1. Fundamentals of Operations Management BUS 3 – 140 Mr. Jess Marino Spring, 2008

2. Page 2 2 Agenda –Introduction –Green Sheet review and other administrative items –Additional comments on the course –Initial Lecture

3. Introduction

4. Page 4 4 Marino Background Academics Supply Chain Experience –Graduate in Production and Operations Management –Product of CSU system (San Diego State) –Developed and presented several courses as a Management Consultant –Over 25 years as a practitioner at all levels of responsibility  Leadership in small and large organizations  Many different hourly and professional jobs  Over eight years as a Management Consultant –Certified in Production and Operations Management by the Association for Operations Management (APICS) –Exposure to many industries and organizations –Have done business in 13 countries throughout the world

5. Page 5 5 Positions Held Machine Operator Production Expediter Mail Room Clerk Warehouse Clerk Production Supervisor Buyer Production Controller Material Controller Stockroom Manager Production Control Manager Director of Materials Executive Director of Fulfillment Director of Supply Chain Management Director of Operations

6. Page 6 6 Have conducted Business in 13 Countries, Worldwide UNITED STATES CANADA MEXICO ENGLAND SCOTLAND FRANCE HOLLAND HONG KONG CHINA TAIWAN SINGAPORE MALAYSIA THAILAND

7. Green Sheet Review

8. Page 8 8 Student Information Sheet NAME MAJOR (and Emphasis) CURRENT JOB (Company Optional) PREVIOUS SUPPLY CHAIN JOBS / EXPERIENCE OTHER

9. Page 9 9 Course Overview and Objectives –Understanding how the Operations function interrelates with other functional organizations in a business –Understanding how an organization uses its resources, processes, data, and technologies to create goods and provide services to customers –Understanding how operational effectiveness can be a critical success factor in determining an organization’s Revenue, Profitability, and Shareholder return –Understanding the managerial responsibility for Operations, even when production is outsourced, or done in regions far from corporate headquarters

10. Page 10 10 Student Learning Objectives for the Course –Understand how Operations is relevant to all functions of a business, and all majors within a Business education –Understand Operations Management and how it fits within the overall organization strategy, objectives, and competitiveness –Develop an interest in Operations and apply that understanding, whether in a manufacturing or service career

11. Course Introduction

12. Page 12 12 Operations is a Key Element of a Supply Chain Revenue Utilization of Assets (People, Plant, Equip) Cash Inventory BALANCING keeping Customers completely satisfied and Resources optimally utilized ……. against spending the least amount of Cash and carrying the least amount of Inventory

13. Page 13 13 Scope of this Course Customer Demand Production Scheduling Materials Mgmt Production Shipping Customer Service Forecasting Aggregate Planning Strategic Capacity Planning Demand & Supply Matching Scheduling Just In Time (JIT) Project Mgmt Inventory Mgmt MRP ERP Process Layout Work System Design Lean Operations Quality

14. Page 14 14 Highest Level Operations Management Process (Fig 1.2) There is a CONVERSION that takes Information, Intelligence, Resources, and Activities and turns them into something VALUABLE to Customers and / or Society Inputs Process (Transformation) Outputs Control Feedback * From Stevenson, Operations Management, Ninth Edition, McGraw Hill Irwin

15. Page 15 15 Inputs / Process / Outputs (Table 1.1) * From Stevenson, Operations Management, Ninth Edition, McGraw Hill Irwin

16. Page 16 16 Operations are managed for both Production and Services Inputs Process Outputs Raw vegetables Metal sheets Water Energy Labor Building Equipment Cleaning Making cans Cutting Cooking Packing Labeling Canned Vegetables PRODUCTION Inputs Process Outputs Doctors, nurses Hospital Medical supplies Equipment Laboratories Examination Surgery Monitoring Medication Therapy SERVICE Treated Patients Food processing Plant Hospital Result is TANGIBLE OUTPUT Result implies an ACT

17. Page 17 17 Differences between Goods and Service (Book Table 1.3) * From Stevenson, Operations Management, Ninth Edition, McGraw Hill Irwin

18. Page 18 18 Goods and Services continuum (Fig 1.3) * From Stevenson, Operations Management, Ninth Edition, McGraw Hill Irwin

19. Page 19 19 Combination of Production and Service * Adapted from Stevenson, Operations Management, Ninth Edition, McGraw Hill Irwin Farmer produces & harvests wheat ($0.15) Wheat shipped to mill ($0.08) Mill produces flour ($0.15) Flour shipped to Baker ($0.08) Baker produces bread ($0.54) Bread shipped to Grocery Store ($0.08) Grocery store displays and sells bread ($0.21) $0.84 of Production $0.45 of Services $1.29 of total Cost and Profit throughout the Supply Chain

20. Page 20 20 Manufacturing Jobs U.S. Manufacturing vs. Service Employment 0 10 20 30 40 50 60 70 80 90 4550556065707580859095000205 Year Percent Mfg. Service > 70% Greater PRODUCTIVITY allows for increased output with fewer workers Many manufacturing jobs have moved OFFSHORE to lower labor cost areas * From Stevenson, Operations Management, Ninth Edition, McGraw Hill Irwin

21. How Operations Interacts with Other Organizations

22. Page 22 22 Key intersections with Sales & Marketing and with Finance FINANCE & ACCOUNTING –Budgeting –Authorizing Capital spending –Authorizing major inventory buys –Cost accounting –Make vs. Buy decisions –Location planning –Managing international trade –Analyzing trade-off decisions

23. Page 23 23 Key intersections with Sales & Marketing and with Finance SALES & MARKETING –Forecasting Demand –Influencing demand –Committing supply –Negotiating schedules with customers –Providing competitive information –Requesting new products and services –Opening new markets

24. Page 24 24 Interaction with other Functional Organizations