Chap 001 operation management

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Chapter 1

Introduction to the Field


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Operations Management

Why Study Operations Management?

Transformation Processes Defined

Operations as a Service

The Importance of OperationsManagement

Historical Development of OMCurrent Issues in OM

OBJECTIVES


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What is Operations Management?

Defined

Operations management (OM) is

defined as the design, operation,and improvement of the systemsthat create and deliver the firms

primary products and services


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Why Study OperationsManagement?

Business Education

Systematic Approachto Org. Processes

Career Opportunities

Cross-FunctionalApplications

OperationsManagement


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What is a Transformation

Process?

Defined

A transformation process is definedas a user of resources to transforminputs into some desired outputs


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Operations as a

Transformation Process

Feedback

INPUT

MaterialMachines

Labor

Management

Capital

OUTPUT

Goods

Services

TRANSFORMATION

PROCESS


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Transformations

Physical--manufacturing

Locational--transportation

Exchange--retailing

Storage--warehousing

Physiological--health care

Informational--telecommunications


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What is a Service and What is aGood?

If you drop it on your foot, it wonthurt you. (Good or service?)

Services never include goods andgoods never include services. (Trueor false?)


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OM in the Organization Chart

Operations

Plant

Manager

Operations

Manager

Director

Manufacturing, Production control,

Quality assurance, Engineering,

Purchasing, Maintenance, etc

Finance Marketing


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Core servicesare basic things

that customers want fromproducts they purchase

Core ServicesDefined

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Core Services Performance Objectives

OperationsManagemen

t

Flexibility

Quality

Speed

Price (or costReduction)

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Value-added services

differentiate the organizationfrom competitors and buildrelationships that bind

customers to the firm in apositive way

Value-Added Services

Defined

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Value-Added Service Categories

OperationsManagement

Information

Problem Solving

Sales Support

Field Support

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Synergies must exist with other

functional areas of theorganization

Operations account for 60-80%

of the direct expenses thatburden a firms profit.

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Historical Development of OM

JIT and TQC

Manufacturing Strategy Paradigm

Service Quality and Productivity

Total Quality Management and Quality

Certification

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Historical Development of OM

(contd)Business Process Reengineering

Supply Chain Management

Electronic Commerce

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Historical Events in OM

Industrial RevolutionSteam engine 1769 James Watt

Division of labor 1776 Adam Smith

Interchangeable parts 1790 Eli Whitney

Scientific ManagementPrinciples 1911 Frederick W. Taylor

Time and motion studies 1911 Frank & Lillian GilbrethActivity scheduling chart 1912 Henry Gant

Moving assembly line 1913 Henry Ford

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Human RelationsHawthorne studies 1930 Elton Mayo

Motivation theories 1940s Abraham Maslow

1950s Frederick Hertzberg

1960s Douglas McGregor

Management ScienceLinear programming 1947 George Dantzig

Digital computer 1951 Remington RandSimulation, PERT/CPM, 1950s Operations research

Waiting line theory groups

MRP 1960s Joseph Orlicky, IBM

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Quality RevolutionJIT 1970s Taiichi Ohno, ToyotaTQM 1980s W. Edwards Deming,

Joseph Juran, et. al.

Strategy and operations Skinner, HayesReengineering 1990s Hammer, Champy

World Trade Organization 1990s Numerous countries

and companies

GlobalizationEuropean Union and 1970s IBM and others

other trade agreements

EDI, EFT, CIM 1980s

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Information Age/

Internet Revolution

Internet, WWW, ERP 1990s ARPANET, TimSupply chain Berners-Lee, SAP, i2management, Technologies, ORACLE,E-commerce PeopleSoft, Amazon,

Yahoo, eBay,

and others

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Current Issues in OM

Coordinate the relationships betweenmutually supportive but separateorganizations.

Optimizing global supplier, production,and distribution networks.

Increased co-production of goods andservices

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Current Issues in OM (contd)

Managing the customersexperience during the serviceencounter

Raising the awareness of

operations as a significantcompetitive weapon

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Question Bowl

A major objective of this book is to show how smart

managers can do which of the following?

a. Improve efficiency by lowering costs

b. Improve effectiveness by creating value

c. Increasing value by reducing prices

d. Serving customers well

e. All of the above

Answer: e. All of the above

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Question Bowl

In the Input-Transformation-Output Relationship,a typical input for a Department Store is

which of the following?a. Displays

b. Stocks of goodsc. Sales clerksd. All of the abovee. None of the above

Answer: e. None of the above (The above areconsidered Resources of a department store.

The correct answer is Shoppers.)

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Question Bowl

In which of the following decades did theconcept of quality control originate?

a. 1920sb. 1930sc. 1940sd. 1950se. 1970s

Answer: b. 1930s (Tools such

as sampling inspection and

statistical tables where first

developed by WalterShewhart, H. F. Dodge, and H.

G. Romig.)

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Chap 001 operation management