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RCSI Royal College of Surgeons in Ireland Coláiste Ríoga na Máinleá in Éirinn
MSc in Healthcare Management 2015 - 2017
Module 2: Operations Management & Quality
Introduction to Operations Management
Theresa Keane
To collaborate with healthcare professionals to
identify, to select, and to focus on designing
improvements to an existing patient/healthcare
process
To develop the skills and knowledge appropriate
to understanding, mapping and strategically
analysing any healthcare process from an
operations management perspective
To draw lessons from diverse industries and
services which can positively contribute to the
delivery of best-in-class healthcare
To understand the transformation process by
which all firms produce and deliver goods and
services
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They are all operations
Kitchen unit
manufacturing
operation
Back office
operation in
a bank
Retail
operation
Take-out /
restaurant
operation
What Is Operations Management?
• Operations Management
– Management of the conversion process which transforms
inputs such as raw material and labour into outputs in the
form of finished goods and services.
Inputs
(customers,
Information,
materials)
Transformation Process
(components)
Outputs
(goods
and
services)
All types of enterprise have an operations function, even if
it isn’t called ‘operations.
Most operations produce both products and services.
https://www.youtube.com/watch?v=INc7a_p56sk
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Role of OM within an Organization
An Operational-Level OM Perspective
• OM’s function focuses on adding value through the
transformation process (technical core) of
converting inputs into outputs.
–
–
–
–
–
–
Physical: manufacturing
Locational: transportation
Exchange: retailing
Storage: warehousing
Physiological: health care
Informational: telecommunications
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Input-Transformation-Output
Relationships for Typical Systems
Pret a Manger
“High-end” sandwich and snack retailer
Use only “wholesome” ingredients
All shops have own kitchens which make fresh
sandwiches every day
Fresh ingredients delivered early every morning
Same staff who serve you at lunch made the
sandwiches that morning
“We don’t work nights, we wear jeans, we party…”
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The two main processes at a
Pret a Manger store
Bread, mayo,
fillings, packing,
etc.
Sandwich
production
Packed,
fresh
sandwiches
Note: output of One
Process becomes the
input of the Next
Process
Staff
Packed,
fresh
sandwiches
Sandwich
Service
Customers
Satisfied
customers
“assembled”
to sandwiches
Staff
The Transformation Processes
A Process “ … a series of activities
Processperformed by resources that
Inputs
Outputs
transform
inputs to outputs”
(Transformation)
TRANSFORMED
RESOURCES
ENVIRONMENT
Materials
`
Products
Information
Customers
Flow
through
& Services
Series of
Activities
ENVIRONMENT
FACILITIES
TRANSFORMING
RESOURCES
STAFF
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Operations & the Process View: Karolinska
Hospital
Process Flow
Inputs
Outputs
……………..
………………
……………………………..
Resources
The differences between producing
good vs producing services
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Goods versus Service
PURE GOODS
Tangible
Production precedes
consumption
Can be transported
Can be stored
Low customer contact
Quality is evident
Intangible
Cannot be stored
Production and
consumption are
simultaneous
High customer contact
Cannot be transported
Quality difficult to judge
PURE SERVICES
The output from most operations is a
mixture of goods and services
PURE GOODS
Low customer contact
Quality is evident
Intangible
PSYCHOTHERAPY
CLINIC
MANAGEMENT
CONSULTANCY
COMPUTER SYSTEMS
SERVICES
Can be transported
Cannot be stored
Pret a Manger
Production precedes
consumption
a Manger
Pret
RESTAURANT
SPECIALIST MACHINE TOOL
MANUFACTURER
Can be stored
ALUMINIUM
SMELTING
CRUDE OIL
PRODUCTION
Tangible
Production and
consumption are
simultaneous
Quality difficult to judge
Cannot be transported
High customer contact
PURE SERVICES
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Operations are managed for both Production and Services
PRODUCTION
Food processing Plant
TRANSFORMING
RESOURCES
Inputs
•
•
•
•
•
•
•
Raw vegetables
Metal sheets
Water
Energy
Labor
Building
Equipment
•
•
•
•
•
•
Hospital
SERVICE
Inputs
•
•
•
•
•
Doctors, nurses
Hospital
Medical supplies
Equipment
Laboratories
•
•
•
•
•
•
Process
Outputs
Cleaning
Making cans
Cutting
Cooking
Packing
Labeling
Canned Vegetables
Result is
TANGIBLE OUTPUT
Process
Outputs
Examination
Diagnosis
Surgery
Monitoring
Medication
Therapy
Treated Patients
Result implies
an ACT
Operations Processes have different
characteristics
VOLUME
Mc Donalds v Restaurant
VARIETY
Taxi v Bus
