Business Essentials, 7th Edition Ebert/Griffin Managing operations Business Essentials, 7th Edition Ebert/Griffin Instructor Lecture PowerPoints PowerPoint Presentation prepared by Carol Vollmer Pope Alverno College © 2009 Pearson Education, Inc.

What Does Operations Mean Today? Operations (Production) All the activities involved in making products—goods and services—for customers Service Operations (Service Production) Provide intangible and tangible service products such as entertainment, transportation and education. What does operations mean today? Operations, or production, includes all the activities involved in making products, including goods and services, for customers. Service operations, or service production, provides intangible and tangible service products. Goods operations, or goods production, produces tangible products. Operations managers create utility for customers through production, inventory and quality control. Teaching Tips: Please join with another student to form a team. In your student teams, please come up with a list of three things for which an operations manager is responsible. Please give examples of these three things. The operations manager is responsible for production, inventory and quality control. Students can give examples of the types of processes these might entail. © 2009 Pearson Education, Inc.

Goods Operations (Goods Production) Produce tangible products Operations managers create utility for customers through production, inventory and quality control.

Creating Value Through Operations UTILITY The ability of a product to satisfy a want or need Form utility Time utility Place utility Operations (Production) Management The systematic direction and control of processes that transform resources into finished services and goods that create value for and provide benefits to customers Creating value through operations provides utility. Utility is the ability of a product to satisfy a want or a need. Types of utility include: Form utility. Time utility. Place utility. Operations, or production management, is the systematic direction and control of processes that transform resources into finished services and goods. The services or goods create value for and provide benefits to customers. Teaching Tips: In your student teams please choose a company that produces a product that you normally buy. Choose one of the three types of utility and prepare an example of how that product and your chosen utility satisfy the customer’s want or need. Answers will vary based on the company and product chosen. © 2009 Pearson Education, Inc.

Operations (or production) Managers: Managers responsible for production, inventory and quality control. Some operations managers work in factories; others in offices and stores.

Operations Processes Operations Process Goods Production Processes A set of methods and technologies used to produce a good or a service Goods Production Processes Make-to-order processes Make-to-stock processes Service Production Processes Extent of Customer Contact Low-contact systems: low customer involvement High-contact systems: high customer involvement Operations processes are a set of methods and technologies used to produce a good or a service. Goods production processes include: Made-to-order processes. Made-to-stock processes. Service production processes depend on the extent of customer contact required: Low customer contact systems mean low customer involvement. High customer contact systems mean high customer involvement. Teaching Tips: In your student teams, please choose either a company that produces a product or generates a service. Please discuss the production processes in relation to the main product or service your chosen company provides. Answers will vary based on company; however, they need to address the issues cited above for either a good or service production process. © 2009 Pearson Education, Inc.

ANALYTIC PROCESS Production process in which resources are broken down into components to create finished products. SYNTHETIC PROCESS A synthetic process combines raw materials to produce a finished product. Ex: GE shapes steel to produce a refrigerator.

Differences Between Service and Goods Manufacturing Operations Goods are produced, services are performed Service operations differ from manufacturing operations: Involve interacting with consumers. Are sometimes intangible and unstorable. Involve a customer’s presence in the process. Involve certain service quality considerations. There are differences between service and goods manufacturing operations: Goods are produced while services are performed. Service operations differ from manufacturing operations in that service operations: Involve interacting with consumers. Are sometimes intangible and unstorable. Involve a customer’s presence in the process. Involve certain service quality considerations. Teaching Tips: In your student teams, now choose a company that offers a service that you use or are familiar with. Please describe how the service operations in producing or delivering your chosen service are different than manufacturing operations based on the four differences we have just discussed. Answers will vary based on the service or company selected, but should directly address one of the four differences discussed above. © 2009 Pearson Education, Inc.

Both service and manufacturing operations transform raw materials into finished products. In service operations, however the raw materials, or inputs are not glass or steel. Rather , they are people who have either unsatisfied needs or possessions needing care or alteration. In service operations, then, finished products or outputs are people with needs met and possessions serviced.

There are four areas of service operations that often make them more complex than goods production, they are: Focus on process and outcome Focus on service characteristics Focus on customer-service link Focus on service quality considerations.