Introduction to Operations Management What is Operations Management? Why is OM important? How OM relates to other business areas Historical perspective of OM Models and OM Compiled by: Alex J. Ruiz-Torres, Ph.D. From information developed by many.

What is OM? Design, execution, and control of a firm's operations that convert its resources into desired goods and services, and implement its business strategy http://www.businessdictionary.com/definition/operations-management.html The business function responsible for the transformation processes that create the goods and services required by the organization’s customers. Chase, Aquilano & Jacobs (2009)

What is OM? the maintenance, control, and improvement of organizational activities that are required to produce goods or services for consumers. http://www.bnet.com/topics/operations+management .. deals with the design and management of products, processes, services and supply chains. It considers the acquisition, development, and utilization of resources that firms need to deliver the goods and services their clients want.

What is OM? OM decisions: strategic… tactical … and operational levels. Strategic issues include determining the size and location of manufacturing plants, deciding the structure of service networks, and designing supply chains. Tactical issues include plant layout and structure, project management methods, and equipment selection and replacement. Operational issues include production scheduling and control, inventory management, quality control and inspection, traffic and materials handling, and equipment maintenance policies. http://mitsloan.mit.edu/omg/om-definition.php

What is OM? Management of a complex network of organizations that aim to meet a need http://www.rxresponse.org/Learn/PublishingImages/pharm_supply_chain.jpg

What is OM? Management of systems Inputs > Transformation > Outputs Transformation : processes that create value Plastic Forming Check Processing Manufacturing Transportation Dinning/ hotel Surgery

Why is OM important? Every business provides a transformation; and it must create value to the customer (and typically generate profits). The value obtained will be directly related to the planning, management, and execution of the transformation processes. Therefore, every organization needs effective OM systems (government, not for profit, small businesses, family owned, …)

Why is OM important? Locally relevant! Improve performance of the manufacturing plants/ distribution centers. Optimize logistic and transportation systems to minimize costs, reduce times at ports of entry/ border crossings, improve customer service. Attract technology ventures through demonstrated knowledge on quality and resource management.

Why is OM important? OM systems play a role in your daily life All the products and technology you use (toothbrush, toothpaste, car, ) Food consumed (coffee, sugar, …) Services encountered (bank, university, hospital…) Failure of OM systems can affect your daily life Poor planning/ systems can causes flight delays, not having the repair parts for your car, long lines for services, getting the wrong medicine, …

OM and other business areas Accounting: inventory management and costing of products Marketing: product design, product customization, coordination between sales and operations planning Finance: resource acquisition, outsourcing Human resources: capability planning, incentive plans Information systems: infrastructure for OM

Historical perspective of OM Before the industrial revolution, production based on “craftsman” approach Low volume production, often made to order, no standardization Industrial revolution > mass production A move to standardized ways of production: one best way to do something (Fedrick Taylor, “Father” of Operations management and industrial engineering”) Ford’s assembly lines

Historical perspective of OM Operations Research and the application of mathematical models to business problems Quality and JIT revolution of the 80’s: move away from inspections, quality at the source, reduce inventories

Historical perspective of OM Recent trends Design for manufacturability and life cycle costs Information technology systems allow collaboration / integration across the SC Focus on SCM as to reduce inventories, increase response time, maximize profits Focus on service operations including healthcare, retail, and financial

Models and OM Models are extensively used in OM to characterize and optimize systems OM systems are represented by this model: Customer Need (1) Feedback (4) Outputs (3) Transformation Process (2) Inputs (2)

Models and OM OM problems can be highly complex Thousands of products, resources, locations Multiple measures of performance (costs, responsiveness, quality) Models in the form of algorithms are used to support decision making (scheduling, resource planning, facility location, …) Algorithm - logical step-by-step procedure for solving problems

Study areas ahead Strategy and OM Production Control Project Management Inventory Management Process and Capacity Planning Supply Chain Management Service Systems Quality Management Manufacturing Systems Lean and Six Sigma