Operation Management Case Study

Operation Management Case Study

Ninth edition

Ninth edition

Nigel Slack Alistair Brandon-Jones

Operation Management Case Study

What makes Operations Management, 9th edition work so well? ● Clear structure (thanks to the ‘4 Ds’ model of operations management) ● Real-life examples provided in ‘operations in practice’ boxes and case studies ● Worked examples blend qualitative and quantitative perspectives ● Critical commentaries pose alternative views where appropriate ● Summary answers to key questions presented as practical bullet points

N i n t h e d i t i o nN i n t h e d i t i o n

OPERATIONS MANAGEMENT OPERATIONS

Nigel Slack • Alistair Brandon-Jones

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OPERATIONS MANAGEMENT

OPERATIONS M ANAGEM

ENT

Operation Management Case Study

Operations may not run the world, but it makes the world run!

To truly understand the way a business operates, you need to get your hands dirty – that’s how you get to appreciate what’s actually happening within an organization. Looking inside for the answers is what Operations Management is all about.

Learn from world-leading experts Nigel Slack and Alistair Brandon-Jones and benefi t from their wealth of experience, helping improve businesses of all shapes and sizes. Strategic in its perspective, the book o� ers a comprehensive and practical way to explore key concepts and see them into action through a plethora of international examples.

Nigel Slack is an Emeritus Professor of Operations Management and Strategy at Warwick University, an Honorary Professor at Bath University, and an Associate Fellow of Said Business School, Oxford University.

Alistair Brandon-Jones is a Full Chaired Professor in Operations and Supply Management at the University of Bath, Adjunct Professor at Hult International Business School and at DTU Copenhagen.

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OPER ATIONS M ANAGEMENT

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Operation Management Case Study

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OPER ATIONS M ANAGEMENT

Nigel Slack Alistair Brandon-Jones

NINTH EDITION NINTH EDITION NINTH EDITION

Harlow, England • London • New York • Boston • San Francisco • Toronto • Sydney • Dubai • Singapore • Hong Kong Tokyo • Seoul • Taipei • New Delhi • Cape Town • São Paulo • Mexico City • Madrid • Amsterdam • Munich • Paris • Milan

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PEARSON EDUCATION LIMITED KAO Two KAO Park Harlow CM17 9SR United Kingdom Tel: +44 (0)1279 623623

First published under the Pitman Publishing imprint 1995 (print) Second edition (Pitman Publishing) 1998 (print) Third edition 2001 (print) Fourth edition 2004 (print) Fifth edition 2007 (print) Sixth edition 2010 (print) Seventh edition 2013 (print and electronic) Eighth edition 2016 (print and electronic) Ninth edition 2019 (print and electronic)

Operation Management Case Study

© Nigel Slack, Stuart Chambers, Christine Harland, Alan Harrison, Robert Johnston 1995, 1998 (print) © Nigel Slack, Stuart Chambers, Robert Johnston 2001, 2004, 2007, 2010 (print) © Nigel Slack, Alistair Brandon-Jones, Robert Johnston 2013, 2016 (print and electronic) © Nigel Slack and Alistair Brandon-Jones 2019 (print and electronic)

The rights of Nigel Slack and Alistair Brandon-Jones 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, Barnard’s Inn, 86 Fetter Lane, London EC4A 1EN.

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ISBN: 978-1-292-25396-1 (print) 978-1-292-25399-2 (PDF) 978-1-292-25398-5 (ePub)

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 Names: Slack, Nigel, author. | Brandon-Jones, Alistair. Title: Operations management / Nigel Slack, Alistair Brandon-Jones. Description: Ninth edition. | Harlow, England; New York: Pearson, 2019. Identifiers: LCCN 2018059217| ISBN 9781292253961 (print) | ISBN 9781292253992 (pdf ) | ISBN 9781292253985 (epub) Subjects: LCSH: Production management. | Manufacturing processes. | Industrial management. Classification: LCC TS155 .S562 2019 | DDC 658.5—dc23LC record available at https://urldefense.

