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there is enough mileage in social responsibility and ethics to launch ‘green’
MBA programmes that emphasize a triple bo。。om line； also known as ‘TBL’
or ‘3BL’ – profit； people； planet。 Antioch University （antiochne。edu/
om/mba）； New England； Dominican University （greenmba）；
California and Duquesne University； （h。。p：//mba。sustainability。duq。edu） in
Pi。。sburgh are among those offering such programmes。
Operations
management
。 Outsourcing
。 Production methods
。 Controlling operations
。 Maintaining quality
。 Information systems
To stay ahead； panies need to generate innovation； organize production；
collaborate with other panies and manage the performance of activities；
processes； resources and control systems used to deliver goods and
services。 Operations management is the catch…all title used to hold all these
disparate fields together。 O。。en in business schools the subject is afforded
a distinct syllabus of its own； as for example is the case at Cranfield School
of Management； Warwick and Bocconi； in Milan； Italy。 At Cardiff Business
School； Logistics and Operations Management are bundled together with
a strong emphasis on ‘Lean Thinking’ and in Barcelona’s Esade Business
School ‘Innovation’ is the partner subject。
However the subject is taught； the foundations if not the content
started out with the work of Frederick W Taylor。 Usually referred to as
the ‘father of scientific management’； he studied and measured the way
people worked； searching out ways to improve productivity。 His book；
The Principles of Scientific Management （1911； Harper and Row； New York）；
showed how science could replace apprenticeship as the way to transfer
knowledge about how tasks should be done。 Though much misunderstood
and misapplied – the Soviet Union adopted his methods as the foundation
for its five…year plans – Taylorism； as his work became known； was the
spur to the many variants and extensions that are today bundled under
operations management。
10
234 The Thirty…Day MBA
The next big boost to the discipline took place with the introduction of
mathematical models used during the Second World War to make maximum
use of scarce resources。 Fairly mundane tasks； such as removing bo。。lenecks
in tank production； led to dramatic increases in output。 More esoterically；
operations research； as this branch of the subject became known； was used
to work out the optimum size of convoy to evade destruction by German
U…boats as well as the depth at which explosives would be most effective
against the submarines themselves。
MBAs； unless they have a strong background in mathematics； are unlikely
to be able to apply any of the techniques and tools described below
without expert help。 But they do need to be aware that such methods are
on hand and so can remend their application when the opportunity or
relevant problem arises。
OUTSOURCING AND THE VALUE CHAIN
The classic opening question in any business analysis that MBAs will find
themselves addressing with increasing frequency is： what business are we
in？ Later in that analysis will e a more fundamental and challenging
question： what business should we be in？ These are strategic boundary
questions that will be explored in more detail in Chapter 12； Strategy。 The
answers are also key to deciding what operations a business should and
should not undertake itself； and the answer will not always be the same； as
business petence and market opportunities change。
Figure 10。1 Maternity clothes value chain
Creative design → Purchase of materials → Make up garments →
Package and distribute → Retail through own outlets → Consumers
The business example shown in Figure 10。1 doesn’t have to do all the activities；
from creative design； through manufacture； to selling out from its
own retail outlets。 It is highly likely that there are other businesses be。。er
at certain elements of the process。 For example； most businesses don’t
retail the products they manufacture； and even within the same industry
different approaches are taken。 Dell only sells direct via the internet；
Apple sells via the internet； through a small number of pany…owned
outlets and through other retailers。 IBM； having virtually created the personal
puter industry in 1981； sold its PC division to the Chinese pany
Lenovo on 1 May 2005 for 655 million in cash and 600 million in
Lenovo stock； moving away from personal consumers to concentrate on
businesses。
Operations Management 235
Outsourcing is the activity of contracting out the elements that are not
considered core or central to the business。 There are obvious advantages to
outsourcing： the best people can do what they are best at。 But the approach
can get out of hand； if le。。 unmanaged。 In 2008； IBM pleted a major
overhaul of its value chain and for the first time in its century…long history
created an integrated supply chain （ISC） – a centralized worldwide approach
to deciding what to do itself； what to buy in and where to buy in from。
Suppliers were halved from 66；000 to 33；000； support locations from 300 to
3 global centres； in Bangalore； Budapest and Shanghai。 Manufacturing sites
reduced from 15 to 9； all ‘globally enabled’ in that they can make almost any
of IBM’s products at each plant and deliver them anywhere in the world。
In the process IBM has lowered operating costs by more than 4 billion a
year。
Quality control is one strategic issue when it es to outsourcing； and
an emerging danger with the arrival of the ‘socially minded customer’
is that people are looking more closely at panies and their products
before buying from them。 Ge。。ing garments made cheaply by child labour
is very much an issue on consumers’ radar。 So while outsourcing plays
a vital role in operations； it still has to be managed and to conform with
corporate ethical standards。
PRODUCTION METHODS AND CONTROL
Manufacturing has e a long way since Adam Smith’s observation in his
book； An Inquiry into the Nature And Causes of the Wealth of Nations （1776）；
that：
The greatest improvement in the productive powers of labour； and the greater
part of the skill； dexterity； and judgment with which it is anywhere directed；
or applied； seem to have been the effects of the division of labour。 。 。。 I have
seen a small manufactory of this kind where ten men only were employed；
and where some of them consequently performed two or three distinct
operations。 But though they were very poor； and therefore but indifferently
acmodated with the necessary machinery； they could； when they exerted
themselves； make among them about twelve pounds of pins in a day。 There
are in a pound upwards of four thousand pins of a middling size。 Those ten
persons； therefore； could make among them upwards of forty…eight thousand
pins in a day。 But if they had all wrought separately and independently； and
without any of them having been educated to this peculiar business； they
certainly could not each of them have made twenty。
By Smith’s calculations； organizing production efficiently increased output
by 2；400 times； leaving the market