To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Chapter 1 Introduction to Operations and Competitiveness To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved.

Operations as a transformation process Operations as a transformation process Operations as a basic function Operations as a basic function Operations as the technical core Operations as the technical core The Operations Function

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Operations as a Transformation Process INPUT Material Machines Labor Management Capital

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Operations as a Transformation Process INPUT Material Machines Labor Management Capital TRANSFORMATION PROCESS

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Operations as a Transformation Process INPUT Material Machines Labor Management Capital OUTPUT Goods Services TRANSFORMATION PROCESS

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Operations as a Transformation Process Feedback INPUT Material Machines Labor Management Capital OUTPUT Goods Services TRANSFORMATION PROCESS

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Transformation Processes Physical(manufacturing) Physical(manufacturing) Locational(transportation/ warehouse) Locational(transportation/ warehouse) Exchange(retail) Exchange(retail) Physiological(health care) Physiological(health care) Psychological(entertainment) Psychological(entertainment) Informational(communications) Informational(communications)

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Operations as the Technical Core

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Operations as the Technical Core Operations Finance/Accounting Human Resources Marketing Suppliers Production and Inventory data Capital budgeting requests Capacity expansion and Technology plans Budgets Cost analysis Capital investments Stockholder requirements Orders for materials Production and delivery Schedules Quality Requirements Design/ Performance specs Material availability Quality data Delivery schedules Designs Product/Service Availability Lead-time estimates Status of order Delivery schedules Sales forecasts Customer orders Customer feedback Promotions Personnel needs Skill sets Performance evaluations Job design/work measurement Hiring/firing Training Legal requirements Union contract negotiations

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Historical Events in OM Industrial Revolution Industrial Revolution Scientific Management Scientific Management Human Relations Human Relations Management Science Management Science Quality Revolution Quality Revolution Globalization Globalization Information Age/Internet Revolution Information Age/Internet Revolution

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Historical Events in OM Industrial Revolution Steam engine1769James Watt Division of labor1776Adam Smith Interchangeable parts1790Eli Whitney Scientific Management Principles1911Frederick W. Taylor Time and motion studies1911Frank & Lillian Gilbreth Activity scheduling chart1912Henry Gant Moving assembly line1913Henry Ford

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Historical Events in OM Human Relations Hawthorne studies1930Elton Mayo Motivation theories1940sAbraham Maslow 1950sFrederick Hertzberg 1960sDouglas McGregor Management Science Linear programming1947George Dantzig Digital computer1951Remington Rand Simulation, PERT/CPM, 1950sOperations research Waiting line theory groups MRP1960sJoseph Orlicky, IBM

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Historical Events in OM Quality Revolution JIT1970sTaiichi Ohno, Toyota TQM1980sW. Edwards Deming, Joseph Juran, et. al. Strategy and operationsSkinner, Hayes Reengineering1990sHammer, Champy World Trade Organization1990sNumerous countries and companies Globalization European Union and1970sIBM and others other trade agreements EDI, EFT, CIM1980s

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Historical Events in OM Information Age/ Internet Revolution Internet, WWW, ERP1990sARPANET, Tim Supply chainBerners-Lee, SAP, i2 management,Technologies, ORACLE, E-commercePeopleSoft, Amazon, Yahoo, eBay, and others

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Categories of E-Commerce

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Categories of E-Commerce Business ConsumerBusinessConsumer B2B Commerceone.com B2C Amazon.com C2B Priceline.com C2C eBay.com

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. A New Value Chain Manufacturer Wholesaler/ distributor Wholesaler/ distributor Retailer Consumer (a) Traditional Value Chain

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. A New Value Chain Manufacturer Wholesaler/ distributor Wholesaler/ distributor Retailer Consumer Manufacturer Wholesaler/ distributor Wholesaler/ distributor Retailer Consumer (a) Traditional Value Chain (b) Intermediaries Eliminated (Deintermediation)

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. A New Value Chain Manufacturer Wholesaler/ distributor Wholesaler/ distributor Retailer Consumer Infomediary Manufacturer E-Retailer E-Retailer Aggregator Portal Portal Consumer Manufacturer Wholesaler/ distributor Wholesaler/ distributor Retailer Consumer (a) Traditional Value Chain (b) Intermediaries Eliminated (Deintermediation) (b) New Intermediaries Introduced (Reintermediation)

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. An Integrated Value Chain

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. An Integrated Value Chain ManufacturerSupplierCustomer Flow of information (customer order)

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. An Integrated Value Chain ManufacturerSupplierCustomer Flow of information (customer order) Flow of product (order fulfillment)

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. The Growth of E-Commerce – – – – 0 0 – ||||| Year Trillions of Dollars

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. The Growth of E-Commerce B2BB2C – – – – 0 0 – ||||| Year Trillions of Dollars

