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Chapter 1
Operations Management and competitiveness

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OBJECTIVES
What is Operations and Supply Management? Why Study Operations Management? Transformation Processes Defined Differences between Services and Goods The Importance of Operations Management Historical Development of OM Current Issues in OM 1-2

What is Operations and Supply Management?

Operations and Supply 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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Across the Organization

Finance
Acquires financial resources and capital for inputs

Material & Service Inputs Support Functions Accounting Information Systems Human Resources Engineering

Sales Revenue

Operati ons
Translates materials and service into outputs

Marketing
Generates sales of outputs

Product & Service Outputs

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What is a Transformation Process? Defined

A transformation process 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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A Process View

External environment
Internal and external customers Inputs Workers Managers Equipment Facilities Materials Land Energy Outputs Goods Services 5 2 4

Processes and operations 1 3

Information on performance

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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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The Goods-Services Continuum

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Core Services Defined

Are basic things that customers want from products they purchase

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Core Services Performance Objectives

Quality

Flexibility

Operations Management

Speed

Price (or cost Reduction)

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Value-Added Services Defined

differentiate the organization from competitors and build relationships that bind customers to the firm in a positive way
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Historical Development of OM

JIT and TQC Service Quality and Productivity Total Quality Management and Quality Certification Business Process Reengineering Six-Sigma Quality Supply Chain Management Electronic Commerce
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Process planning
Long range

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Supply network planning Forecasting and demand management

Strategic capacity planning Sales and operations (aggregate) planning Sales plan
Aggregate operations plan

Medium range

Manufacturing Master scheduling

Material requirements planning

Logistics

Services

Vehicle capacity planning Vehicle loading Vehicle dispatching Warehouse receipt planning Weekly workforce scheduling Daily workforce scheduling
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Order scheduling
Short range

McGraw-Hill/Irwin

2009 The McGraw-Hill Companies, All Rights Reserved

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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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Question Bowl

Deciding on the appropriate number of workers, scheduling those workers and deciding whether overtime of multiple work shifts are to be employed are decisions that are made wholly by the human resources function of the firm. Ans: F Efficiency means doing the right things to create the most value for the company. Ans: F Effectiveness means doing the right things to create the most value for the company. Ans:T

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Question Bowl

Operations Management strategic issues tend to be primarily directed at planning how to efficiently schedule material and labor within the constraints of intermediate level decision-making.

Ans: F Operational planning and control decisions address where the factory or facilities shall be located and how much capacity will be needed. Ans: F From an operations management systems view, a traveler is an input to an airlines transformational system. Ans: T
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Question Bowl

A reason for studying operations management (OM) is which of the following? A. OM is essential for understanding organizational behavior B. Most business graduates do OM work regardless of their job title C. Concepts and tools of OM are useful in other functions of business D. OM is a required course in all business degree programs E. OM is the most rigorous business discipline Ans: C
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Question Bowl

In the transformation process of a hospital, a patient is considered a primary input. A primary transformation function of the same system is which of the following? A. Healthy individuals B. Health care C. Well-prepared food D. Storage and redistribution E. Allocation of beds Ans: B
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End of Chapter 1

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