Operations Management 14 Chapter Copyright ©2011 Pearson Education

14-2 Learning Outcomes Define operations management and explain its role Define the nature and purpose of value chain management Describe how value chain management is done Discuss contemporary issues in value chain management Copyright ©2011 Pearson Education

14-3 What is Operations Management? Operations Management – the study and application of the transformation process Transformation Process – The process that converts resources into finished goods and services Copyright ©2011 Pearson Education

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14-5 How do Service and Manufacturing Firms Differ? Manufacturing Organizations – Organizations that produce physical goods Service Organizations – Organizations that produce nonphysical products in the form of services Copyright ©2011 Pearson Education

14-6 What is Value? Value – The performance characteristics, features, attributes, and other aspects of goods and services, for which customers are willing to give up resources Copyright ©2011 Pearson Education

14-7 What is Value Chain Management? Value Chain – The entire series of work activities that add value at each step from raw materials to finished product Value Chain Management – The process of managing the sequence of activities and information along the entire value chain Copyright ©2011 Pearson Education

14-8 How Is Value Chain Management Done? Business Model – A strategic design for how a company intends to profit from its broad array of strategies, processes, and activities Copyright ©2011 Pearson Education

14-9 Requirements for Successful Value Chain Management Coordination and Collaboration – All partners in the chain identify things customers value and integrate their efforts comprehensively and seamlessly Technology Investment – key tools include a supporting enterprise resource planning (ERP) software system that links all of an organization’s activities with trading network partners Copyright ©2011 Pearson Education

14-10 Requirements for Successful Value Chain Management (cont.) Organizational Processes – Improving forecasting, collaborating with partners, and evaluating performance of activities in the chain Leadership – successful value chain management isn’t possible without strong and committed leadership Copyright ©2011 Pearson Education

14-11 Requirements for Successful Value Chain Management (cont.) Employees and Human Resources – flexible approaches to job design, an effective hiring process, and ongoing training Organizational Culture and Attitudes – attitudes include sharing, collaborating, openness, flexibility, mutual respect, and trust Copyright ©2011 Pearson Education

14-12 What Are Organizational Processes? Organizational Processes – The way organizational work is done – Managers must critically evaluate all organizational processes from beginning to end by looking at core competencies—the organization’s unique skills, capabilities, and resources—to determine where value is being added Copyright ©2011 Pearson Education

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14-15 How Do Managers Control Quality? ISO 9000 – A series of international quality standards that set uniform guidelines for processes to ensure that products conform to customer requirements Six Sigma – A quality standard that establishes a goal of no more than 3.4 defects per million units or procedures Copyright ©2011 Pearson Education

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14-17 How Are Projects Measured? Project – A one-time-only set of activities with a definite beginning and ending point Project Management – The task of getting project activities done on time, within budget, and according to specifications Copyright ©2011 Pearson Education

14-18 What Are Some Popular Project Scheduling Tools? Gantt chart – A planning tool that shows in bar graph form when tasks are supposed to be done and compares that with the actual progress on each Load Chart – A modified version of a Gantt chart that lists either whole departments or specific resources Copyright ©2011 Pearson Education

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14-21 What is a PERT network analysis? PERT Network Analysis – A flowchart-like diagram that depicts the sequence of activities needed to complete a project and the time or costs associated with each activity Copyright ©2011 Pearson Education

14-22 Elements of PERT Analysis Events – End points that represent the completion of major activities Activities – Actions that take place Critical Path – The longest or most time-consuming sequence of events and activities required to complete a project in the shortest amount of time Copyright ©2011 Pearson Education

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