Introduction to Operations Management McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

You should be able to: 1. Define the term operations management 2. Identify the three major functional areas of organizations and describe how they interrelate 3. Identify similarities and differences between production and service operations 4. Describe the operations function and the nature of the operations manager’s job 5. Summarize the two major aspects of process management 6. Explain the key aspects of operations management decision making 7. Briefly describe the historical evolution of operations management 8. Characterize current trends in business that impact operations management 1-2 Student Slides

What is operations? The part of a business organization that is responsible for producing goods or services A production system How can we define operations management? The management of systems or processes that create goods and/or provide services 1-3 Student Slides

Goods are physical items that include raw materials, parts, subassemblies, and final products. Automobile Computer Oven Shampoo Services are activities that provide some combination of time, location, form or psychological value. Air travel Education Haircut Legal counsel 1-4 Student Slides

Suppliers’ suppliers Suppliers’ suppliers Direct suppliers Direct suppliers Producer Distributor Final Customers Final Customers Supply Chain – a sequence (or a network) of activities or organizations involved in producing and delivering a goods or service Student Slides 1-5

Inputs Material Land Labor Capital Information Inputs Material Land Labor Capital Information Outputs Goods Services Outputs Goods Services Transformation/ Conversion Process Transformation/ Conversion Process Control Measurement and Feedback Measurement and Feedback Measurement and Feedback Value-Added Feedback = measurements taken at various points in the transformation process Control = The comparison of feedback against previously established standards to determine if corrective action is needed. Student Slides 1-6

1. Degree of customer contact 2. Uniformity of input 3. Labor content of jobs 4. Uniformity of output 5. Measurement of productivity 6. Production and delivery 7. Quality assurance 8. Amount of inventory 9. Evaluation of work 10. Ability to patent design Student Slides 1-7

The operations function includes many interrelated activities such as: Forecasting Capacity planning Facilities and layout Scheduling Managing inventories Assuring quality Motivating employees Deciding where to locate facilities And more... The scope of operations management ranges across the organization. 1-8 Student Slides

The Operations Function consists of all activities directly related to producing goods or providing services. A primary function of the operations manager is to run (guide) the system by making decisions below. System Design Decisions System Operation Decisions Student Slides 1-9

Every enterprise has a production (0r operations) function. Every aspect of business affects or is affected by operations Many service jobs are closely related to operations Financial services Marketing services Accounting services Information services There is a significant amount of interaction and collaboration amongst the functional areas It provides an excellent vehicle for understanding the world in which we live Student Slides 1-10

Operations manager Supply chain manager Production analyst Schedule coordinator Production manager Industrial engineer Purchasing manager Inventory manager Quality manager Student Slides 1-11

Most operations decisions involve many alternatives that can have different impacts on quality, costs and/or profits Decisions at three levels: Strategic Tactical Operational Typical operations decisions include: What: What resources are needed, and in what amounts? When: When will each resource be needed? When should the work be scheduled? When should materials and other supplies be ordered? Where: Where will the work be done? How: How will he product or service be designed? How will the work be done? How will resources be allocated? Who: Who will do the work? 1-12 Student Slides

Industrial Revolution Scientific Management Human Relations Movement Decision Models and Management Science Influence of Japanese Manufacturers JIT Lean/6 sigma Continuous improvement Student Slides 1-13

Economic conditions Innovation Quality problems Risk management Competition in a global economy 1-14 Student Slides

In the past, organizations did little to manage the supply chain beyond their own operations and immediate suppliers which led to numerous problems: Oscillating inventory levels Inventory stock outs Late deliveries Quality problems Cost/competitiveness Q: how to manage a supply chain? Student Slides 1-15