Introduction to Business Chapter 5 Managing Operations and Improving Quality

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 and tangible products, such as entertainment, transportation, education etc.

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.

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.

Input Output Operations Process: Operations Managers Plan , organize, schedule, control Input Land Capital Labour Information Material Human resource Output Transformation or Conversion Finished products Raw-material

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.

Analytical Process Input Output Petrol Crude Oil Diesel Gas Transformation or Conversion Crude Oil Diesel Gas

Synthetic Process Input Output fruits Fruit Juice sugar colors Transformation or Conversion Fruit Juice sugar colors preservatives

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:

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.

FOUR areas of service operations are : 1) Focus on process and outcome (manufacturing operations focus on outcome where as service operations focus on the transformation process as well as on its outcome) 2) Focus on service characteristics as: a) Intangibility b) Customization c) Un-storability 3) Focus on customer services link 4) Focus on service quality considerations (quality of work and quality of service taken in to consideration)