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Types of B2B Transactions BuyerSeller Buyers Sellers Buyer Sellers BuyersSellers (a) Electronic Storefront(b) Seller’s Auction (c) Buyer’s Auction(d) Exchange or E-Marketplace

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. E-Business Promotes: Better customer relations Better customer relations More efficient processes More efficient processes Lower cost of materials Lower cost of materials Information technology synergy Information technology synergy Better and faster decision making Better and faster decision making

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. E-Business Promotes: New forms of organizations New forms of organizations Expanded supply chain Expanded supply chain Higher customer expectations Higher customer expectations New ways of doing business New ways of doing business Globalization Globalization

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. An International Comparison of Hourly Wage Rates |||||| $ 35 $ 35 – $ 30 $ 30 – $ 25 $ 25 – $ 20 $ 20 – $ 15 $ 15 – $ 10 $ 10 – $ 5 $ 5 – $ 0 $ 0 –

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. An International Comparison of Hourly Wage Rates |||||| $ 35 $ 35 – $ 30 $ 30 – $ 25 $ 25 – $ 20 $ 20 – $ 15 $ 15 – $ 10 $ 10 – $ 5 $ 5 – $ 0 $ 0 –Germany Japan United States EU Asian NIEs Mexico

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Multinational Corporations CountryForeign Sales Companyof Originas % of Total NestléSwitzerland98.2 NokiaFinland97.6 PhilipsNetherlands94.0 BayerGermany89.8 ABBGermany87.2 SAPGermany80.0 Exxon MobilUnited States79.6 Royal Dutch/ShellNetherlands73.3 IBMUnited States62.7 McDonald’sUnited States61.5

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Competitiveness The degree to which a nation can produce goods and services that meet the test of international markets while simultaneously maintaining or expanding the real incomes of its citizens.

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Productivity Productivity = OutputInput

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Productivity Become more efficient Become more efficient Downsize Downsize Expand Expand Retrench Retrench Achieve breakthroughs Achieve breakthroughs Productivity = OutputInput Productivity improves when firms:

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Productivity in the ‘90s |||||||||||| ‘90‘91‘92‘93‘94‘95‘96‘97‘98‘99‘ – 7 7 – 6 6 – 5 5 – 4 4 – 3 3 – 2 2 – 1 1 – 0 0 – – – –

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Productivity in the ‘90s |||||||||||| ‘90‘91‘92‘93‘94‘95‘96‘97‘98‘99‘ – 7 7 – 6 6 – 5 5 – 4 4 – 3 3 – 2 2 – 1 1 – 0 0 – – – – United States Germany Japan

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Measures of Competitiveness Productivity Productivity GDP (Gross domestic product) growth GDP (Gross domestic product) growth Market capitalization Market capitalization Technological infrastructure Technological infrastructure Quality of education Quality of education Efficiency of government Efficiency of government

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Competitiveness of Selected Countries USSingaporeFinlandIrelandGermanyUKJapanMexicoRussia

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Competitiveness of Selected Countries USSingaporeFinlandIrelandGermanyUKJapanMexicoRussia

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Barriers to Entry Economies of scale Economies of scale Capital investment Capital investment Access to supply and distribution channels Access to supply and distribution channels Learning curves Learning curves

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Competition Within Industries Increases When Firms are relatively equal in size and resources Firms are relatively equal in size and resources Products and services are standardized Products and services are standardized Industry growth is slow or exponential Industry growth is slow or exponential

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Primary Topics in Operations Management Strategy Strategy Products and services Products and services Processes and technologies Processes and technologies Facilities Facilities Project management Project management Managing the supply chain Managing the supply chain Forecasting demand for products and services Forecasting demand for products and services Production planning and scheduling Production planning and scheduling Ensuring quality Ensuring quality

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Purpose of the Text To gain an appreciation of the strategic importance of operations and how operations relates to other business functions To gain an appreciation of the strategic importance of operations and how operations relates to other business functions To develop a working knowledge of the concepts and methods related to designing and managing operations To develop a working knowledge of the concepts and methods related to designing and managing operations To develop a skill set for organizing activities as a part of a process To develop a skill set for organizing activities as a part of a process

To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Organization of the Text The StrategicDesigning the Importance ofOperating Managing the Ensuring OperationsSystemSupply ChainQuality 1.Introduction to Operations and Competitiveness 2.Operations Strategy 3.Products and Services 4.Processes and Technologies 5.Facilities 6.Project Management 7.Supply Chain Management 8.Forecasting 9.Capacity and Aggregate Planning 10.Inventory Management 11.Just-in-Time and Lean Production 12.Enterprise Resource Planning 13.Scheduling 14.Quality Management 15.Statistical Process Control 16.Waiting Line Models for Service Improvement 17.Human Resources in Operations Management