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Lesson 1

1. The document introduces operations/production management and discusses why it is studied, its heritage, and operations in the service sector. 2. Key points covered include the basic functions of operations managers in planning, organizing, staffing, leading and controlling decision areas. 3. The history of the field is discussed from contributors like Taylor who advocated for scientific management up to more modern innovations in computers, quality management, and integrating operations into overall business strategy.

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Carla Mercado
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51 views

Lesson 1

1. The document introduces operations/production management and discusses why it is studied, its heritage, and operations in the service sector. 2. Key points covered include the basic functions of operations managers in planning, organizing, staffing, leading and controlling decision areas. 3. The history of the field is discussed from contributors like Taylor who advocated for scientific management up to more modern innovations in computers, quality management, and integrating operations into overall business strategy.

Uploaded by

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

INTRODUCTION TO
PRODUCTION/OPERATIONS
MANAGEMENT
Learning Objectives:

At the end of the chapter, the students will be able to:


1. Give the reasons why to study POM;
2. Trace the heritage of POM; and
3. Describe the operation/management in the service sectors.

Overview to Production/Operations Management

Production is the creation of goods and services. Operations management is the set of activities
that creates value in the form of goods and services by transforming inputs into outputs. Activities
creating goods and services take place in all organizations. In manufacturing firms, the production
activities that create goods are usually quite obvious.
In organizations that do not create physical products, production function may be less obvious. It
may be hidden from the public and even the customer. Examples are the transformations that take place at
a bank, hospital, airline office or college.
Often when services are performed, no tangible goods are produced. Instead, the product may
take such forms as the transfer of funds from savings account to a checking account, the transplant of a
liver, the filling of an empty seat on an airline or the education of a student. Regardless of whether the
end product is a good or service, the production activities that go in the organization are often referred to
as operations or operations management.

Why Study OM?

1. We study OM to know how people organize themselves for productive enterprise.


2. We study OM because we want to know how goods and services are produced.
3. We study OM to understand what operations manager do.
4. We study OM because it is such a costly part of an organization.
What Operations Managers Do?

All good managers perform the basic functions of the management process. The management
process consists of planning, organizing, staffing, leading and controlling. Operations managers apply this
management process to decisions they make in the OM function.

Ten Decision Areas Issues


1. Service and product design What good or service should we offer?
How should we design these products?
2. Quality management Who is responsible for quality?
How do we define the quality?
3. Process and capacity design What process and what capacity will these products
require?
What equipment and technology is necessary for these
processes?
4. Location Where should we put the facility?
On what criteria should we base the location decision?
5. Layout design How should we arrange the facility?
How large must be the facility be to meet our plan?
6. Human resources and job How do we provide a reasonable work environment?
design How much can we expect our employees to produce?
7. Supply-chain management Should we make or buy this component?
Who are our suppliers and who can integrate into our e-
commerce program?
8. Inventory, material How much inventory of each item should we have?
requirements, planning and JIT When do we reorder?
9. Intermediate and short term Are we better off keeping people on the payroll during
scheduling slowdowns?
Which job do we perform next?
10. Maintenance Who is responsible for maintenance?
When do we do maintenance?

The Heritage of Operations Management

The field of OM is relatively young, but its history is rich and interesting. Our lives and the OM
discipline have been enhanced by the innovations and contributions of numerous individuals.
Frederick W. Taylor, known as the father of scientific management, contributed to personnel
selection, planning and scheduling, motion study and the now popular field of ergonomics. One of his
major contributions was his belief that management should be much more resourceful and aggressive in
the improvement of work methods.
Another of Taylor’s contributions was the belief that management should assume more
responsibility for:
1. Matching employees to the right job.
2. Providing the proper training.
3. Providing proper work methods and tools.
4. Establishing legitimate incentives for work to be established.

Year Contribution Contributor


Specialization of labour in manufacturing Adam Smith
1799 Interchangeable parts, cost accounting EH Whitney and others
1832 Division of labour by skills; assignment of jobs by skill; Charles Babbage
basics of time study
1900 Scientific Management time study and work study Frederick Taylor
developed; dividing planning and doing of work
1901 Scheduling techniques for employees, machines jobs in Frank B. Gilbreth
manufacturing
1915 Economic lot sizes for inventory control Henry L. Gantt
1927 Human Relations, the Hawthorne studies Elton Mayo
1931 Statistical inference applied to product quality; quality W.A Shewart
control charts
1935 Statistical sampling applied to quality control inspection H.F Dodge
sampling plans
Year Contribution Contributor
1940 Operations research applications in World War II M.P Blacker and others
1946 Digital computer John Mauchlly and L.P Eckert
1947 Linear Programming G.B Dantzig, Williams and
other
1950 Mathematical programming on linear and stochastic A. Charnes, W.W Cooper
processes and others
1951 Commercial digital computer, large scale computations Sperry Univac
available
1960 Organizational behaviour; continued study of people at L. Cummings, I Porter
work
1970 Integrating operations into overall strategy and policy. W. Skinner, J. Orlicky and G.
Computer applications to manufacturing. Scheduling Wright
and Control. Material requirement planning (MRP).
1980 Quality and productivity applications from Japan, W.E. Deming and J. Juran
robotics, CAD-CAM

Especially important contributions to OM have come from information sciences, which we define
as the systematic processing of data to yield information. The information sciences, the Internet and e-
commerce are contributing in a major way toward improved productivity while providing society with a
greater diversity of goods and services.
Decisions in operations management require individuals who are well versed in management
science, in information science and often in one of the biological or physical sciences.

Operations in the Service Sector

Differences between Goods and Services


1. Services are usually intangible (for example, your purchase of a ride in an empty airline seat
between two cities) as opposed to a tangible good.
2. Services are often produced and consumed simultaneously; there is no stored inventory.
3. Services are often unique.
4. Services have high customer interaction. Services are difficult to standardize, automate and make
as efficient as we would like because customer interaction demands uniqueness.
Many service activities take place within goods-producing operations. Human resource
management, logistics, accounting, etc. are all service activities, but they take place within a
manufacturing organization.
When a tangible product is not included in the service, we call it a pure service. Although there
are not very many pure services, one example is counselling.

The Challenge of Social Responsibility

Operations managers function in a system where they are subjected to constant changes and
challenges. These come from stakeholders such as customers, suppliers, owners, leaders and employees.
These stakeholders and government agencies require that managers respond in a socially responsible way
in maintaining a clean environment, a safe workplace and ethical behavior. If operations managers focus
on increasing productivity in an open system in which all stakeholders have a voice, then many of these
challenges are mitigated. The company will use fewer resources, the employees will be committed and
the ethical climate will be enhanced.

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