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10 9 8 7 6 5 4 3 2 1 23 22 21 20 19

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Print edition typeset in 9.25/12 Charter ITC Std by Pearson CSC Printed in Slovakia by Neografia

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 x Preface xv To the instructor… xvii To the student… xviii Ten steps to getting a better grade in operations management xix About the authors xx Acknowledgements xxi Publisher’s acknowledgements xxiii

PART ONE Directing the operation

1 Operations management 4 2 Operations performance 38 3 Operations strategy 72 4 Managing product and service innovation 109 5 The structure and scope of operations 142

PART TWO Designing the operation

6 Process design 176 7 The layout and look of facilities 214 8 Process technology 246 9 People in operations 276 Supplement to Chapter 9 — Work study 308

PART THREE Deliver

10 Planning and control 318 11 Capacity management 355 Supplement to Chapter 11 —

Analytical queueing models 402 12 Supply chain management 409 13 Inventory management 445 14 Planning and control systems 485 Supplement to Chapter 14 —

Materials requirements planning (MRP) 508

15 Lean operations 515

PART FOUR Development

16 Operations improvement 548 17 Quality management 589 Supplement to Chapter 17 — Statistical

process control (SPC) 623 18 Managing risk and recovery 636 19 Project management 667

Notes on chapters 703 Glossary 710 Index 725

BRIEF CONTENTS

v

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vi

How is operations performance judged at an operational level? 47

How can operations performance be measured? 60

How do performance objectives trade off against each other? 63

Summary answers to key questions 65 Case study: IKEA looks to the future 67 Problems and applications 70 Selected further reading 71

3 Operations strategy 72 Introduction 72 What is strategy and what is operations strategy? 74 How does operations strategy align with business

strategy (top-down)? 78 How does operations strategy align with market

requirements (outside-in)? 81 How does operations strategy align with

operational experience (bottom-up)? 86 How does operations strategy align with operations

resources (inside-out)? 88 How are the four perspectives of operations

strategy reconciled? 90 How can the process of operations strategy be

organized? 97 Summary answers to key questions 101 Case study: McDonald’s: half a century of growth 103 Problems and applications 106 Selected further reading 108

4 Managing product and service innovation 109 Introduction 109 What is product and service innovation? 110 What is the strategic role of product and service

innovation? 113 What are the stages of product and service

innovation? 119 How should product and service innovation be

resourced? 128 Summary answers to key questions 135

Guide to ‘operations in practice’, examples, short cases and case studies x Preface xv To the instructor… xvii To the student… xviii Ten steps to getting a better grade in operations management xix About the authors xx Acknowledgements xxi Publisher’s acknowledgements xxiii

PART ONE

DIRECTING THE OPERATION 2

1 Operations management 4 Introduction 4 What is operations management? 5 Why is operations management important in

all types of organization? 7 What is the input–transformation–output process? 14 What is the process hierarchy? 18 How do operations and processes differ? 23 What do operations managers do? 27 Summary answers to key questions 31 Case study: Design house partnerships at Concept

Design Services 32 Problems and applications 35 Selected further reading 37

2 Operations performance 38 Introduction 38 Why is operations performance vital in any

organization? 39 How is operations performance judged at a

societal level? 40 How is operations performance judged at a

strategic level? 45

CONTENTS

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CONTENTS vii

Summary answers to key questions 238 Case study: The event hub 240 Problems and applications 243 Selected further reading 245

8 Process technology 246 Introduction 246 What is process technology and why is it getting

more important? 247 Understanding the potential of new process

technology 251 How can new process technologies be evaluated? 258 How are new process technologies developed

and implemented? 265 Summary answers to key questions 270 Case study: Rochem Ltd 272 Problems and applications 274 Selected further reading 275

