Introduction to Business Chapter 5 Managing Operations and Improving Quality Dr. Mustafa Malik

Operations or Production What is Operations or Production All the activities involved in making products (goods and services) for customers. Operations or Production Goods Operations Activities producing tangible products, radios, buses, mobile phones, computers etc. Service Operations Activities producing intangible products, such as entertainment, transportation, education etc. Dr. Mustafa Malik

Production helps create and provide utility What is utility? A product’s ability to satisfy a human need or want. There are four kinds of utility, that production helps to provide: Time utility: it makes products available when consumers want them. Place utility: it makes products available where they are convenient for the consumers. Ownership / possession utility: by making a product available for consumers to own and use. Form utility: by turning raw material into finished goods. Dr. Mustafa Malik

Operation (or production) management: The systematic direction and control of processes that transform resources into finished products (services and goods) that create value and provide benefits to customers. Operation (or production) manager: Managers responsible for production, inventory and quality control. Dr. Mustafa Malik

Input Output Operations Process: Operations Managers Plan , organize, schedule, control Input Land Capital Labour information material Output Transformation or Conversion Finished products Raw-material Dr. Mustafa Malik

Goods manufacturing process can be of two types: Operations Process: An operations process is a set of methods and technologies used to produce a product (goods or services). Goods manufacturing process can be of two types: Analytical process – production process in which resources (input) are broken down into components to create finished products. Synthetic process: production process in which resources (input) are combined to create finished products. Dr. Mustafa Malik

Analytical Process Input Output Petrol Crude Oil Diesel Gas Transformation or Conversion Crude Oil Diesel Gas Dr. Mustafa Malik

Synthetic Process Input Output fruits Fruit Juice sugar colors Transformation or Conversion Fruit Juice sugar colors preservatives Dr. Mustafa Malik

Services Process: Some services operation processes involve the presence of consumer as part of production process. Whether the consumer needs to be present or not while producing a service, we may classify services process on the basis of extent of customer contact as: Dr. Mustafa Malik

High contact service process / system: Those services processes / systems in which customer is part of the process of service production and delivery. b) Low Contact Services process / system: Those services processes / systems in which customer need not to be part of the process of service production and delivery.

Goods are produced, services are performed Difference between services and manufacturing operations: Goods are produced, services are performed Service operations differ from manufacturing operations in that service operations: Involve interacting with consumers. Are sometimes intangible and un-storable. Involve a customer’s presence in the process. Involve certain service quality considerations.

Therefore, service operations need to: Focus on performance Focus on process and outcome Focus on service characteristics as: Intangibility Customization Un-storability d) Focus on customer services service link