1. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. 1

2. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. 2 Chapter 1 Introduction to the Field

3. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. 3  Operations Management  Why Study Operations Management?  Transformation Processes Defined  Operations as a Service  The Importance of Operations Management  Historical Development of OM  Current Issues in OM OBJECTIVES

4. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. 4 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 and services

5. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. 5 Why Study Operations Management? Business Education Systematic Approach to Org. Processes Career Opportunities Cross-Functional Applications Operations Management

6. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. 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. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. 7 Transformations  Physical--manufacturing  Locational--transportation  Exchange--retailing  Storage--warehousing  Physiological--health care  Informational--telecommunications

8. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. 8 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?)

9. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. 9 OM in the Organization Chart Operations Plant Manager Operations Manager Operations Manager Director Manufacturing, Production control, Quality assurance, Engineering, Purchasing, Maintenance, etc FinanceMarketing

10. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. 10 Core services are basic things that customers want from products they purchase Core Services Defined

11. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. 11 Core Services Performance Objectives Operations Managemen t Flexibility Quality Speed Price (or cost Reduction)

12. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. 12 Value-added services differentiate the organization from competitors and build relationships that bind customers to the firm in a positive way Value-Added Services Defined

13. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. 13 Value-Added Service Categories Operations Management Information Problem Solving Sales Support Field Support

14. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. 14 The Importance of Operations Management  Synergies must exist with other functional areas of the organization  Operations account for 60-80% of the direct expenses that burden a firms profit.

15. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. 15 Historical Development of OM  JIT and TQC  Manufacturing Strategy Paradigm  Service Quality and Productivity  Total Quality Management and Quality Certification

16. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. 16 Historical Development of OM (cont’d)  Business Process Reengineering  Supply Chain Management  Electronic Commerce

17. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. 17 Current Issues in OM  Coordinate the relationships between mutually supportive but separate organizations.  Optimizing global supplier, production, and distribution networks.  Increased co-production of goods and services

18. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. 18 Current Issues in OM (cont’d)  Managing the customers experience during the service encounter  Raising the awareness of operations as a significant competitive weapon

19. © The McGraw-Hill Companies, Inc., 2006 19 End of Chapter 1