Introduction to Operations Management A Review

1-2 What Do Operations Managers Do?  What is Operations? a function or system that transforms inputs into outputs of greater value a function or system that transforms inputs into outputs of greater value  What is a Transformation Process? a series of activities along a value chain extending from supplier to customer. a series of activities along a value chain extending from supplier to customer. activities that do not add value are superfluous and should be eliminated activities that do not add value are superfluous and should be eliminated  What is Operations Management? design, operation, and improvement of productive systems design, operation, and improvement of productive systems

1-3  Physical: as in manufacturing operations  Locational: as in transportation operations  Exchange: as in retail operations  Physiological: as in health care  Psychological: as in entertainment  Informational: as in communication Transformation Process

OM’s Transformation Role

1-5 Operations Function  Operations  Marketing  Finance and Accounting  Human Resources  Outside Suppliers

6 Operations Strategy – Designing the Operations Function

Key OM Concepts  Efficiency -  Efficiency - Doing something at the lowest possible cost; doing things right  Effectiveness -  Effectiveness - Doing the right things to create the most value for the organization  Value -  Value - The essence of operations function is to add value during the transformation process 8

8 Speed Cost Depend- ability FlexibilityQuality Lower prices (or higher profits) Faster customer response Error-free products and services Wider variety More customisation More innovation Cope with volume fluctuations On-time deliveries

9 Consequences of the Mismatch are Severe