Information Management and Operations Overview

For Next Week No Class on Monday – MLK Holiday For Wednesday, 1/23 Read Pages 1-27 of Business Intelligence: Making Better Decisions Pages 43-52 of Casino Operations Management Pages 1-14 of Harrah’s Entertainment Inc. – Available on CULearn in the Additional Readings Folder First CULearn On-Line Quiz will cover these readings – Open 7:30 – 11:30 AM

Operations is all about adding value, and creating wealth.

In order to know how much Information In order to know how much wealth you are creating (or losing), you must collect and organize relevant information about your operations.

Operations – 80-90% Hidden

Transformation Definition Processes Goods Services Labor Capital Materials INPUTS OUTPUTS The design, control, and management of processes that transform inputs into finished goods and services for sale to customers Data Usable Information Feedback

Transformation Definition Managers transform inputs into outputs Example: Accounting Manager Inputs: data, materials, labor Transformation: application of accounting principles and knowledge Outputs: accounting reports, knowledge of performance, ... All managers have an “operation” to run Therefore: All managers are Operations Managers!

Continuum of Characteristics Mining (coal) Automobiles Fast Food Banking Consulting Service Orientation Manufacturing Regardless of orientation, information is required to understand the operation’s performance.

Economic Definition Operations is responsible for improving the “production function” of the firm. Information is required to understand how well the organization is performing.

Bicycle Manufacturing Schwinn ’80s Huffy Capital Used (equipment) per unit produced Serotta Trek Labor Used per unit produced

Bicycle Manufacturing Desirable Undesirable! Capital Used (equipment) per unit produced Efficient Frontier Desirable Desirable Labor Used per unit produced

Added-Value Definition Business Environment The Firm Value Chain Suppliers Customers Value is the customer’s subjective evaluation, adjusted for cost, of how well a good or service meets or exceeds expectations. Note that: Value is defined in terms of a singular customer It is a subjective evaluation The evaluation is compared with an expectation Expectations can be influenced and do change Competitors adapted from Porter, Competitive Advantage, Free Press, 1985

Added-Value Definition Inputs: Materials Labor Demand Competition Ideas Technology Outputs: Goods + Services = “Products” How? Marketing and Operations “touch the product” Marketing Operations

Added-Value Definition Operations is the fundamental means by which firms…Add Value Information is the way to measure this value.

How do Firms Add Value? Greater Flexibility Greater Productivity Greater variety Customization for customer needs / desires Useful Innovation Features, technology Better performance New capabilities Often unrecognized Greater Productivity Lower costs and expenses Lower prices for the customer Higher Quality Better performance Greater durability, reliability, aesthetics, ... Better Timeliness Faster response and turnaround On-time delivery, meet promises

Key Points Operations is all about adding value for customers. Without value, there is no business.

Key Points Usable information must be captured and organized in a way that managers can understand how much value has been added.

Key Points Every manager is an “operations” manager -- responsible for a transformation process; measured in operating terms (productivity, quality, …)