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Chapter 1
Overview: Introduction to the
Field

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OBJECTIVES

• Operations Management
• Why Study Operations Management?
• Production System Defined
• Operations as a Service
• Plan of This Book
• 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 firm’s primary
products and services

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Why Study Operations Management?


Systematic Approach
to Org. Processes

Business Education Operations Career Opportunities


Management

Cross-Functional
Applications

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What is a Production System?


Defined

A production system is 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 won’t 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 Marketing

Plant Operations Director


Manager Manager

Manufacturing, Production control,


Quality assurance, Engineering,
Purchasing, Maintenance, 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

Operations
Flexibility Speed
Management

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

Operations Sales Support


Information
Management

Field Support

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I. Operations Strategy 1. Introduction


and Managing Change to the Field

2. Operations Strategy 3. Project


and Competitiveness Management
II. Product Design
and Process III. Supply 9. Supply
Selection Chain Design Chain Strategy

10. Strategic 11. Just-in-Time


4. Process Capacity and Lean
Analysis Management Systems

5. Product 6. Product
Design and Design and IV. Planning and 12. Forecasting
Process Selection Process Selection Controlling the and Demand
-Manufacturing -Services Supply Chain Management

13. Aggregate Sales and


7. Quality Operations Planning
Management

14. Inventory 15. Materials


8. Operations Consulting Control Requirements Planning
and Reengineering

16. Operations Scheduling

17. Synchronous Manufacturing


and Theory of Constraints

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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 (cont’d)

• Business Process Reengineering

• Supply Chain Management

• Electronic Commerce

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Current Issues in OM
• Effectively consolidating the operations
resulting from mergers
• Developing flexible supply chains to
enable mass customization of products
and services
• Managing global supplier, production and
distribution networks
• Increased “commoditization” of suppliers

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Current Issues in OM (cont’d)


• Achieving the “Service Factory”
• Enhancing value added services

• Making efficient use of Internet


technology

• Achieving good service from service


firms

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End of Chapter 1

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