1. Introduction to Operations Management
What is Operations Management?
Why is OM important?
How OM relates to other business areas
Historical perspective of OM
Models and OM
Compiled by:
Alex J. Ruiz-Torres, Ph.D.
From information developed by many.

2. What is OM?
Design, execution, and control of a firm's operations that convert its resources into desired goods and services, and implement its business strategy
The business function responsible for the transformation processes that create the goods and services required by the organization’s customers. Chase, Aquilano & Jacobs (2009)

3. What is OM?
the maintenance, control, and improvement of organizational activities that are required to produce goods or services for consumers.
.. deals with the design and management of products, processes, services and supply chains. It considers the acquisition, development, and utilization of resources that firms need to deliver the goods and services their clients want.

4. What is OM?
OM decisions: strategic… tactical … and operational levels.
Strategic issues include determining the size and location of manufacturing plants, deciding the structure of service networks, and designing supply chains.
Tactical issues include plant layout and structure, project management methods, and equipment selection and replacement.
Operational issues include production scheduling and control, inventory management, quality control and inspection, traffic and materials handling, and equipment maintenance policies.

5. What is OM?
Management of a complex network of organizations that aim to meet a need

6. What is OM? Management of systems
Inputs > Transformation > Outputs
Transformation : processes that create value
Plastic Forming
Check Processing
Manufacturing
Transportation
Dinning/ hotel
Surgery

7. Why is OM important?
Every business provides a transformation; and it must create value to the customer (and typically generate profits).
The value obtained will be directly related to the planning, management, and execution of the transformation processes.
Therefore, every organization needs effective OM systems (government, not for profit, small businesses, family owned, …)

8. Why is OM important? Locally relevant!
Improve performance of the manufacturing plants/ distribution centers.
Optimize logistic and transportation systems to minimize costs, reduce times at ports of entry/ border crossings, improve customer service.
Attract technology ventures through demonstrated knowledge on quality and resource management.

9. Why is OM important? OM systems play a role in your daily life
All the products and technology you use (toothbrush, toothpaste, car, )
Food consumed (coffee, sugar, …)
Services encountered (bank, university, hospital…)
Failure of OM systems can affect your daily life
Poor planning/ systems can causes flight delays, not having the repair parts for your car, long lines for services, getting the wrong medicine, …

10. OM and other business areas
Accounting: inventory management and costing of products
Marketing: product design, product customization, coordination between sales and operations planning
Finance: resource acquisition, outsourcing
Human resources: capability planning, incentive plans
Information systems: infrastructure for OM

11. Historical perspective of OM
Before the industrial revolution, production based on “craftsman” approach
Low volume production, often made to order, no standardization
Industrial revolution > mass production
A move to standardized ways of production: one best way to do something (Fedrick Taylor, “Father” of Operations management and industrial engineering”)
Ford’s assembly lines

12. Historical perspective of OM
Operations Research and the application of mathematical models to business problems
Quality and JIT revolution of the 80’s: move away from inspections, quality at the source, reduce inventories

13. Historical perspective of OM
Recent trends
Design for manufacturability and life cycle costs
Information technology systems allow collaboration / integration across the SC
Focus on SCM as to reduce inventories, increase response time, maximize profits
Focus on service operations including healthcare, retail, and financial

14. Models and OM
Models are extensively used in OM to characterize and optimize systems
OM systems are represented by this model:
Customer
Need (1)
Feedback (4)
Outputs (3)
Transformation
Process (2)
Inputs (2)

15. Models and OM OM problems can be highly complex
Thousands of products, resources, locations
Multiple measures of performance (costs, responsiveness, quality)
Models in the form of algorithms are used to support decision making (scheduling, resource planning, facility location, …)
Algorithm - logical step-by-step procedure for solving problems

16. Study areas ahead Strategy and OM Production Control
Project Management
Inventory Management
Process and Capacity Planning
Supply Chain Management
Service Systems
Quality Management
Manufacturing Systems
Lean and Six Sigma