Chase: Chapter 1 Overview of Operations – Manufacturing and Service

3 Why Study Operations (Manufacturing & Services) Management? Operations Management Business Education Systematic Approach to Org. Processes Career Opportunities Cross-Functional Applications

4 Operations Management Definition Operations management may be defined as the design, operation, and improvement of the production system that creates the firm’s primary products and services.

What is a Production System? Defined A production system is defined as a user of resources to transform inputs into some desired (value-added) outputs.

5 Operations Decision Making Marketplace Corporate Strategy Operations Strategy Operations Management Marketing StrategyFinance Strategy People PlantsPartsProcesses Planning and Control Production System Materials & Customers Input Products & Services Output

6 OM Involves Managing Transformations InputOutput  People  Plants  Parts  Processes  Planning and Control Transformation Process (Value Adding) Transformation is enabled by The 5 Ps of OM:

7 Transformations  Physical--manufacturing  Locational--transportation  Exchange--retailing  Storage--warehousing  Physiological--health care  Informational--telecommunications

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11 Core “Factory Services” - that customers want  - these are also called critical performance objectives of operations function - firms Compete on these bases.  Quality and Quality Reliability (i.e. make it good)  Flexibility  Speed  Price (or production cost)

What is a Service and What is a Good?  “If you drop it on your foot, it won’t hurt you.” (Good or service?)  “Services never include goods and goods never include services.” (True or false?)  Emerging concept/model in Operations – “every organization is in the service business” i.e. the facilitating goods concept – if you make a tangible product, you then just facilitating some goods.

12 Value-Added Factory Services - these apply to both internal and external customers of the firm.  Information  Problem Solving  Sales Support  Field Support

13 Development of OM as a Field Scientific Management Moving Assembly Line Hawthorne Studies Operations Research Historical Underpinnings Computers (MRP) JIT/TQC & Automation Manufacturing Strategy Service Quality and Productivity TQM & Quality Certification Business Process Reengineering Electronic Enterprise Global Supply Chain Mgmt. OM's Emergence as a Field

14 Current Issues  Speeding up the time it takes to get new products into production.  Developing flexible production systems to enable mass customization of products and services.  Managing and integrating global production networks.  Developing and integrating new production technologies into existing production systems.

15 Current Issues  Achieving high quality quickly and keeping it up in the face of restructuring.  Supply chain management challenges: co-production of goods and services  Outsourcing and Globalization pressures – managing global supplier, production and distribution networks  Managing a diverse workforce.  Operations security concerns  Conforming to environmental constraints, ethical standards, and government regulations.

Fast-forward to the Future of Operations/Manufacturing  Extensive use of collaborative product development tools (virtual reality)  Intelligent logistics and process control – extensive use of RFID technologies in planning and control  More customization of the product development process