011 The rights of Nigel Slack, Alistair Brandon-Jones and Robert Johnston to be identifi ed as authors of this work have been asserted by them in accordance with the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, Saffron House, 6 –10 Kirby Street, London EC1N 8TS. 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 affi liation with or endorsement of this book by such owners. Pearson Education is not responsible for the content of third party internet sites. ISBN: 978-0-273-75242-4 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data Slack, Nigel. Essentials of operations management / Nigel Slack, Alistair Brandon-Jones, Robert Johnston. p. cm. Includes bibliographical references and index. ISBN 978-0-273-75242-4 (pbk.) 1. Production management. 2. Manufacturing processes. 3. Industrial management. I. Johnston, Robert, 1953- II. Brandon-Jones, Alistair. III. Title. TS155.S5617 2011 658.5--dc22 2011000808 10 9 8 7 6 5 4 3 2 1 15 14 13 12 11 Typeset in 10/12pt Minion by 35 Printed and bound by Rotolito Lombarda, Italy Brief contents Guide to ‘operations in practice’ examples and short cases ix Making the most of this book and MyOMLab xii Preface xvi To the Instructor . . . xviii To the Student . . . xix Ten steps to getting a better grade in operations management xx About the authors xxi Acknowledgements xxii 1 Operations management 1 2 Operations strategy 25 3 Social, environmental and economic performance 44 4 The design of services and products 67 5 Process design 90 6 Location, layout and fl ow 118 7 Supply network management 137 8 Capacity management 167 9 Inventory management 196 10 Planning and control 223 11 Lean synchronization 246 12 Quality management 267 13 Operations improvement 289 Notes on chapters 315 Index 318 Contents Guide to ‘operations in practice’ examples Trade-offs between performance objectives 62 and short cases ix Summary answers to key questions 64 Making the most of this book and MyOMLab xii Learning exercises 65 Preface xvi Want to know more? 66 To the Instructor . . . xviii Useful websites 66 To the Student . . . xix Chapter 4 Ten steps to getting a better grade in The design of services and products 67 operations management xx About the authors xxi Introduction 67 Acknowledgements xxii Why is good design so important? 69 The stages of design – from concept to Chapter 1 specifi cation 72 Operations management 1 The benefi ts of interactive design 83 Summary answers to key questions 87 Introduction 1 Learning exercises 88 What is operations management? 3 Want to know more? 88 Operations management is important in Useful websites 89 all types of organization 5 The input–transformation–output process 9 Chapter 5 The processes hierarchy 13 Process design 90 Operations processes have different Introduction 90 characteristics 17 What is process design? 91 The activities of operations management 21 Process types – the volume–variety effect Summary answers to key questions 22 on process design 94 Learning exercises 23 Detailed process design 100 Want to know more? 24 Human implications for process design 112 Useful websites 24 Summary answers to key questions 116 Learning exercises 117 Chapter 2 Want to know more? 117 Operations strategy 25 Useful websites 117 Introduction 25 What is strategy and what is operations strategy? 27 Chapter 6 The ‘top-down’ and ‘bottom-up’ perspectives 30 Location, layout and fl ow 118 The market requirements and operations Introduction 118 resources perspectives 32 The location of operations 120 The process of operations strategy 39 What is layout? 123 Summary answers to key questions 41 What is layout and what are the types used Learning exercises 42 in operations? 131 Want to know more? 43 Workplace layout 133 Useful websites 43 Summary answers to key questions 134 Learning exercises 135 Chapter 3 Want to know more? 135 Social, environmental and Useful websites 136 economic performance 44 Chapter 7 Introduction 44 Supply network management 137 Operations performance is vital for any organization 46 Introduction 137 The fi ve operations performance objectives 51 The supply network perspective 139 viii Contents Designing and managing supply networks 141 Enterprise resource planning (ERP) 240 Supply network design 144 Summary answers to key questions 243 Types of relationships in supply networks 148 Learning exercises 244 Supply network dynamics 155 Want to know more? 245 Improving supply networks 157 Useful websites 245 Summary answers to key questions 164 Learning exercises 165 Chapter 11 Want to know more? 166 Lean synchronization 246 Useful websites 166 Introduction 246 What is lean synchronization? 