Overview: Introduction to the Field Chapter 1 Overview: Introduction to the Field
OBJECTIVES Operations Management Why Study Operations Management? Transformation Processes Defined Operations as a Service The Importance of Operations Mgt. Historical Development of OM Current Issues in OM 2
What is Operations Management? Defined Operations management (OM) is defined as the design, operation, and improvement of the systems that create and deliver the firm’s primary products & services. This involves the transformation of inputs to outputs and is the core of any business.
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
Why Study Operations Management? Systematic Approach to Org. Processes Operations Management Business Education Career Opportunities Cross-Functional Applications
What is a Transformation Process? Defined A transformation process is defined as a user of resources to transform inputs into some desired outputs
OM Involves Managing Transformations Process (Value Adding) Input Output People Plants Parts Processes Planning and Control Transformation is enabled By the 5 P’s of OM
Transformations Physical--manufacturing Locational--transportation Exchange--retailing Storage--warehousing Physiological--health care Informational--telecommunications 7
What is a Service and What is a Good? “If you drop it on your foot, it won’t hurt you.” (Good or service?) “Services never include goods and goods never include services.” (True or false?) 8
What About McDonald’s? Service or manufacturing? The company certainly manufactures tangible products Why then would we consider McDonald’s a service business?
OM in the Organization Chart Finance Marketing Operations Plant Manager Operations Manager Director Manufacturing, Production control, Quality assurance, Engineering, Purchasing, Maintenance, etc 8
Core Services Defined Core services are basic things that customers want from products they purchase 11
Core Services Performance Objectives Quality Flexibility Speed Operations Management Price (or cost Reduction)
Value-Added Services Defined Value-added services differentiate the organization from competitors and build relationships that bind customers to the firm in a positive way 12
Value-Added Service Categories Problem Solving Help internal/external groups solve problems Information Sales Support Operations Management Performance data on products Use data for improvements Enhance sales/marketing through equipment demos Field Support Replace defective parts quickly
The Importance of Operations Management Synergies must exist with other functional areas of the organization Operations account for 60-80% of the direct expense that burden a firm’s profit
Historical Development of OM JIT and TQC Manufacturing Strategy Paradigm Service Quality and Productivity Total Quality Management and Quality Certification 14
Historical Development of OM (cont’d) Business Process Reengineering Supply Chain Management Electronic Commerce 15
Current Issues in OM Coordinating the relationship between mutually supportive but separate organizations Optimizing global supplier, production, and distribution networks Increased co-operation of goods and services 14
Current Issues in OM (cont’d) Managing the customer’s experience during the service encounter Raising the awareness of operations as a significant competitive weapon 15