Introduction to Operations Management Before I speak, I have something important to say… -Groucho Marx

Tasks ahead: Defining Operations Management Classifying Operations Finding Operations Managers

operations A set of activities dedicated to the transformation of inputs into outputs of greater value.

A MODEL OF ANY KIND OF OPERATION Inputs Resources People Materials Equipment Knowledge Infrastructure

A MODEL OF ANY KIND OF OPERATION InputsTransformation Resources People Materials Equipment Knowledge Infrastructure Operations Assembly Transportation Extraction Cultivation Fabrication

A MODEL OF ANY KIND OF OPERATION InputsTransformationOutputs Resources People Materials Equipment Knowledge Infrastructure Operations Assembly Transportation Extraction Cultivation Fabrication Outputs Goods and services Employment Pollution

value-added The difference between the total value of the outputs and the total value of the inputs associated with an operation.

VALUE CREATION THREE ELEMENTS OF VALUE CREATION

VALUE CREATION Productivity THREE ELEMENTS OF VALUE CREATION

productivity A measurement of value creation, calculated as a ratio of the values of output to input.

InputsTransformationOutputs Output Inputs Productivity

VALUE CREATION Productivity THREE ELEMENTS OF VALUE CREATION

Sustainability VALUE CREATION Productivity THREE ELEMENTS OF VALUE CREATION

sustainability The degree to which activity with immediate benefit does not incur greater costs in the long term.

Recycling symbol = Input / Output Model twisted into a loop.

green Assures sustainability. biomimicry The imitation of natural processes and systems.

Sustainability VALUE CREATION Productivity THREE ELEMENTS OF VALUE CREATION

Sustainability VALUE CREATION Responsibility Productivity THREE ELEMENTS OF VALUE CREATION

responsibility An obligation to perform. ethics Principles governing conduct, delineating good from bad.

Inputs Outputs Transformation CLASSIFYING AN OPERATION

Tangibility Good or service? Inputs Outputs Transformation CLASSIFYING AN OPERATION

tangibility The degree of perceivable, physical essence of a product.

goods Tangible products.

goods Tangible products. services Intangible products.

Finished good Top assembly Screen assembly Bottom assembly Top casing Keypad Flat screen Backlight frame CPU card Power supply Bottom casing A Bill of Materials for Manufacture of a Tangible Good

Physical Therapy as a pure service.

Goods operations Service operations Tangible products Intangible products COMPARING GOODS AND SERVICES (Generalities…)

Goods operations Service operations Tangible products Intangible products Less customer contact More customer contact COMPARING GOODS AND SERVICES (Generalities…)

Goods operations Service operations Tangible products Intangible products Less customer contact More customer contact More reliance on specialized equipment Less reliance on specialized equipment COMPARING GOODS AND SERVICES (Generalities…)

Goods operations Service operations Tangible products Intangible products More reliance on specialized equipment Less reliance on skilled labor Less reliance on specialized equipment More reliance on skilled labor COMPARING GOODS AND SERVICES (Generalities…) Less customer contact More customer contact

Tangibility Good or service? Inputs Outputs Transformation CLASSIFYING AN OPERATION

Tangibility Good or service? Inputs Outputs Transformation Supply Chains One organization or many? CLASSIFYING AN OPERATION

supply chain A system consisting of all organizations that play some role in supplying a particular product to a customer.

CUSTOMER Retailer Distributor Manufacturer Casing supplier Keypad supplier Card and memory supplier Flat Screen supplier Suppliers supplier Suppliers supplier Suppliers supplier Suppliers supplier Suppliers supplier Suppliers supplier Suppliers supplier A SUPPLY CHAIN SYSTEM

Goods moving through global supply chains.

Tangibility Good or service? Inputs Outputs Transformation Supply Chains One organization or many? CLASSIFYING AN OPERATION

Tangibility Good or service? Inputs Outputs Transformation Supply Chains One organization or many? Governance Commercial or nonprofit? Uncertainty and Control CLASSIFYING AN OPERATION

VARYING LEVELS OF UNCERTAINTY AND CONTROL IN OPERATIONS More controlLess control Less uncertaintyMore uncertainty Production And Service Management Project Management Event Management Incident Management

scientific management A methodology stressing the use of data collection and analysis to redesign processes and improve efficiency.

