1. 1 1 Slide Operations Management Operations and Productivity Professor Ahmadi

2. 2 2 Slide Learning Objectives n n Definition of Operations Management (OM) n n Organizational Functions n n Why Study OM? n n A brief history of operations management n n The future of the discipline n n Goods Versus Services n n Measuring productivity n n Career opportunities in operations management

3. 3 3 Slide What Is Operations Management? n Production is the creation of goods and services n Operations management is the set of activities that creates value in the form of goods and services by transforming inputs into outputs

4. 4 4 Slide Organizing to Produce Goods and Services ( Organizational Functions) n Essential functions: Operations –creates the product Operations –creates the product Marketing – generates demand Marketing – generates demand Finance/accounting – tracks organizational performance, pays bills, collects money Finance/accounting – tracks organizational performance, pays bills, collects money

5. 5 5 Slide Functions - Bank Operations Finance/ Accounting Marketing Check Clearing Teller Scheduling Transactions Processing Security Commercial Bank

6. 6 6 Slide Functions - Airline Operations Finance/ Accounting Marketing Ground Support Flight Operations Facility Maintenance Catering Airline

7. 7 7 Slide Functions - Manufacturer Operations Finance/ Accounting Marketing Production Control Manufacturing Quality Control Purchasing Manufacturing

8. 8 8 Slide Why Study OM? OM is one of three major functions ( marketing, finance, and operations ) of any organization. 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.

9. 9 9 Slide What Operations Managers Do n Basic Management Functions Planning Planning Organizing Organizing Staffing Staffing Leading Leading Controlling Controlling

10. 10 Slide The Critical Decisions Quality management Service and product design Process and capacity design Location Layout design Human resources and job design Supply chain management Inventory, material requirements planning, Intermediate, short term, and project scheduling Maintenance

11. 11 Slide Major Events in OM Standardized parts (Eli Whitney 1800) Standardized parts (Eli Whitney 1800) Scientific Management (Frederick Taylor 1881) Scientific Management (Frederick Taylor 1881) Coordinated assembly line ( Henry Ford 1903) Coordinated assembly line ( Henry Ford 1903) Gantt charts (Gantt 1916) Gantt charts (Gantt 1916) Motion study (Frank and Lillian Gilbreth 1922) Motion study (Frank and Lillian Gilbreth 1922) Quality control (Deming 1950) Quality control (Deming 1950)

12. 12 Slide Major Events in OM (Continued) CPM/PERT (DuPont 1957) CPM/PERT (DuPont 1957) Material requirements planning (Orlicky 1960) Material requirements planning (Orlicky 1960) Computer aided design (CAD 1970) Computer aided design (CAD 1970) Flexible manufacturing system (FMS 1975) Flexible manufacturing system (FMS 1975) Baldrige Quality Awards (1980) Baldrige Quality Awards (1980) Computer integrated manufacturing (1990) Computer integrated manufacturing (1990) Globalization (1992) Globalization (1992) Internet (1995) Internet (1995)

13. 13 Slide New Challenges in OM n Local or national focus n Batch shipments n Low bid purchasing n Lengthy product development n Standard products n Job specialization n Global focus n Just-in-time n Supply chain partnering n Rapid product development n Mass customization n Empowered employees, teams n Others: Environmental SensitivityEnvironmental Sensitivity EthicsEthics FromTo From To

14. 14 Slide Goods Versus Services n Can be resold n Can be inventoried n Some aspects of quality measurable n Selling is distinct from production n Reselling unusual n Difficult to inventory n Quality difficult to measure n Selling is part of service Goods Services

15. 15 Slide Goods Versus Services - Continued n Product is transportable n Site of facility important for cost n Often easy to automate n Revenue generated primarily from tangible product n Provider, not product is transportable n Site of facility important for customer contact n Often difficult to automate n Revenue generated primarily from intangible service. Goods Services

16. 16 Slide  Measure of process improvement  Represents output relative to input  Only through productivity increases can our standard of living improve Productivity Measurement Productivity = Units produced Input used

17. 17 Slide Multi-Factor Productivity Output Labor + Material + Energy + Capital + Miscellaneous Productivity =  Also known as total factor productivity  Output and inputs are often expressed in dollars

18. 18 Slide Productivity Variables n Labor - contributes about 10% of the annual increase n Capita l - contributes about 32% of the annual increase n Management - contributes about 52% of the annual increase

19. 19 Slide Entry-Level Jobs in OM Purchasing planner/buyerPurchasing planner/buyer Production (or operations) supervisorProduction (or operations) supervisor Production (or operations) scheduler/controllerProduction (or operations) scheduler/controller Production (or operations) analystProduction (or operations) analyst Inventory analystInventory analyst Quality specialistQuality specialist Others …Others …