1. Introduction to Operations Management1
PowerPoint presentation to accompany
Heizer and Render
Operations Management, 10e, Global Edition
Principles of Operations Management, 8e, Global Edition
PowerPoint slides by Jeff Heyl
© 2011 Pearson Education

2. Why Study OM?
OM is one of three major functions of any organization, we want to study how people organize themselves for productive enterprise
We want (and need) to know how goods and services are produced
We want to understand what operations managers do
OM is such a costly part of an organization
© 2011 Pearson Education

3. Ten Critical Decisions
Ten Decision Areas Chapter(s)
Design of goods and services 5
Managing quality 6, Supplement 6
Process and capacity 7, Supplement 7 design
Location strategy 8
Layout strategy 9
Human resources and job design
Supply-chain 11, Supplement management
Inventory, MRP, JIT 12, 14, 16
Scheduling 13, 15
Maintenance 17
Table 1.2
© 2011 Pearson Education

4. Restaurant meal/auto repair investment management
Goods and Services
Automobile
Computer
Installed carpeting
Fast-food meal
Restaurant meal/auto repair
Hospital care
Advertising agency/
investment management
Consulting service/
teaching
Counseling
Percent of Product that is a Good Percent of Product that is a Service
100% %
| | | | | | | | |
© 2011 Pearson Education

5. Ethics and Social Responsibility
Challenges facing operations managers:
Developing and producing safe, quality products
Maintaining a clean environment
Providing a safe workplace
Honoring stakeholder commitments
© 2011 Pearson Education

6. Scope of Operations Management
The scope of operations management ranges across the organization.
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 . . .
1-6
Student Slides

7. Role of the Operations Manager
The Operations Function consists of all activities directly related to producing goods or providing services.
A primary function of the operations manager is to guide the system by decision making.
System Design Decisions
System Operation Decisions
1-7
Student Slides

8. Why Study OM?
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
1-8
Student Slides

9. OM and Supply Chain Career Opportunities
Operations manager
Supply chain manager
Production analyst
Schedule coordinator
Production manager
Industrial engineer
Purchasing manager
Inventory manager
Quality manager
1-9
Student Slides

10. Historical Evolution of OM
Industrial Revolution
Scientific Management
Human Relations Movement
Decision Models and Management Science
Influence of Japanese Manufacturers
1-10
Student Slides

11. Key Issues for Operations Managers Today
Economic conditions
Innovating
Quality problems
Risk management
Competing in a global economy
1-11
Student Slides

12. The Need for Supply Chain Management
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 stockouts
Late deliveries
Quality problems
1-12
Student Slides

13. What is Operations Management?
“ Operation Management is the set of activities that create goods and services through the transformation of inputs into outputs.”
(Slack, 2001)

14. Typical Organization Chart
Source: Reid and Sanders, 2005.

15. Activities of Operations manager
Understand the operation’s strategic objectives
Developing an operation’s strategy for the organization
Designing the operation’s products, services and processes
Planning and controlling the operation
Improving the performance of the operation.

16. Some Activities of an Operations Manager
Design elegant products which can be flat packed efficiently
Storage
Quality
Design Store Layout
Site Location

17. The input-transformation-output model
ransformed
resources
Materials
Information
Customers
Goods
Transformation
Input
Out
put
and
process
services T
ransforming
resources
Facilities
Staff
Source: Slack, 2001
Reid & Sanders, Operations management, c Wiley 2003

18. Similarities-Service/Manufacturers
All use technology
Both have quality, productivity, & response issues
All must forecast demand
Each will have capacity, layout, and location issues
All have customers and suppliers
All have scheduling and staffing issues

19. Historical Development of OM
Industrial revolution Late 1700s
Scientific management Early 1900’s
Human relations movement 1930s to 1960s
Management science Mid-1900s
Computer age s
Just-in-Time Systems (JIT) 1980s
Total quality management (TQM) 1980’s
Reengineering s
Flexibility s
Time-Based Competition 1990s
Supply chain Management 1990’s
Global Competition 1990s
Environmental Issues 1990s
Electronic Commerce Late 1990s

20. Today’s OM Environment
Customers demand better quality, faster deliveries, and lower costs

21. Competitive Priorities- The Edge
Four Important Operations Questions: Will you compete on –
Cost?
Quality?
Time?
Flexibility?
All of the above? Some? Tradeoffs?
Source: Reid and Sanders, 2005.

22. Speed
Cost
Depend-ability
Flexibility
Quality
Lower prices
(or higher profits)
Faster customer response
Error-free products and services
Wider variety
More customisation
More innovation
Cope with volume fluctuations
On-time deliveries

23. Are There Priority Tradeoffs?
Which priorities are “Order Qualifiers”?
e.g. Must have excellent quality since everyone expects it
Which priorities are “Order Winners”?
e.g. Dell competes on all four priorities
Southwest Airlines competes on cost
McDonald’s competes on consistency
FedEx competes on speed
Custom tailors compete on flexibility
Can you have both high quality and low cost?
e.g. Yes, Coke and Pepsi are good examples
Can you offer design flexibility and short delivery?
e.g. Yes, modular housing manufacturers do it

24. Measuring Productivity
Productivity is a measure of how efficiently inputs are converted to outputs
Productivity = output/input
Total Productivity Measure
Total Productivity = $sales/inputs $
Partial Productivity Measure
Partial Productivity = cars/employee
Multifactor Productivity Measure
Multi-factor Productivity = sales/total $costs
Source: Reid and Sanders, 2005.

25. Highlights
Business Strategy is a long range plan. Functions develop supporting plans
Strategy must address mission, environment, and core competencies
Business strategy provides a guide for designing operations strategy
Operations strategy must consider which competitive priorities are essential to meet business objectives
Competitive priorities are cost, quality, time, and flexibility
Productivity measures how effectively a firm is using resources
Productivity is computed as a ratio of outputs divided by inputs

26. References
Reid R.D., and Sanders N. R., (2005) Operations Management, 2nd Edition, Wiley Publication.
Slacks Nigel and Lewis Mike, (2002) Operations Management, Prentice Hall.