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Operations Management

This document provides an introduction to two chapters in a textbook on operations management: Chapter 1 introduces operations management and describes what operations managers do. Chapter 2 discusses operations management in the context of competition, strategy, and productivity. The introduction previews that Chapter 1 will cover the nature and scope of operations management, comparing manufacturing and service operations, a brief history, and trends impacting operations. Chapter 2 will cover the importance of operations in achieving business goals and measuring production performance.

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Gohar Muhammad Khan
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117 views

Operations Management

This document provides an introduction to two chapters in a textbook on operations management: Chapter 1 introduces operations management and describes what operations managers do. Chapter 2 discusses operations management in the context of competition, strategy, and productivity. The introduction previews that Chapter 1 will cover the nature and scope of operations management, comparing manufacturing and service operations, a brief history, and trends impacting operations. Chapter 2 will cover the importance of operations in achieving business goals and measuring production performance.

Uploaded by

Gohar Muhammad Khan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Page 1

PART ONE

Introduction

hapter 1 introduces you to


the field of operations
management. It describes the
nature and scope of operations
management, and how operations
management relates to other parts of
the organization. Among the other
important topics it covers are a
comparison of manufacturing and
service operations, a brief history of
operations management, and a list
of trends in business that relate to
operations. After you have read this
chapter, you will have a good

understanding of what the operations


function of a business organization
encompasses.
Chapter 2 discusses operations
management in a broader
context, and presents the issues of
competition, strategy, and
productivity. After you have read
Chapter 2, you will understand the
importance of the operations
function relative to the goals of a
business organization, and how
performance of production function
can be measured.

Introduction includes two


chapters:
Chapter 1

Chapter 2

Introduction to
Operations
Management
Competitiveness,
Strategy, and
Productivity

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CHAPTER

Page 2

1
Introduction to Operations
Management
Operations Managers and
Decision Making, 14

LEARNING OBJECTIVES

After completing this chapter, you


should be able to:

Models, 14
Quantitative Approaches, 14
Analysis of Trade-offs, 15
The Systems Approach, 15
Establishing Priorities, 15
Ethics, 16

1 Define the term operations

management.
2 Identify the three major

5
6

functional areas of organizations


and describe how they
interrelate.
Describe the operations
function and the nature of the
operations managers job.
Differentiate between design
and operation of production
systems.
Compare and contrast service
and manufacturing operations.
Briefly describe the historical
evolution of operations
management.
Describe the key aspects of
operations management
decision making.
Identify some of the current
trends in business that impact
operations management.

CHAPTER OUTLINE

Introduction, 3
Why Study Operations
Management? 4
Newsclip: Operations Management
Job Ads, 5
Careers in Operations
Management, 5

Functions within Organizations, 6


Operations, 6
Finance, 8
Marketing, 8
Other Functions, 8

The Scope of Operations


Management, 9
Differentiating Features of
Operations Systems, 11
Degree of Product
Standardization, 11
Type of Process, 11
Production of Goods versus
Services, 11

The Operations Managers Job, 13

The Historical Evolution of


Operations Management, 16
The Industrial Revolution, 16
Scientific Management, 17
The Human Relations
Movement, 18
Decision Models and
Computers, 18
The Influence of Japanese
Manufacturers, 19

Trends in Business, 21
Major Trends, 21

Summary, 23
Key Terms, 24
Discussion and Review
Questions, 24
Taking Stock, 24
Critical Thinking Exercise, 25
Internet Exercise, 25
Mini-Case: Lynn, 25
Operations Tour: Sobeys, 26
Selected Bibliography and
Further Reading, 28

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CHAPTER ONE INTRODUCTION TO OPERATIONS MANAGEMENT

p until the late 1990s, Sobeys was a regional chain of


supermarkets in Atlantic Canada. Then, Loblaw started
opening up stores in Sobeys backyard. Sobeys top management decided that the only way they could compete was to
expand nationally. The company is now the second largest
grocery chain in Canada, competing well with Loblaw.

When Wal-Mart expanded into Canada in the mid-1990s, it


caught Zellers by surprise. Zellers had been operating with
almost no competition, carrying old merchandize, and offering
little customer service. Profits shrank and losses piled up. The
parent company, Hudsons Bay Company, had to change the
strategic and operations direction of Zellers with the result that
Zellers is now more competitive.

his book is about operations management. The subject matter is fascinating and
T
timely: productivity, quality, e-business, global competition, and customer service are
very much in the news. All are part of operations management. This first chapter presents
an introduction and overview of operations management. Among the issues it addresses
are: What is operations management? Why is it important? What do operations managers do?
The chapter also provides a brief description of the historical evolution of operations
management and a discussion of the trends that impact operations management.

