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An Introduction to Operations Management


Lecturer: Mrs J Botha

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Learning Objectives
1. Understand the definition of operations management. 2. Understand the transformation process 3. Contrast differences between services and goods producing processes. 4. Define efficient and effective operations. 5. List the challenges faced by operations managers

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Operations Management Definition


Operations management may be defined as the design, operation, and improvement of the production system that creates the firms primary products and services. A production system is defined as a user of resources to transform inputs into some desired outputs. The internationalisation and globalisation of world markets
has forever changed the way that companies must conduct business. (Kon Sera)

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Operations management is fashionable!


The consultancy services market % of world revenues of 40 largest consultancy firms Financial 6 Organizational design 11 Benefits/Actuarial 16 IT strategy 17 Corporate strategy 17
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Marketing/sales 2 Operations and process management 31

Process Steps for Mens Nylon Supplex Parka

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OM Involves Managing Transformations


Transformed resources Materials Information Customers

Input resources

Transformation process

Output products and services

Customers

Transforming resources Facilities Staff

Outputs are products and services that add value for customers

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Inputs and outputs at Prt a Manger Pr


Transformed resources Ingredients Packaging Customers Customers Served and satisfied customers

Input resources Transforming resources Equipment Fittings Staff

Customers

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Slack et al.s model of operations management


Operations performance Operations strategy

Transformed resources Materials Information Customers

Operations strategy

Operations management Input resources Design Improvement Output products and services Customers

Transforming resources Facilities Staff

Planning and control

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Differences Between Services and Goods

1. Services are intangible 2. Services requires some interaction with the customer 3. Services are inherently heterogeneous 4. Services are perishable and time dependent 5. Services are defined and evaluated as a package of features
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Performance objectives of goods and services


These are the basic things that customers want from products they purchase or a service they receive. Quality Dependability Flexibility Speed Price (or production cost)
Manufacturing operations is also in the service business, even if it is an internal customer

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Value-Added Services
Value-added services differentiate the organization from competitors and build relationships that bind customers to the firm in a positive way. Information Problem Solving Sales Support Field Support

Link the shop floor worker to the customer


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The Goods-Services Continuum

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Servitization Strategies

Servitization refers to a company building service activities into its product offerings for its current users
Maintenance, spare parts, training, and so on

Success starts by drawing together the service aspects of the business under one roof Servitization may not be the best approach for all companies
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International Growth in Services

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Efficiency, Effectiveness, and Value

Efficiency: Doing something at the lowest possible cost Effectiveness: Doing the right things to create the most value for the company Value: quality divided by price

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Careers in Operations and Supply Management


Plant manager Hospital administrator Branch manager Call center manager Supply chain manager Purchasing manager Business process improvement analyst Quality control manager Lean improvement manager Project manager Production control analyst Facilities manager
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Historical Development of Operations and Supply Management


Lean manufacturing, JIT, and TQC Manufacturing strategy paradigm Service quality and productivity Total quality management (TQM) and quality certifications Business process reengineering Six-sigma quality Supply chain management Electronic commerce Service science
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Challenges Facing Operations Managers


Most products and systems are becoming more complex. Speeding up the time it takes to get new products into production. Developing flexible production systems to enable mass customization of products and services. Managing global production networks. Developing and integrating new production technologies into existing production systems. Achieving high quality quickly and keeping it up in the face of restructuring. Successful management involves a team approach integration of many specialised disciplines. Managing a diverse workforce. Conforming to environmental constraints, ethical standards, and government regulations.
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Key Questions

1. What role should the operations function play in achieving strategic success? 2. What are the performance objectives of operations and what are the internal and external benefits which derive from excelling in each of them?

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