Management of Value Creating Processes Lesson 1 Introduction and basics

About the Requirements Two lecturers: András István Kun, PhD, assistant professor Ágnes Kotsis, assistant lecturer 1 lecture and 2 seminar in every week Monday 14:00-16:30 Syllabus and slides will be available on the internet: From the 3. week calculators are needed!

Requirements The calculation of the final grade is as follows: Mid-term test30% Written exam70% Date of the mid-term is noted in the schedule above, exams can be taken in the exam period. There is only one possibility to retake the mid-term (in room C9 on 25th May, 14:00), and there are 2 opportunities to retake the exam (exams will be organized via neptun). The mid-term test contains the topics discussed on week 1-7. The exams contain all of the topics discussed during the whole semester. The final result will be evaluated according to the following schedule: <51%– 1 51%– 2 65%– 3 75%– 4 85%– 5

What is this course about? Introductory course to operations management. Key issues: The Value Chain Concept Competitiveness, strategy, productivity Capacity Planning Constraint management Quality Management Supply Chain Management and logistics Inventory Management LEAN Operations Basics of process and project management

Roots of operations management I. Industrial revolution (1770’s) – Europe Scientific management (1911) – USA Mass production Standardization Division of labor Human relations (HR) movement ( ) Decision models (1915, ’s) Influence of Japanese management philosophy and techinques

Roots of operations management II. Production and production management Production: creation of finished goods (and services) using the factors of production: land, labor, capital (+ enterpreneurship, knowledge) Production magagement: Planning, implementation, and control of industrial production processes to ensure smooth and efficient operation (the activites of managers do to help their firms create goods). Ensures that goods (and services) are produced efficiently; that they are of the right quality, quantity, cost; and that they are produced on time. As service sector becomes larger, concepts of (industrial) production management become influenced by it.

Operations management Includes the production of services. The term production has been repleaced by operations. Specialized area in management that converts or transforms resources into goods and services. It managing systems and processes as well.

Differences between products and services (can they be distiquished?) Characteristic ManufacturingService Output Customer contact Uniformity of input Labor content Uniformity of output Measurement of productivity Opportunity to correct Tangible Low High Low High Easy High Intangible High Low High Low Difficult Low quality problems High

The place of operations management between other funcions Head of the Organization Finance Operations Marketing Organziational Functions

Adding value InputsOutputs Transformational processes Feedback Organization Business environment

Operations interfaces (Stevenson 2005) Public Relations Accounting Industrial Engineering Operations Maintenance Personnel Purchasing Distribution MIS Legal

Operations overlap (Stevenson 2005) Operations Finance Marketing

Key decisions What to produce / amount to produce When to produce / to order / to supply Where Is the best location for work / process / store etc. How designed Who to do the work (or which team)

Measures & methods Operations research (mathematical basis) Models and abstraction Performance metrics Trade-off analysis System approach

To be continued… (with the the Value chain concept)