9 People in operations 276 Introduction 276 Why are people so important in operations

management? 277 How can the operations function be organized? 279 How do we go about designing jobs? 284 How are work times allocated? 299 Summary answers to key questions 302 Case study: Grace faces (three) problems 303 Problems and applications 305 Selected further reading 307

Supplement to Chapter 9 Work study 308 Introduction 308 Method study in job design 308 Work measurement in job design 310

PART THREE

DELIVER 316

10 Planning and control 318 Introduction 318 What is planning and control? 319 How do supply and demand affect planning and

control? 322 What are planning and control activities? 328 Summary answers to key questions 347

Case study: Developing ‘Savory Rosti-crisps’ at Dreddo Dan’s 137

Problems and applications 140 Selected further reading 141

5 The structure and scope of operations 142 Introduction 142 What is the structure and scope of operations? 143 How should the network be configured? 147 How much capacity should operations have? 151 Where should operations be located? 154 How vertically integrated should an operation’s

network be? 158 What activities should be in-house and what

should be outsourced? 163 Summary answers to key questions 168 Case study: Aarens Electronic 170 Problems and applications 172 Selected further reading 173

PART TWO

DESIGNING THE OPERATION 174

6 Process design 176 Introduction 176 What is process design? 177 What should be the objectives of process design? 179 How do volume and variety affect process design? 183 How are processes designed in detail? 190 Summary answers to key questions 209 Case study: The Action Response Applications

Processing Unit (ARAPU) 210 Problems and applications 212 Selected further reading 213

7 The layout and look of facilities 214 Introduction 214 How can the layout and look of facilities influence

performance? 215 What are the basic layout types used in operations

and how do they affect performance? 218 How does the appearance of an operation’s

facilities affect its performance? 228 What information and analysis is

needed to design the layout and look of facilities? 232

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viii CONTENTS

Operation Management Case Study

Case study: subText Studios Singapore 349 Problems and applications 351 Selected further reading 354

11 Capacity management 355 Introduction 355 What is capacity management? 356 How is demand measured? 359 How is capacity measured? 368 How is the demand side managed? 375 How is the supply side managed? 378 How can operations understand the consequences

of their capacity management decisions? 382 Summary answers to key questions 393 Case study: Blackberry Hill Farm 395 Problems and applications 400 Selected further reading 401

Supplement to Chapter 11: Analytical queueing models 402 Introduction 402 Notation 402 Variability 403 Incorporating Little’s law 404 Types of queueing system 404

12 Supply chain management 409 Introduction 409 What is supply chain management? 410 How should supply chains compete? 412 How should relationships in supply chains

be managed? 417 How should the supply side be managed? 421 How should the demand side be managed? 427 What are the dynamics of supply chains? 432 Summary answers to key questions 438 Case study: Supplying fast fashion 440 Problems and applications 443 Selected further reading 444

13 Inventory management 445 Introduction 445 What is inventory? 446 Why should there be any inventory? 449 How much to order? The volume decision 455 When to place an order? The timing decision 468 How can inventory be controlled? 473 Summary answers to key questions 479 Case study: Supplies4medics.com 481 Problems and applications 482 Selected further reading 483

14 Planning and control systems 485 Introduction 485 What are planning and control systems? 486 What is enterprise resource planning and how

did it develop into the most common planning and control system? 492

How should planning and control systems be implemented? 500

Summary answers to key questions 503 Case study: Psycho Sports Ltd 504 Problems and applications 506 Selected further reading 507

Supplement to Chapter 14: Materials requirements planning (MRP) 508 Introduction 508 Master production schedule 508 The bill of materials (BOM) 509 Inventory records 510 The MRP netting process 511 MRP capacity checks 514 Summary 514

15 Lean operations 515 Introduction 515 What is lean? 516 How does lean eliminate waste? 522 How does lean apply throughout the

supply network? 536 How does lean compare with other approaches? 538 Summary answers to key questions 541 Case study: Saint Bridget’s Hospital 542 Problems and applications 544 Selected further reading 545