1. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Business Plug-In B8 Operations Management

2. 8-2 LEARNING OUTCOMES 1. Explain operations management role in business 2. Describe the correlation between operations management and information technology 3. Describe the five characteristics of competitive priorities

3. 8-3 OM FUNDAMENTALS O Production - is the creation of goods and services using the factors of production O Production management - describes all the activities managers do to help companies create goods O Operations management (OM) - the management of systems or processes that convert or transform resources into goods and services

4. 8-4 OM FUNDAMENTALS O Transformation process - the actual conversion of inputs to outputs

5. 8-5 OM FUNDAMENTALS

6. 8-6 OM FUNDAMENTALS O Value-added - the term used to describe the difference between the cost of inputs and the value of price of outputs

7. 8-7 OM IN BUSINESS O How does an airline service organization’s OM team adds value? O Forecasting O Capacity planning O Scheduling O Managing inventory O Assuring quality O Motivating and training employees O Locating facilities

8. 8-8 IT’S ROLE IN OM O Managers use IT to heavily influence OM decisions including : O What: What resources will be needed and in what amounts? O When: When should the work be scheduled? O Where: Where will the work be performed? O How: How will the work be done? O Who: Who will perform the work?

9. 8-9 OM Strategic Business Systems O Operations strategy addresses broad questions about using major resources to achieve corporate objectives O Major long-term issues addressed in operations strategy include: O How big to make the facilities? O Where to locate the facilities? O When to build additional facilities? O What type of process(es) to install to make the products?

10. 8-10 OM Strategic Business Systems O Strategic planning - focuses on long range planning O Strategic business units (SBUs) - consist of several stand-alone businesses O Materials requirement planning (MRP) - use sales forecasts to make sure that needed parts and materials are available at the right time and place

11. 8-11 OM Strategic Business Systems O Tactical planning - focuses on producing goods and services as efficiently as possible within the strategic plan O Global inventory management system - provides the ability to locate, track, and predict the movement of every component or material anywhere upstream or downstream in the production process

12. 8-12 OM Strategic Business Systems O Operational planning and control (OP&C) - deals with the day-to-day procedures for performing work, including scheduling, inventory, and process management O Inventory management and control system O Transportation planning system O Distribution management system

13. 8-13 COMPETITIVE OM STRATEGY O Five key competitive priorities which a company can add value to its OM decisions including: 1. Cost 2. Quality 3. Delivery 4. Flexibility 5. Service

14. 8-14 COMPETITIVE OM STRATEGY 1. Cost: there can be only one lowest-cost producer, and that firm usually establishes the selling price in the market 2. Quality: is divided into two categories product and process quality O Six Sigma Quality O Malcolm Balridge National Quality Awards O ISO 900, ISO 14000 O CMMI

15. 8-15 COMPETITIVE OM STRATEGY 3. Delivery: a firms ability to provide consistent and fast delivery 4. Flexibility: a firms ability to offer a wide variety of products 5. Service: high-quality customer service adds tremendous value to an ordinary product

16. 8-16 OM AND THE SUPPLY CHAI N O Supply chain - consists of all parties involved, directly or indirectly, in the procurement of a product or raw material O Supply Chain Management (SCM) – involves the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability

17. 8-17 OM AND THE SUPPLY CHAIN O Typical manufacturing supply chain

18. 8-18 OM AND THE SUPPLY CHA IN O Typical service supply chain