Key Topics Define Operations Management Give examples (Inputs – Processes – Outputs) Service operations vs. goods production Current Challenges in Operations Management Quality attributes for services and products Total quality management tools What is supply chain management

Operations Management Finance Marketing Information Systems Accounting Demand Forecasting Systems Product Design Distribution Inventory Management Investment Analysis Technology Management Business Strategy Cash Flow Quality Customer Satisfaction Facility Design Product Costing Networking Telecommunications Product Management Valuation Product Pricing Planning & Control Advertising Budgeting Sales Management JIT Market Research Risk Management The Big Picture! Process Choice Capacity Organizational Behavior Leadership Group Dynamics/Teams Organizational Effectiveness Motivation

Operations Management Production: creation of goods and services Operations management (OM) is defined as the design, operation, and improvement of the systems that create (transform inputs into outputs) and deliver the firm’s primary products and services Each part of the organization, not just operations, must design and operate processes and deal with quality, technology and staffing issues

Processes and Operations Inputs Workers Managers Equipment Facilities Materials Services Land Energy Processes and operations Internal and external customers Outputs Services Goods Information on performance

Small Group Activity Identify the inputs, processes, and outputs for: Saint Michael’s College Fletcher Allen Hospital Ben and Jerry’s Ice Cream

Millions of Workers Services Goods Production $4,000$3,000$2,000$1,000 (Billions) Services Goods Production Growth in the Goods and Services Sectors

Options for Increasing Contribution Marketing Option Finance & Accounting Option OM Option Current Sales Revenue : +50% Finance Costs:-50% Production Costs:-20% Sales $100,000 $150,000 $100,000 Cost of Goods Sold -80, , , ,000 Gross Margin 20,000 30,000 20,000 36,000 Finance Costs -6, ,000 -6,000 Net Margin 14,000 24,000 17,000 30,000 25% -3,500 -6,000 -4,250 -7,500 Contribution 10,500 18,000 12,750 22,500

Significant Events in Operations Management

Continuum of Characteristics More like a manufacturing organization More like a service organization Physical, durable product Output that can be inventoried Low customer contact Long response time Regional, national, or international markets Large facilities Capital intensive Quality easily measured Intangible, perishable product Output that cannot be inventoried High customer contact Short response time Local markets Small facilities Labor intensive Quality not easily measured

New Challenges in OM Global focus Just-in-time Supply chain partnering Rapid product development, alliances Mass customization Empowered employees, teams FromTo From To Local or national focus Batch shipments Low bid purchasing Lengthy product development Standard products Job specialization

Competitive Priorities Cost1.Low-cost operations Quality2.High-performance design 3.Consistent quality Time4.Fast, Reliable delivery 5.On-time delivery 6.New development speed Flexibility7.Customization 8.Volume flexibility Operating system capabilities and strengths required to serve customers and outperform competitors

Southwest Airline’s Low Cost Competitive Advantage

Small Group Activity What makes a quality good? What makes a quality service?

Operation Reliability & durability Conformance Serviceability Appearance Perceived quality Quality Dimensions of Quality for Goods

Under- standing Tangibles Reliability CommunicationCredibility Security Responsiveness Competence Courtesy Access © 1995 Corel Corp. Service Quality Attributes

Seven Tools for TQM

Supply-Chain Management Supply Chain Management is primarily concerned with the efficient integration of suppliers, factories, warehouses and stores so that merchandise is produced and distributed in the right quantities, to the right locations and at the right time, and so as to minimize total system cost subject to satisfying service requirements. SCM, is a strategic weapon that seeks to synchronize a firm’s functions and those of its suppliers to match the flow of materials, services, and information with customer demand

Integrated Supply Chain SuppliersPurchasing ProductionDistribution Customers Phase 1: Independent supply-chain entities SuppliersCustomers Internal supply chain Materials management department ProductionPurchasingDistribution Phase 2: Internal integration Integrated supply chain Customers Suppliers Internal supply chain Phase 3: Supply-chain integration