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Chapter One Operations Management

This chapter introduces operations management (OM) as the business function responsible for planning, coordinating, and controlling resources to produce products and services. OM transforms inputs like people, materials, and money into outputs of goods and services. The role of OM is to add value and provide an efficient transformation process. OM makes both strategic and tactical decisions and works closely with other business functions like marketing, finance, and human resources. The chapter outlines the historical development of OM and trends in areas like just-in-time systems and total quality management.

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Lianna Rodriguez
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194 views

Chapter One Operations Management

This chapter introduces operations management (OM) as the business function responsible for planning, coordinating, and controlling resources to produce products and services. OM transforms inputs like people, materials, and money into outputs of goods and services. The role of OM is to add value and provide an efficient transformation process. OM makes both strategic and tactical decisions and works closely with other business functions like marketing, finance, and human resources. The chapter outlines the historical development of OM and trends in areas like just-in-time systems and total quality management.

Uploaded by

Lianna Rodriguez
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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Chapter 1 - Introduction to

Operations Management

Operations Management
by
R. Dan Reid & Nada R. Sanders

 1
Learning Objectives

• Define and explain OM


• Explain the role of OM in business
• Describe the di erences between
service and manufacturing
operations
• Describe the decisions that
operations managers make
 2
Learning Objectives – con’t

• Identify major historical


developments in OM
• Identify current trends in OM
• Describe the flow of information
between OM and other business
functions
 3
Operations Management is:
The business function responsible
for planning, coordinating, and
controlling the resources needed
to produce products and services
for a company
 4
Operations Management is:
• A management function

• An organization’s core function

• In every organization whether


Service or Manufacturing, profit
or Not for profit
 5
Typical Organization Chart

 6
What is Role of OM?
• OM Transforms inputs to outputs

–Inputs are resources such as

•People, Material, and Money

–Outputs are goods and services

 7
OM’s Transformation
Process

 8
OM’s Transformation Role
• To add value
– Increase product value at each
stage
– Value added is the net increase
between output product value
and input material value  9
OM’s Transformation Role –
con’t
• Provide an e cient
transformation
– E ciency – means performing
activities well for least possible
cost
 10
Manufacturers vs Service
Organizations
• Services:
• Intangible product
• Product cannot be
inventoried
• High customer contact
• Short response time
• Labor intensive  11
Manufacturers vs Service
Organizations
• Manufacturers:
• Tangible product
• Product is inventoried
• Low customer contact
• Longer response time
• Capital intensive
 12
Similarities for Service/
Manufacturers
• Both use technology
• Both have quality, productivity, &
response issues
• Both must forecast demand
• Both can have capacity, layout, and
location issues
• Both have customers, suppliers,
scheduling and sta ng issues
 13
Service vs Manufacturing
• Manufacturing often provides services
• Services often provides tangible goods
• Some organizations are a blend of
service/manufacturing/quasi-
manufacturing Quasi-Manufacturing
(QM) organizations
• QM characteristics include
– Low customer contact & Capital
Intensive
 14
OM Decisions
• All organizations make decisions
and follow a similar path
– First decisions very broad –
Strategic decisions
• Strategic Decisions – set the
direction for the entire company;
they are broad in scope and
long-term in nature
 15
OM Decisions
• Following decisions focus on
specifics - Tactical decision
– Tactical decisions: focus on specific
day-to-day issues like resource needs,
schedules, & quantities to produce
– are frequent
• Strategic decisions less frequent
• Tactical and Strategic decisions
must align  16
OM Decisions

 17
Plan of Book-Chapters link
to Types of OM Decisions

 18
Historical Development of
OM
• Industrial revolution (Late 1700s)
– Brought in innovations that changed
production by using machine power
instead of human power.

• Scientific management(Early 1900s)


– An approach to management that
focused on improving the output by
redesigning jobs and determining
acceptable levels of worker output.
 19
Historical Development of
OM
• Human Relations Movement (1930s
to 1960s)
– A philosophy based on the recognition
that factors other than money can
contribute to worker productivity.
• Management Science (1940s to
1960s)
– Focused on the development of
quantitative techniques to solve
operations problems.  20
Historical Development of
OM
• Computer age (1960s)
– Enabled processing of large amounts
of data and allowed widespread use of
quantitative procedures.

• Environmental issues (1970s)


– Considered waste reduction, the need
for recycling, and product reuse.

 21
Historical Development of
OM
• Just-in-time systems (JIT) (1980s)
– Designed to achieve high-volume
production with minimal inventories.

• Total quality management (TQM)


(1980s)
– Sought to eliminate causes of
production defects.

 22
Historical Development of
OM
• Reengineering (1980s)
– Required redesigning a company’s
processes in order to provide greater
e ciency and cost reduction.

• Global competition (1980s)


– Designed operations to compete in the
global market.

 23
Historical Development of
OM
• Flexibility (1990s)
– O ered customization on a mass cycle.

• Time based competition (1990s)


– Based on time, such as speed of
delivery.

 24
Historical Development of
OM
• Supply chain management (1990s)
– Focused on reducing the overall cost of
the system that manages the flow of
materials and information from
suppliers to final customers.
• Electronic commerce (2000s)
– Uses the Internet and World Wide Web
for conducting business activity.

 25
Historical Development of
OM
• Outsourcing and flattening of the
world (2000s)
– Convergence of technology has
enabled outsourcing of virtually any
job imaginable from anywhere around
the globe, therefore “flattening” the
world.

 26
Today’s OM Environment
• Customers demand better quality, greater
speed, and lower costs
• Companies implementing lean system
concepts – a total systems approach to
e cient operations
• Recognized need to better manage
information using ERP and CRM systems
• Increased cross-functional decision making

 27
OM in Practice
• OM has the most diverse
organizational function
• Manages the transformation process
• OM has many faces and names such
as;
– V. P. operations, Director of supply chains,
Manufacturing manager
– Plant manger, Quality specialists, etc.
• All business functions need
information from OM in order to  28
Business Information Flow

 29
OM Across the Organization
• Most businesses are supported by
the functions of operations,
marketing, and finance
• The major functional areas must
interact to achieve the
organization goals

 30
OM Across the
Organization – con’t
• Marketing is not fully able to
meet customer needs if they do
not understand what operations
can produce
• Finance cannot judge the need
for capital investments if they do
not understand operations
concepts and needs
 31
OM Across the
Organization – con’t
• Information systems enables the
information flow throughout the
organization
• Human resources must
understand job requirements and
worker skills
• Accounting needs to consider
inventory management, capacity
information, and labor standards
 32
Chapter 1 Highlights
• OM is the business function that
is responsible for managing and
coordinating the resources
needed to produce a company’s
products and services.
• The role of OM is to transform
organizational inputs into
company’s products or services
outputs  33
Chapter 1 Highlights
• OM is responsible for a wide
range of decisions, ranging from
strategic to tactical.
• Organizations can be divided into
manufacturing and service
organizations, which di er in the
tangibility of the product or
service
 34
Chapter 1 Highlights – con’t
• OM is highly important function
in today’s dynamic business
environment. Among the trends
with significant impact are just-in-
time, TQM, reengineering,
flexibility, time-based competition,
SCM, global marketplace, and
environmental issues
 35
Chapter 1 Highlights – con’t
• OM works closely with all other
business functions
• Many historical milestones have
shaped OM. Some of these are
the Industrial Revolution, scientific
management, the human
relations movement,
management science, and the
computer age  36
Thank
You
For
Listening ^.^

 37

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