MBA 8452 Systems and Operations Management MBA 8452 Systems and Operations Management Introduction

2 Quality Management Statistical Process Control Inventory Control Just in Time Introduction to Operations Management/ Operations Strategy Project Management Planning for Production Process Analysis and Design Process Control and Improvement Waiting Line Analysis Services Manufacturing Process Analysis Job Design Aggregate Planning Capacity Management Supply Chain Management Layout/ Assembly Line Balancing Scheduling

3 Objectives: The Nature of Operations Be able to Define Operations Management Transformation Process Inputs/Outputs Transformation Activities Monitoring and Control Be able to describe the two Views of Organizations

4 What Is Operations Management? Operations Management (OM) concerns about planning and controlling of all activities and resources in an operations (or production) system that creates an organization’s goods and services OM is about how to efficiently and effectively create products and services that are valuable to customers

5 What Is An Operations/production System? Transformation processes that convert inputs into some desired outputs Transformation Process Transformation Process Outputs Inputs Resources

6 Operations/Production System People Plants Transformation Process Transformation Process Goods Services Materials Customers Parts Processes Planning & Control

7 What Is Operations System? Transformations Physical-- Locational-- Exchange-- Storage-- Physiological-- Informational--

8 What Is Operations System? Efficient and Effective Transformation Efficient Transformation Produce goods or provide services using the smallest resource inputs Effective Transformation Provide the right goods/services to create the most value for the company

9 What Is Operations System? Value-Added Transformation Value = The output should be of greater value than the sum of inputs Productivity (the ratio of outputs to inputs) should be high Operations is the fundamental means by which firms add value and increase productivity Good things to customer Cost of the product/service

10 What is Operations System? How do Firms Add Value? Greater productivity Lower costs and/or more products Lower prices for the customer Higher quality Better performance Greater durability, reliability, aesthetics,... Better timeliness Faster response and turnaround On-time delivery, meet promises Greater flexibility greater variety customization for customer needs / desires

11 What is Operations System? Examples of Operations Systems SystemInputs/ResourcesConversionOutput (desired) Hospital Patients MDs, Nurses Medical Supplies Equipment Health CareHealthy Individuals Restaurant Hungry Customers Food, Chef Servers Atmosphere Prepare Food Serve Food Satisfied Customers Automobile Plant Sheet Steel Engine Parts Tools, Equipment Workers Fabrication and Assembly of Cars High Quality Automobiles University High School Grads Teachers, Books Classroom Transferring of Knowledge and Skills Educated Individuals

12 What is Operations System? Supply Chain Systems SuppliersManufactures Warehouses & Distribution Centers Customers

13 Outputs from Operations Systems Services vs. Goods Goods Tangible Can be inventoried Low customer contact Tend to Make-to-Stock Services Intangible Cannot be inventoried High customer contact Tend to Make-to-Order

14 Services vs. Goods--Quiz “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?)

15 Look at McDonald’s Service or Manufacturing? The company certainly manufactures tangible products Why then would we consider McDonald’s a service business?

16 Most Operations Contain Both Goods and Service Components Commodities (grain) Automobiles Fast Food Banking Consulting Service Orientation Production Orientation Restaurant

17 Service Operations Front Office Customer Goods Services Back Office Examples: Restaurants, Banks, Airlines

18 Who Are “Operations” Managers? All mangers are Operations Managers! Managers transform inputs into outputs Example: Accounting Manager  Inputs: data, information, labor  Transformation: application of accounting principles and knowledge  Outputs: accounting reports, knowledge of performance All of us are Operations Managers!!

19 Why Study Operations Management? Learn how to best manage the operations process and create value-added outputs Learn systematic approach to solving operations problems Learn tools and techniques that can apply to other functions of business An essential component of business education Increase your career opportunities

20 Three Basic Functions of A Firm Marketing establishes demand Finance provides capital Operations creates goods and services Operations FinanceMarketing

21 Historical Landmarks of OM Scientific management (1911) Moving assembly line (1913) Hawthorne studies (1930s) Operations research (1940s-1960s) Quality revolution (1970s-1990s) Information technology (1980s-1990s) Globalization (1990s)

22 Some Important Issues of OM --more, better, cheaper, faster, anywhere, anytime Competing with time Competing with flexibility Competing with quality Competing with technology Competing with supply chain