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Production Lec 1

Operations Management involves managing systems that create goods and services, impacting both company and national competitiveness. It encompasses functions such as planning, controlling, and improving operations, while distinguishing between manufacturing and service operations based on characteristics like customer contact and output uniformity. Understanding Operations Management is crucial as it relates to all business areas and is essential for effective decision-making and resource management.

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7 views23 pages

Production Lec 1

Operations Management involves managing systems that create goods and services, impacting both company and national competitiveness. It encompasses functions such as planning, controlling, and improving operations, while distinguishing between manufacturing and service operations based on characteristics like customer contact and output uniformity. Understanding Operations Management is crucial as it relates to all business areas and is essential for effective decision-making and resource management.

Uploaded by

ahmedjojo6088
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Introduction to

Operations Management
Operations Management

• Operations Management is:


The management of systems or processes
that create goods and/or provide services
• Operations Management affects:
• Companies’ ability to compete
• Nation’s ability to compete internationally

2
The Organization

The Three Basic Functions

Organization

Finance Operations Marketing

3
Value-Added Process

The operations function involves the conversion of


inputs into outputs
Value added
Inputs
Transformation/ Outputs
Land
Conversion Goods
Labor
process Services
Capital
Feedback

Control
Feedback Feedback 4
Value-Added & Product
Packages

• Value-added is the difference between the cost of


inputs and the value or price of outputs.
• Product packages are a combination of goods and
services.
• Product packages can make a company more
competitive.

5
Activities of Operations
manager

• Understand the operation’s strategic objectives


• Developing an operation’s strategy for the organization
• Designing the operation’s products, services and
processes
• Planning and controlling the operation
• Improving the performance of the operation.

6
Some Activities of the
Operations Manager

Design elegant products


which can be flat packed
Storage efficiently

Quality

Design Store Layout


Site Location
7
Manufacturing vs. Service
Operations

• Production of goods
• Tangible products
• Automobiles, Refrigerators, Aircrafts, Coats, Books, Sodas
• Services
• Repairs, Transportation, Regulation
• Regulatory bodies: Government, Judicial system, FAA, FDA
• Entertainment services: Theaters, Sport activities
• Exchange services: Wholesale/retail
• Security services: Police force, Army
• Financial services: Banks
• Education: Universities
8
Manufacturing vs. Service
Operations

• Differences with respect to


1. Customer contact
2. Uniformity of input
3. Labor content of jobs
4. Uniformity of output
5. Measurement of productivity
6. Production and delivery

1. Amount of inventory

9
Customer contact

• Often, by its nature, service involves a much higher


degree of customer contact than manufacturing.
• The performance of a service often occurs at the point
of consumption.
• On the other hand, manufacturing allows a separation
between production and consumption, so that
manufacturing can occur away from the consumer.

10
Uniformity of input

• Service operations are subject to greater variability of


inputs than typical manufacturing operations.
• Manufacturing operations often have the ability to
carefully control the amount of variability of inputs and
thus achieve low variability in outputs.

11
Labor content of jobs

• Many services involve a higher labor content than


manufacturing operations.

12
Uniformity of output

• Because high mechanization generates products with


low variability, manufacturing tends to be smooth and
efficient
• Service activities sometimes appear to be slow and
output is more variable.

13
Measurement of
productivity

• Measurement of productivity is more straightforward in


manufacturing due to the high degree of uniformity of
most manufactured items.
• In service operations, variations in demand intensity
and in requirements from job to job make productivity
measurement considerably more difficult.

14
Quality assurance

• Quality assurance is more challenging in services


when production and consumption occur at the same
time.
• Moreover, the higher variability of input creates
additional opportunity for the quality of output to suffer
unless quality assurance is actively managed.
• Quality at the point of creation is typically more evident
for services than for manufacturing, where errors can
be corrected before the customer receives the output.
15
Amount of inventory

• Manufacturing systems usually have more inventory


on hand (e.g., raw materials, partially completed items,
finished goods inventories) than service firms.

16
Manufacturing vs. Services

Characteristic Manufacturing Service


Output Tangible Intangible

Customer contact Low High

Uniformity of output Low High

Labor content Low High

Uniformity of input Low High

Measurement of productivity Easy Difficult

Opportunity to correct quality problems Easy Difficult

17
Responsibilities of
Operations Management

u Planning u Controlling
– Capacity, utilization – Inventory
– Location – Quality
– Choosing products or – Costs
services u Organization
– Make or buy – Degree of standardization
– Layout – Subcontracting
– Projects – Process selection
– Scheduling u Staffing
– Market share – Hiring/lay off
– Plan for risk reduction, – Use of overtime
– Forecasting – Incentive plans
18
Scope of Operations
Management

• Operations Management includes:


• Forecasting
• Capacity planning
• Scheduling
• Managing inventories
• Assuring quality
• Motivating employees
• Deciding where to locate facilities
• Supply chain management
• And more . . .
19
Operations Management
and Decision Making

• The chief role of an operations manager is that of


planner and decision maker.
• Operations management professionals make a
number of key decisions that affect the entire
organization.

20
Key Decisions of
Operations Managers

• What
What resources will be needed and in what amounts?
• When
When will each resource will be needed? When should the
work be scheduled? When should materials and other
supplies be ordered?
• Where
Work to be done
• How
Designed
• Who 21
To do the work
Why Study Operations
Management?

• OM is related to all areas of any business


• There is no business without Operations
• Education on how to produce goods or services
• Most costs are incurred in creating goods or
services
• Global nature of operations and competition
• Impetus of new technologies

22
Why Study Operations
Management? Systematic Approach
to Org. Processes

Business Education Operations Career Opportunities


Management

Cross-Functional
Applications

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