The Role of Operations Management Chapter 5.1

The Nature of Operations The use of inputs to product outputs whether it is a finished good or a service

Operation Concerns Efficiency of production Keeping costs as low as possible Quality Suitable for the purpose intended Flexibility of innovation The need to develop and adapt

Relationships Between other Functions of Business Good things can happen Marketing: Proper quantities are produced so marketing can sell profitably Human Resources: Suitable employees are hired Finance: Funding for expanded capacity

Relationships Between other Functions of Business Bad things can happen Marketing: Producing to many products when sales are declining Human Resources: Increase production requires another shift but this employees are not available for work Finance: new product improvements fail because of a shortage of finance

Production Process This model applies to manufacturing and service industries. Resources Resources Inputs Land Capital Capital Labor Labor Production Process Finished goods Services Components Outputs for other firms During this process the goal is to ADD-VALUE. Therefore, we can charge more for the finished output, than the cost of the components of raw materials. During this process the goal is to ADD-VALUE. Therefore, we can charge more for the finished output, than the cost of the components of raw materials. Can include other items other than raw material costs such as: * product design *efficiency of production *convince consumers to pay more

Production INPUTS Land: All business need a place to operate Labor: All business activity requires labor Capital: Machinery, tools, computers, CASH

Triple Bottom Line Planet People Profit Commonly held view that businesses have a wider role in our local, national, and global communities.

Triple Bottom Line Planet Ecological Sustainability – the capacity of ecosystems to maintain their essential functions and processes and retain their biodiversity in full measure over the long term - reduce waste at all levels of the organization - use less energy and source from renewable sources when possible - reduce water usage and recycle water - product design and packaging that uses recycled materials

Triple Bottom Line PlanetExamples: 3:58 minutes – Major companies protecting the environment Ford Motor Company: Rouge Plant Living Roof 3:00 minutes – Highlights of the Dearborn, MI Ford Plant Other examples: ????

Triple Bottom Line People Social Sustainability – the ability of a community to develop processes and structures which not only meet the needs of its current members but also support the ability of future of generations to maintain a healthy community - production systems that are safe and healthy for employees - workplaces that allow social interaction - create jobs for low-income or deprived communities - reduce negative impact on communities – reduce harmful pollution

Triple Bottom Line PeopleExamples: 3:47 minutes – Proctor & Gamble Live, Learn, Thrive Initiative Other examples: ????

Triple Bottom Line Profit Economic Sustainability – using assets of the company efficiently to allow it to continue functioning profitably over time - managing and maintaining operational assets to extend lifespans - increasing the efficiency of production to improve competitiveness; businesses with lower unit production costs have a better chance of profitability - research and development of new and innovative products