VARIATION
VISIBILITY
Resort Hotel v City Hotel
Laboratory v Phlebotomy
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The Implications of the 4
Vs of Operations
IMPLICATIONS
Low repetition
Each staff member
performs more of job
Less systemization
High unit costs
Flexible
Complex
Match customer needs
High unit cost
Changing capacity
Anticipation
Flexibility
In touch with demand
High unit cost
Short waiting tolerance
Satisfaction governed by
customer perception
Customer contact skills
needed
Received variety is high
High unit cost
IMPLICATIONS
Low
High
Volume
High
Variety
High Variation in demand
High
Visibility
High repeatability
Specialization
Systemization
Capital intensive
Low unit cost
Low
Well defined
Routine
Standardized
Regular
Low unit costs
Low
Stable
Routine
Predictable
High utilization
Low unit costs
Low
Time lag between
production and
consumption
Standardized
Low contact skills
High staff utilization
Centralization
Low unit costs
Operations at IKEA
Design elegant
products which can be
flat-packed efficiently
Site stores of an
appropriate size in
the most effective
locations
Maintain
cleanliness and
safety of storage
area
Design a store layout
which gives smooth
and effective flow
IKEA
Ensure that the jobs of
all staff encourage their
contribution to
business success
STORE
Continually examine
and improve
operations practice
Arrange for fast
replenishment of
products
Monitor and enhance
quality of service to
customers
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Pret a Manger and IKEA
4 V’s analysis
Low
Volume
High
High
Variety
Low
High
Variation
Low
High
Low
Visibility
Pret a
Manger
IKEA
Important to understand how different operations
are positioned in the 4 Vs
Is their position where they want to be?
Do they understand the strategic implications
Top-down Approach to OM Strategy
• Operations Strategy Decisions
– Strategic (long-range)
• Needs of customers
(capacity planning)
– Tactical (medium-range)
• Efficient scheduling of
resources
– Operational planning
and control (short-range)
• Immediate tasks and
activities
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Competitive Advantage ?
The
“technological”
specification of its
product/service?
Product/
Service
Technology
Marketing
The way it
produces its
Operations goods and
services?
The way it
positions itself
in its market?
Group:
1. Read The Ryan Case Study
2. How does its Operations support its
Business Strategy?
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Improving Productivity at
Starbucks
A team of 10 analysts
continually look for ways to
shave time. Some
improvements:
Operations improvements have helped Starbucks
increase yearly revenue per outlet by $200,000 to
signatures
$940,000 in six years. Saved 8 seconds
Stop requiring
on credit card purchases
per transaction
Productivity has improved by 27%, or about 4.5%
under €25
per year.
Change the size of the ice
scoop
Saved 14 seconds
per drink
New espresso machines
Saved 12 seconds
per shot
Making Operational Trade-Offs
Responsiveness
High
Hospital switch boards
Objective: 80% of incoming calls wait less than
20 seconds
Very short waiting times,
Comes at the expense of
Frequent operator idle time
Actual: 30% of incoming calls wait less than 20
seconds
Tradeoff
Long waiting times,
yet operators are almost
fully utilized
Problem: Staffing levels of call centers / impact on
efficiency
Low
Low labour
productivity
OM Provides tools to balance responsiveness
with efficiency
High labour
productivity
Labour Productivity
(e.g. €/call)
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Making Operational Trade-Offs
In the health-care sector
World-class
walk in clinic
High
General
Facilities
Responsiveness
Operations
Frontier
World-class
(non-emergency)
Hospital
Low
High
Cost efficiency
Low
Interfunctional relationships between the
operations function and
support functions
Engineering/
technical
function
Understanding of the
capabilities and
constraints of the
operations process
Product/service
development
function
Analysis of new
technology options Understanding of
process technology
needs
New product and
Accounting
service ideas
Provision
and finance
Understanding of the
of relevant
function
capabilities and
data
Operations
constraints of the
Financial analysis
operations
process
function
for performance
Market
and decisions
requirements
Understanding of human
resource needs
Understanding Provision of systems for
of infrastuctural design, planning and
and system control, and improvement
Recruitment
needs
development
and training
Human
resources
function
Marketing
function
Information
technology
(IT) function
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References
•
Slack, N., Chambers, S., & Johnston, R. (2010). Operations Management (6th edn). UK,
Prentice Hall. Chapter 1, 2 & 3
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