Chapter 1 - Introduction to Operations Management by R. Dan Reid & Nada R. Sanders 2nd Edition © Wiley 2005 PowerPoint Presentation by R.B. Clough - UNH © Wiley 2005

Learning Objectives Define OM Role of OM in business Decisions that operations managers make OM differences between service and mfg. Major historical developments in OM Identify current trends in OM Define information flow between OM and other business functions © Wiley 2005

What is Operations Management? The business function responsible for planning, coordinating, and controlling the resources needed to produce a company’s products and services © Wiley 2005

Typical Organization Chart © Wiley 2005

OM’s Transformation Role © Wiley 2005

Why OM? “In business today, the emphasis is not so much on what you make, but on how you do business. Dell makes computers just like every other PC manufacturer.” Quote: KT CEO on CNBC 4/99 The resurgence of American business in the 1990’s capitalized on improved operations. © Wiley 2005

Differences between Manufacturers and Service Organizations Services: Intangible product Product cannot be inventoried High customer contact Short response time Labor intensive Manufacturers: Tangible product Product can be inventoried Low customer contact Longer response time Capital intensive © Wiley 2005

Similarities-Service/Manufacturers All use technology Both have quality, productivity, & response issues All must forecast demand Each will have capacity, layout, and location issues All have customers and suppliers All have scheduling and staffing issues © Wiley 2005

Trends in OM Service sector growing to 80% of non-farm jobs- See Figure 1-4 Global competitiveness Demands for higher quality Huge technology changes Time based competition Work force diversity © Wiley 2005

OM Decisions © Wiley 2005

Plan of Book-Chapters link to Types of OM Decisions © Wiley 2005

Historical Development of OM Industrial revolution Late 1700s Scientific management Early 1900’s Human relations movement 1930s to 1960s Management science Mid-1900s Computer age 1970s Just-in-Time Systems (JIT) 1980s Total quality management (TQM) 1980’s Reengineering 1990s Flexibility 1990s Time-Based Competition 1990s Supply chain Management 1990’s Global Competition 1990s Environmental Issues 1990s Electronic Commerce Late 1990s © Wiley 2005

Today’s OM Environment Customers demand better quality, faster deliveries, and lower costs Increased cross-functional decision making Recognized need to better manage information using ERP and CRM systems © Wiley 2005

Business Information Flow © Wiley 2005

Chapter 1 Highlights OM is function that manages the resources that add value Its role is to transform inputs into products or services Decisions are many and vary from daily tactical to strategic Key differences between mfg. and service companies are tangibility of product and degree of customer contact Historical milestones range from 1700s Industrial Revolution to the modern Electronic Commerce age OM must understand and implement major process changes like JIT, TQM, supply chain management, and environmental changes OM works closely with all other business functions © Wiley 2005

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