NATIONAL ECONOMICS UNIVERSITY

OPERATIONS MANAGEMENT
INTRODUCTION

PhD. Le Phan Hoa

 CONTENT

1. DEFINITION
2. RELATIONS WITH OTHER FUNCTIONS
3. GOODS AND SERVICES
4. OM DECISIONS
5. HISTORY OF OM
6. OM MANAGERS
DEFINITION
PRODUCTION vs OPERATIONS MANAGEMENT

PAST RECENTLY

• Creation of • How to
goods and improve the
services.  creation 
PRODUCTION OPERATIONS
MANAGEMENT
OPERATIONS MANAGEMENT
O P E R A T I O N S

The set of activities that creates value in the

form of goods and services by transforming
inputs into outputs
OPERATIONS MANAGEMENT
O P E R A T I O N S

COOKING PROCESS
INPUTS OUTPUTS

COOK FRIED - EGG

MONEY
EGG, SALT, ONION..
PAN, CHOPSTICK..
INFORMATION
……
FEEDBACK LOOP
OPERATIONS MANAGEMENT
T R A N S F O R M AT I O N P R O C E S S

The set of activities that creates value in the form of goods and services by
transforming inputs into outputs
TRANSFORMATION
INPUTS OUTPUTS
PROCESS

LABOR GOODS
CAPITAL SERVICES
MATERIAL
TECHNOLOGY
INFORMATION
……
FEEDBACK LOOP
OPERATIONS MANAGEMENT
QUESTION: specify the transformation process of the following organizations: fast food,
university, restaurants

OPERATIONS INPUT (RESOURCES) TRANSFORMATION OUTPUT

Fast foods • Meat, bread Cooking Burgers

• Staffs
Universities • Students Teaching Graduates
• Exam
• Buildings
Restaurant • Hungry customers Cooking Well-prepared food
• Food Service Satisfied customers
• Chef/staffs Cosy environment
RELATIONS WITH OTHER FUNCTIONS
MANAGEMENT
DEFINITION FUNCTIONS

PLANNING

MANAGEMENT IS THE PROCESS OF CONTROLLING ORGANIZING

ACOMPLISHING ORGANISATION’ GOALS
WHILE DEALING WITH RESOUCE CONSTRAINTS

LEADING STAFFING
BUSINESS MANAGEMENT
B U S I N E S S M A N A G E M E N T
• MARKETING • PLANNING
• FINANCE • ORGANIZING
• OPERATIONS • STAFFING
• HUMAN RESOURCES • LEADING
• CONTROLLING

SUPPORT or
CONFLICT??
 OPERATIONS MANAGEMENT and OTHER FUNCTIONS
OPERATIONS FINANCE MARKETING HUMAN RESOURCE
• Transform inputs • Record and • Analyze why people • Manage
into outputs summaries financial buy to price, relationship
• Applies to the transactions into promote, distribute between employers
manufacturing and report and produce and employees
service sector • Use income statement products that • Include: acquiring,
• Can be global or and balance sheet to increase sale development,
domestic evaluate business • Aim to meet maintaining, and
performance customer wants and separation
needs
OPERATIONS MANAGEMENT and OTHER FUNCTIONS

operations
Operations Marketing

IT

Finance
Human
Resource
finance
IT marketing

Human
resource
 OPERATIONS MANAGEMENT and OTHER FUNCTIONS
Organizational
chart showing
the information
flow
 OPERATIONS MANAGEMENT and OTHER FUNCTIONS
Information flow
BUSINESS MANAGEMENT

OPERATIONS STRATEGY
HUMAN RESOURCE
FINANCE
MARKETING

PROFIT GROWTH
MARKET SHARE

MARKET
STRATEGY
BUSINESS STRATEGY
Defines the long-range plans for the company

OPERATIONS STRATEGY
Develops a plan for the operations function focusing on specific competitive
priorities to meet long-range plan

