Operations & Logistics Management Lesson 1: Introduction to Operations Management

COURSE OBJECTIVES OPERATIONS & LOGISTICS MANAGEMENT (OLM) Understand why OLM is seen as an important element of an organisation’s success. Understand the basic concepts and principles of OLM. Get an overall view of the process of OLM. Compare the basic principles of the OLM process with the processes that are applied in your own environment. Critically evaluate the value of OLM for your organisation.

INTRODUCTION OLM is a part of business that has evolved through more than 200 years. Before first industrial revolution work was done via: domestic system and craft guilds. Inventions in the 18 th century (the flying shuttle, spinning jenny, water frame and steam engine) changed the pace of work and manufacturing. By the 19 th century, manufacturing of products was being increasingly mechanised. This the rise of the use of machines to produce goods, gave rise to the need to manage the production and manufacturing process, thus manage operations = Operations Management.

INTRODUCTION In the 20 th century, inventors, entrepreneurs and managers started writing down their views and methods they use to oversee/ run/ manage the operations in their factories. These inventors, entrepreneurs and managers include: - Frederick Taylor (Scientific Management- 1911) - Henry Ford (Assembly line- 1913) - Ford W. Harris (Economic Order Quantity (EOQ)-1913) - Frank & Lillian Gilbreth (Motion Studies, ) - Taiichi Ohno (1943)- Toyota, Japan - Jospeh Orlicky (Material Requirement Planning (MRP)-IBM, 1964) - JN Edwards (Just-in-time (JIT)- 1983) - Deming (Total Quality Management (TQM) - Int. Org. for Standardisation (ISO 9000)

DEFINING OPERATIONS The purpose of business is to make money- profit. The production or making of goods and services is generally referred to as operations. Operations consists of various tasks, processes and activities. These tasks and activities take place within a special space- a warehouse, a mine, an office- and rely on various tools machines and infrastructure.

DEFINING OPERATIONS Operations does not only apply to a designated work place or corporate sector. We carry out ‘operations’ daily in our everyday life/ living E.g. Having this class/presentation is a form of operations management. CLASS EXERCISE: - Identify the activities you carried out this morning to get to work on time. - Who is the ‘operations manager ‘ in your home?

DEFINING OPERATIONS Operations management includes the assessment of: 1.Supply network: all the suppliers and customers that have a relationship with the operation. 2.Internal Supplier and Customers: all the processes or individuals that supply products or services to other processes or individuals within the operations. 3.Hierarchy of Operations: all operation processes are made up of smaller operation processes that contribute to and create the operation.

DEFINING OPERATIONS MANAGEMENT Definition is still limited to the production process. ‘Operations means the production of goods and services for the business. Operation Management is that aspect of a business enterprise which is involved in producing goods and services in the most efficient and effective way’. ‘ Operations management teams design the method of conversion on inputs (materials, labour, propriety information, etc.) into outputs (goods, services, value-added products, etc.) that is most beneficial to the organisation. Operations management is concerned with converting materials and labour into goods and services as efficiently as possible to maximize the profit of an organisation.

DEFINING OPERATIONS MANAGEMENT Definition is still limited to the production process. Silo effect: each managerial function managed itself with no consideration of how management decisions would impact on the rest of the functions. Failure of businesses: could be ascribed to segregation that exists between the various functions that make up a business.

DEFINING OPERATIONS MANAGEMENT Production Accounting Marketing Purchasing Human Resource

DEFINING OPERATIONS MANAGEMENT Operations management cannot achieve objective in isolation from the rest of the organisation. Other functions within the organisation, i.e. accounting, finance, marketing, and HR, have a direct impact on productions ability to produce and deliver quality goods and services. The operations of an organisation can be divided into three core functionalities: – 1. design – 2. planning & control – 3. improvement

DEFINING OPERATIONS MANAGEMENT Important: To understand a company’s operations management approach it is important to understand if they support a narrow or broad definition of operations management.

DISCUSSION QUESTIONS: 1.What is operations management? 2.What is the difference between the narrow and broad definitions of operations management? 3.Which definition would you say best defines the way your organisation views ‘operations’?

Thank You!