248 Chapter 8 The elimination of waste 252 Capacity management 167 Lean synchronization applied throughout the Introduction 167 supply network 262 What is capacity management? 169 Summary answers to key questions 264 Measuring demand and capacity 171 Learning exercises 265 The alternative capacity plans 177 Want to know more? 265 Choosing a capacity management approach 185 Useful websites 266 Capacity planning as a queuing problem 189 Summary answers to key questions 193 Chapter 12 Learning exercises 194 Quality management 267 Want to know more? 195 Introduction 267 Useful websites 195 What is quality and why is it so important? 269 Diagnosing quality problems 271 Chapter 9 Conformance to specifi cation 273 Inventory management 196 Total quality management (TQM) 279 Introduction 196 Summary answers to key questions 286 What is inventory? 198 Learning exercises 287 Why is inventory necessary? 198 Want to know more? 287 The volume decision – how much to order 201 Useful websites 288 The timing decision – when to place an order 212 Chapter 13 Inventory analysis and control systems 216 Operations improvement 289 Summary answers to key questions 220 Introduction 289 Learning exercises 222 Why improvement is so important 291 Want to know more? 222 Elements of improvement 291 Useful websites 222 Approaches to improvement 297 Improvement techniques 304 Chapter 10 Summary answers to key questions 312 Planning and control 223 Learning exercises 313 Introduction 223 Want to know more? 314 What is planning and control? 225 Useful websites 314 Supply and demand effects on planning and control 226 Notes on chapters 315 Planning and control activities 231 Index 318 Guide to ‘operations in practice’ examples and short cases Chapter Location Company/example Region Sector/activity Company size Chapter 1 p. 2 IKEA Global Retail Large Operations p. 7 Acme Whistles UK Manufacturing Small management p. 8 Oxfam Global Charity Large p. 13 Pret A Manger Europe/USA Retail Medium p. 18 Formule 1 Europe Hospitality Large p. 19 Mwagusi Safari Lodge Tanzania Hospitality Small Chapter 2 p. 26 Two operations strategies: Global/Europe Manufacturing service/ Large Operations Flextronics and Ryanair transport strategy p. 32 Giordano Asia Retail Large p. 37 Amazon, what exactly is your Global Retail/business Large core competence? services p. 41 Sometimes any plan is better Europe Military Large than no plan Chapter 3 p. 45 A tale of two terminals Dubai and UK Transport Large Social, p. 52 Lower Hurst Farm UK Agricultural Small environmental p. 54 Accident recovery General Healthcare Medium and economic p. 55 Dabbawalas hit 99.9999% India General service Large performance dependability p. 58 BBC Global Media Large p. 59 Aldi Europe Retail Large Chapter 4 p. 68 Airbus A380 Europe Aerospace Large The design of p. 71 Dyson Global Design/manufacturing Large products and p. 74 Square watermelons Japan Retail/Agriculture Various services p. 76 Daniel Hersheson UK Hairdressing Small p. 79 Art Attack! UK Media Small Chapter 5 p. 91 McDonalds Global Quick service Large Process design p. 93 Daimler-Chrysler, Smart car France Auto manufacturing Large p. 112 Heathrow UK Transport Large Chapter 6 p. 119 Tesco Global Retail Large Location, p. 121 Tata Nano India Manufacturing Large layout and flow p. 126 Surgery UK Healthcare Medium p. 130 Cadbury UK Entertainment and Large manufacturing Chapter 7 p. 138 Dell Global Computer Large Supply network manufacturing management p. 143 Ford Motor Company Global Auto manufacturing Large p. 147 Behind the brand names Taiwan Computer Large manufacturing p. 151 Northern Foods Europe Food services Large p. 160 TDG Europe Logistics services Large p. 161 Seven-Eleven Japan Japan Retail Large