DESIGN OF OPERATIONS FUNCTION

Developed to focus on the identified competitive properties
CONVERT BUSINESS STRATEGY INTO OPERATIONS ACTIVITIES

Differentiation
Innovative design
Providing a broad product line
Offering excellent after-sale service
Adding sensory experience
Cost leadership
Low overhead
Effective capacity use
Efficient inventory management
Respond
Offering a flexible product line
Reliable scheduling
Speedy delivery
DIFFERENCES BETWEEN MANUFACTURING AND
SERVICE ORGANIZATION
GOODS VS SERVICES GOODS SERVICES

TANGIBILITY AND Tangible Intangible

PERISSHABILITY Perishable Non-perishable

CUSTOMIZATION Standardized Heterogeneous

OWNERSHIP Can be owned and transfer Cannot be owned

TIME BETWEEN
PRODUCTION AND Considerable Simultaneous
CONSUMPTION

DETERMINATION OF Can be independently Is highly subjective

VALUE ascertained
MANUFACTURING vs SERVICE ORGANIZATION
OPERATIONS MANAGEMENT
DECISIONS
10 OM DECISIONS
STRATEGIC
1. Design of goods and services
2. Managing quality
3. Process and capacity design
4. Location strategy
5. Layout strategy
6. Human resources and job design
7. Supply chain management
8. Inventory management
9. Scheduling
10. Maintenance
TATICAL
STRATEGIC DECISIONS VS TATICAL DECISIONS
THE CRITICAL DECISIONS

Design of goods and services

What good or service should we offer?
How should we design these products and services?
Managing quality
How do we define quality?
Who is responsible for quality?
THE CRITICAL DECISIONS
Process and capacity design
What process and what capacity will these
products require?
What equipment and technology is necessary for
these processes?
Location strategy
Where should we put the facility?
On what criteria should we base the location
decision?
THE CRITICAL DECISIONS

Layout strategy
How should we arrange the facility?
How large must the facility be to meet our plan?
Human resources and job design
How do we provide a reasonable work
environment?
How much can we expect our employees to
produce?
THE CRITICAL DECISIONS

Supply chain management

Should we make or buy this component?
Who are our suppliers and who can integrate into our
e-commerce program?
Inventory, material requirements planning, and JIT
How much inventory of each item should we have?
When do we re-order?
THE CRITICAL DECISIONS

Intermediate and short–term scheduling

Are we better off keeping people on the payroll during
slowdowns?
Which jobs do we perform next?
Maintenance
Who is responsible for maintenance?
When do we do maintenance?
HISTORY OF OPERATIONS
MANAGEMENT
HERITAGE OF OPERATIONS MANAGEMENT
NEW CHALLENGES IN OPERATIONS MANAGEMENT
From To
 Local or national focus  Global focus
 Batch shipments  Just-in-time
 Low bid purchasing  Supply chain partnering
 Lengthy product development  Rapid product
 Standard products development, alliances

 Job specialization  Mass customization

 Empowered employees,
teams
NEW TRENDS IN OPERATIONS MANAGEMENT
 Global focus
 Just-in-time performance
 Supply chain partnering
 Rapid product development
 Mass customization
 Empowered employees
 Environmentally sensitive production
 Ethics
ETHICS AND SOCIAL RESPONSIBILITY

Challenges facing
operations managers:
 Developing and producing safe, quality
products
 Maintaining a clean environment
 Providing a safe workplace
 Honoring community commitments
WHO ARE OPERATIONS
MANAGERS?
GROUP WORK
Research about:
- Skills required for operations jobs
- Job titles and responsibilities
JOB POSITIONS

Midlevel
managers:
Vice president manufacturin Quality
of operations, g manager, specialist,
vice president
The president operations production
of
or Chief manager, analyst,
manufacturin
operations quality inventory
g, V.P., or
officers control analyst, and
director of
manager, production
supply chain
plant supervisor
operations
manager, and
others
THANK YOU!