INTRODUCTION
Operations management is the management of processes or systems that create
goods and/or provide services. It encompasses forecasting, capacity planning, scheduling,
managing inventories, assuring quality, motivating employees, deciding where to locate
facilities, buying material and equipment and maintaining them, and more.

Inputs

TRANSFO

Outputs

MATION

We can use an airline company to illustrate an operations system. The system includes
staff and airplanes, airport facilities, and maintenance facilities, sometimes spread out
over a wide territory. Most of the activities performed by management and employees fall
into the realm of operations management:
Forecasting such things as seat demand for flights, the growth in air travel, and weather
and landing conditions.
Capacity planning, deciding the number of planes and where to use them.

operations management The


management of processes or
systems that create goods
and/or provide services.

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PART ONE INTRODUCTION

Scheduling of planes for flights and for routine maintenance; scheduling of pilots and
flight attendants; and scheduling of ground crews, counter staff, and baggage handlers.
Managing inventories of such items as food and beverages and spare parts.
Assuring quality, essential in flying and maintenance operations, where the emphasis
is on safety. Also important in dealing with customers at ticket counters, check-in,
telephone and electronic reservations, and in-flight service, where the emphasis is on
efficiency and courtesy.
Employee motivation and training in all phases of operations.
Location of facilities according to top managers decisions on which cities to provide service
for, where to locate maintenance facilities, and where to locate major and minor hubs.
Buying materials such as fuel, food, bags, and spare parts. Buying aircraft and maintaining it.
Now consider a bicycle factory. This might be primarily an assembly operation: buying
components such as frames, tires, wheels, gears, and other items from suppliers, and then
assembling bicycles. The factory might also do some of the fabrication work itself (forming frames, making the gears and chains) and buy mainly raw materials and a few parts and
materials such as paint, nuts and bolts, and tires. Among the key operations management
tasks in either case are scheduling production, deciding which components to make and
which to buy, ordering parts and materials, deciding on the style of bicycle to produce and
how many, purchasing new equipment to replace old or worn-out equipment, maintaining
equipment, motivating workers, and ensuring that quality standards are met.
Obviously, an airline company and a bicycle factory are completely different types of
operations. One is primarily a service operation, the other a producer of goods. Nonetheless, these two operations have much in common. Both involve scheduling of activities,
motivating employees, ordering and managing supplies, selecting and maintaining equipment, and satisfying quality standards. And in both businesses, the success of the business
depends on planning.
Many companies use operations management strategies, tactics, and actions in order to
improve their efficiency and effectiveness. Efficiency refers to operating at minimum cost
and fast, whereas effectiveness refers to achieving the intended goals (quality). This text
contains many practical and real-life examples of operations management in the form of
tours, readings, cases, photos and captions, news clips, and video clips (on the DVD). For
example, there is a description of how Stone Consolidated, the paper manufacturer (now
part of Abitibi Consolidated), chose a location for a landfill (Chapter 8), how Standard
Aero (a small aircraft engine repairer) started its total quality management process
(Chapter 9), how various food companies such as Good Humor Breyers use supply chain
tools to improve their operation (Chapter 16), how various companies such as Eli Lilly
Canada use warehouse management systems to operate efficiently (Chapter 11), how
companies such as Celestica use just-in-time systems to work efficiently (Chapter 14),
and how companies such as General Dynamics Land Systems use project management
techniques and software to operate effectively (Chapter 17).

WHY STUDY OPERATIONS MANAGEMENT?


You may be wondering why you need to study operations management. Actually, there
are a number of very good reasons. One is that operations management activities are at
the core of all business organizations, regardless of what business they are in. Because a
large percentage of a companys expenses occur in the operations area, such as purchasing materials and workforce salaries, more efficient operationseven a small reduction
in operations costscan result in large increases in profit. Second, a large number of all
jobs are in operations managementsuch areas as purchasing, quality assurance,
production planning and control, scheduling, logistics, inventory management, and
many more (see for example, Operations Management Job Ads on the next page.) Third,
activities in all of the other areas of business organizations, such as finance, accounting,
human resources, management information systems (MIS), and marketing are all

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