1

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Chapter 1
Introduction to the Field

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OBJECTIVES

Operations Management
Why Study Operations Management?
Transformation Processes Defined
Operations as a Service
The Importance of Operations
Management
Historical Development of OM
Current Issues in OM

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What is Operations Management?

Defined
Operations management (OM) is
defined as the design, operation,
and improvement of the systems
that create and deliver the firms
primary products and services

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Why Study Operations

Management?
Systematic Approach
to Org. Processes

Business Education

Operations
Management

Career Opportunities

Cross-Functional
Applications

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What is a Transformation
Process?
A transformation process is defined
Defined
as a user of resources to transform
inputs into some desired outputs

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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 a

Good?

If you drop it on your foot, it wont

hurt you. (Good or service?)

Services never include goods and

goods never include services. (True
or false?)

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OM in the Organization Chart

Finance

Operations
Operations

Marketing

Plant
Plant
Manager
Manager

Operations
Operations
Manager
Manager

Director
Director

Manufacturing,
Manufacturing, Production
Production control,
control,
Quality
Quality assurance,
assurance, Engineering,
Engineering,
Purchasing,
Purchasing, Maintenance,
Maintenance, etc
etc
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Core Services
Defined
Core services are basic things
that customers want from
products they purchase

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Core Services Performance Objectives

Quality

Flexibility

Operations
Managemen
t

Speed

Price (or cost

Reduction)

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Value-Added Services
Defined
Value-added services
differentiate the organization
from competitors and build
relationships that bind
customers to the firm in a
positive way
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Value-Added Service Categories

Problem Solving

Information

Operations
Management

Sales Support

Field Support

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The Importance of
Operations Management
Synergies

must exist with other

functional areas of the
organization
Operations account for 60-80%
of the direct expenses that
burden 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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Current Issues in OM

Coordinate the relationships between

mutually supportive but separate
organizations.

Optimizing global supplier, production,

and distribution networks.

Increased co-production of goods and

services

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Current Issues in OM (contd)

Managing the customers

experience during the service
encounter

Raising the awareness of

operations as a significant
competitive weapon

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End of Chapter 1

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