VARYING LEVELS OF UNCERTAINTY AND CONTROL IN OPERATIONS More controlLess control Less uncertaintyMore uncertainty Production And Service Management Project Management Event Management Incident Management

VARYING LEVELS OF UNCERTAINTY AND CONTROL IN OPERATIONS More controlLess control Less uncertaintyMore uncertainty Production And Service Management Project Management

project A unique collection of activities creating a particular outcome.

VARYING LEVELS OF UNCERTAINTY AND CONTROL IN OPERATIONS More controlLess control Less uncertaintyMore uncertainty Production And Service Management Project Management

VARYING LEVELS OF UNCERTAINTY AND CONTROL IN OPERATIONS More controlLess control Less uncertaintyMore uncertainty Production And Service Management Project Management Event Management Incident Management

incident An unscheduled event requiring immediate resolution.

InputsTransformationOutputs Regional Disaster Relief Services (RDRS) provides assistance to the victims of natural disasters. RDRS relies on fund-raising to support its permanent network of 15 warehouses, housing its inventory of tents, trailers, tools, portable lighting, water-filtration equipment, and electrical generators. Upon news of a disaster, RDRS activates both its staff and volunteers to deploy and provide assistance in the field until permanent services are restored to the citizens of the disaster area. What kind of operation is RDRS? Scenario 1a Classifying Operations

InputsTransformationOutputs Scenario 1a Classifying Operations Regional Disaster Relief Services (RDRS) provides assistance to the victims of natural disasters. RDRS relies on fund-raising to support its permanent network of 15 warehouses, housing its inventory of tents, trailers, tools, portable lighting, water-filtration equipment, and electrical generators. Upon news of a disaster, RDRS activates both its staff and volunteers to deploy and provide assistance in the field until permanent services are restored to the citizens of the disaster area. What kind of operation is RDRS? INCIDENT MANAGEMENT NON PROFIT

InputsTransformationOutputs Scenario 1a Classifying Operations

THE HIERARCHY OF DECISION-MAKING

Strategy Long-term planning Identifying goals

strategy A methodology and resulting plan that identifies the long-term goals of an organization.

THE HIERARCHY OF DECISION-MAKING Strategy Long-term planning Identifying goals

THE HIERARCHY OF DECISION-MAKING Strategy Tactics Long-term planning Medium-term planning Identifying goals Developing solutions

tactics Means to pursue strategic goals with available resources.

THE HIERARCHY OF DECISION-MAKING Strategy Tactics Long-term planning Medium-term planning Identifying goals Developing solutions

THE HIERARCHY OF DECISION-MAKING Strategy Tactics Implementation Long-term planning Medium-term planning Short-term planning Identifying goals Developing solutions Taking action

InputsTransformationOutputs Regional Disaster Relief Services (RDRS) relies on other agencies for air transport, but recently proposed the purchase of six helicopters. RDRS managers were opposed, arguing that ground operations was the core competency of RDRS and it was more important to resolve disputes over the proper allocation of all-terrain vehicles (ATVs), than to acquire aviation at great expense. Several warehouses located close to wilderness areas have no idle ATVs, keeping their ATVs deployed throughout the wildfire season. Managers there want idle ATVs from urban-area RDRS warehouses to be transferred to their warehouses. Urban managers point out that the wilderness area managers leave ATVs in remote areas, speculating that an additional emergency might occur after the initial rescue or evacuation is completed. The urban warehouse managers suggest that wilderness area should put more effort into promptly retrieving the ATVs already assigned to them. Scenario 1b Classifying Operational Decisions

InputsTransformationOutputs How many different decisions have been discussed? At what level in the hierarchy of decision making are these decisions? Scenario 1b Classifying Operational Decisions

InputsTransformationOutputs At what level in the hierarchy of decision making are these decisions? Scenario 1b Classifying Operational Decisions helicopter purchase

InputsTransformationOutputs At what level in the hierarchy of decision making are these decisions? Scenario 1b Classifying Operational Decisions helicopter purchase ATV Allocation

InputsTransformationOutputs At what level in the hierarchy of decision making are these decisions? Scenario 1b Classifying Operational Decisions helicopter purchase ATV Allocation ATV Retrieval Policy

Operations Finance Marketing RELATIVE MIX OF THE THREE BUSINESS FUNCTIONS FOR A REGIONAL HOSPITAL

Operations RELATIVE MIX OF THE THREE BUSINESS FUNCTIONS FOR A SINGLE JEWELRY STORE Finance Marketing

Operations Finance Marketing RELATIVE MIX OF THE THREE BUSINESS FUNCTIONS FOR A RESORT HOTEL