1. 1 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 Time management 40 200 520 520 hours = thirteen weeks @ 40 hrs/wk. (one semester) 200 hours = hours to complete course 40 hours = class time (approx.)

2. OM Goods, Services, and Operations Management 1 COLLIER/EVANS 5 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

3. 3 OM5 | CH1 Operations Management Science and art of ensuring that goods and services are created and delivered successfully to customers Design of goods, services, and the processes that create them Day-to-day management of those processes Continual improvement of these goods, services, and processes

4. 4 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 Operations Management Issues at the core of operations management Efficiency Cost Quality

5. 5 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 Key Activities of Operations Manager Forecasting Supply chain management Facility layout and design Technology section Quality management Purchasing Resource and capacity management Process design Job design Service encounter design SchedulingSustainability

6. 6 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 Exhibit 1.4 Seven Eras of Operations Management

7. 7 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 Current Challenges in OM TechnologyGlobalization Customer expectations Engaging the workforce Quality Innovation and agility

8. 8 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 Understanding Goods Good: Physical product that a person can see, touch, or consume Durable good: Product that does not quickly wear out and lasts at least three years Non-durable good: Perishable and lasts for less than three years

9. 9 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 Understanding Services Service: Primary or complementary activity that does not directly produce a physical product Similarities between goods and services Provides value and satisfaction to customers who purchase and use them Can be standardized or customized to individual wants and needs

10. 10 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 Differences between Goods and Services Goods are tangible while services are intangible Customers participate in many service processes, activities, and transactions Demand for services is more difficult to predict than the demand for goods Services cannot be stored as physical inventory

11. 11 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 Differences between Goods and Services Service management skills are paramount to a successful service encounter Service facilities need to be in close proximity to the customer Patents do not protect services

12. 12 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 Goods & Services GOODS (a pizza) Actual useful objects Produced ahead of use Same for everyone Business  consumer Standardisation important Quality from specifications Can be returned tangible SERVICES (a haircut) Only exist as happening Simultaneous prod/cons. Unique for each person Business with consumer Flexibility important Quality from experience Can’t be returned intangible © 2011 Pearson Education, Inc. publishing as Prentice Hall

13. 13 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 G&S tangibility spectrum (an idea from marketing) © 2011 Pearson Education, Inc. publishing as Prentice Hall salt softdrinks automobiles cosmetics fastfood outlets advertising agencies airlines consulting teaching Tangible ‘dominant’ (‘goods’ focus) Intangible ‘dominant’ (‘service’ focus)

14. 14 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 Exhibit 1.3 Examples of Goods and Service Content

15. 15 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 Service Management Integrates marketing, human resources, and operations functions to: Plan Create Deliver goods and services Deal with service encounters -Moments of truth: Episodes, transactions, or experiences in which a customer comes into contact with any aspect of the delivery system

16. 16 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 Customer Benefit Packages (CBP) Clearly defined set of tangible and intangible features that the customer recognizes, pays for, uses, or experiences Combination of goods and services configured in a certain way to provide value to customers Consists of a primary good or service, coupled with peripheral goods and/or services

17. 17 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 Customer Benefit Packages (CBP) Core offering that attracts customers and responds to their basic needs Primary good or service Core offering that are not essential to the primary good or service, but enhance it Peripheral goods or services CBP attribute that departs from the standard CBP and is normally location- or firm-specific Variant

18. 18 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1

19. 19 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 © 2011 Pearson Education, Inc. publishing as Prentice Hall Strategies for Competitive Advantage Differentiation Having a unique selling point (USP) Market driven Cost leadership Having the lowest price Industry driven Focus Finding a target market within a target market

20. 20 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 Porters Five Forces Analysis © 2011 Pearson Education, Inc. publishing as Prentice Hall Many = good Few = bad Many = good Few = bad Many = bad Few = good High = good Low = bad

21. 21 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 Porters Competitive Strategies

22. 22 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 Porters Value Chain © 2011 Pearson Education, Inc. publishing as Prentice Hall

23. 23 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 Processes Means by which goods and services are produced and delivered Process: Sequence of activities that is intended to create a certain result

24. 24 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 Ops Mgt is about Business Processes Everything a business does is a process. Service -Opening a bank account / making a deposit / making a withdrawal. Good -Designing a new product / testing / manufacturing / marketing and sales. Better processes = better businesses

25. 25 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 Key Processes in Business Core processes: Focused on producing or delivering an organization’s primary goods or services Support processes: Purchasing materials and supplies used in: Manufacturing and installation Managing inventory Health benefits and day care on-site services Technology acquisition and research and development

26. 26 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 Key Processes in Business General management processes: Accounting and information systems, human resource management, and marketing

27. 27 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 Sustainability Organization’s ability to: Strategically address current business needs Develop a long-term strategy that embraces opportunities and manages risk for: -Products, systems, supply chains, and processes to preserve resources for future generations

28. 28 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 Perspectives of Sustainability Environmental sustainability: Organization’s commitment to the long- term quality of the environment Social sustainability: Organization’s commitment to maintain healthy communities and a society that improves the quality of life

29. 29 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 Perspectives of Sustainability Economic sustainability: Organization’s commitment to: Address current business needs and economic vitality Have agility and strategic management to: -Prepare successfully for future business, markets, and operating environments

30. 30 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 Data and Analytics Used to evaluate: Operations performance Quality Order accuracy Customer satisfaction Delivery Cost Environment compliance

31. 31 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 Data and Analytics Business analytics: Process of transforming data into actions through analysis and insights in: Context of organizational decision making and problem solving

32. SUMMARY 32 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 Operations management is constantly changing All operation managers should be aware of the various challenges that will define the future workplace

33. KEY TERMS 33 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 Business analytics Customer benefit packages Durable good Economic sustainability Environmental sustainability General management processes Good Inventory management Moments of truth

34. KEY TERMS 34 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 Non-durable good Operations management Peripheral goods or services Planning and budgeting Primary good or service Quality Quality management Scheduling Scheduling and capacity

35. KEY TERMS 35 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH1 Service Service encounter Service management Social sustainability Sustainability Variant