1. Overview: Introduction to the Field
Chapter 1
Overview: Introduction to the Field

2. OBJECTIVES Operations Management Why Study Operations Management?
Transformation Processes Defined
Operations as a Service
The Importance of Operations Mgt.
Historical Development of OM
Current Issues in OM 2

3. What is Operations Management? Defined
Operations management (OM) is defined as the design, operation, and improvement of the systems that create and deliver the firm’s primary products & services. This involves the transformation of inputs to outputs and is the core of any business.

4. Why Study Operations Management?
OM is related to all areas of any business
There is no business without Operations
Education on how to produce goods or services
Most costs are incurred in creating goods or services
Global nature of operations and competition
Impetus of new technologies

5. Why Study Operations Management?
Systematic Approach
to Org. Processes
Operations
Management
Business Education
Career Opportunities
Cross-Functional
Applications

6. What is a Transformation Process? Defined
A transformation process is defined as a user of resources to transform inputs into some desired outputs

7. OM Involves Managing Transformations
Process
(Value Adding)
Input
Output
People
Plants
Parts
Processes
Planning and Control
Transformation is enabled
By the 5 P’s of OM

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

9. 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?) 8

10. What About McDonald’s? Service or manufacturing?
The company certainly manufactures tangible products
Why then would we consider McDonald’s a service business?

11. OM in the Organization Chart
Finance
Marketing
Operations
Plant Manager
Operations
Manager
Director
Manufacturing, Production control, Quality assurance, Engineering, Purchasing, Maintenance, etc 8

12. Core Services
Defined
Core services are basic things that customers want from products they purchase 11

13. Core Services Performance Objectives
Quality
Flexibility
Speed
Operations
Management
Price (or cost
Reduction)

14. Value-Added Services Defined
Value-added services differentiate the organization from competitors and build relationships that bind customers to the firm in a positive way 12

15. Value-Added Service Categories
Problem Solving
Help internal/external groups
solve problems
Information
Sales Support
Operations
Management
Performance data on products
Use data for improvements
Enhance sales/marketing
through equipment demos
Field Support
Replace defective parts quickly

16. The Importance of Operations Management
Synergies must exist with other functional areas of the organization
Operations account for 60-80% of the direct expense that burden a firm’s profit

17. Historical Development of OM
JIT and TQC
Manufacturing Strategy Paradigm
Service Quality and Productivity
Total Quality Management and Quality Certification 14

18. Historical Development of OM (cont’d)
Business Process Reengineering
Supply Chain Management
Electronic Commerce 15

19. Current Issues in OM
Coordinating the relationship between mutually supportive but separate organizations
Optimizing global supplier, production, and distribution networks
Increased co-operation of goods and services 14

20. Current Issues in OM (cont’d)
Managing the customer’s experience during the service encounter
Raising the awareness of operations as a significant competitive weapon 15