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Introduction toOperations

Management

McGraw-Hill/IrwinCopyri ght 2012 by The McGraw-H il l Companies, In c. All ri ghts reserved.

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You should be able to:1. Define the term operations management

2. Identify the three major functional areas of organizations and describehow they interrelate

3. Identify similarities and differences between production and serviceoperations

4. Describe the operations function and the nature of the operationsmanagers job

5. Summarize the two major aspects of process management

6. Explain the key aspects of operations management decision making

7. Briefly describe the historical evolution of operations management

8. Characterize current trends in business that impact operationsmanagement

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What is operations?

The part of a business organization that is responsiblefor producing goods or services

How can we define operations management?

The management of systems or processes that creategoods and/or provide services

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Goods are physical items that include raw materials, parts,

subassemblies, and final products.

Automobile

Computer

Oven

Shampoo

Services are activities that provide some combination of time, location,

form or psychological value.

Air travel

Education

Haircut

Legal counsel

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Suppliers

suppliers

Direct

suppliersProducer Distributor

Final

Customers

Supply Chain a sequence of activities andorganizations involved in producing and delivering

a good or service

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Operations FinanceMarketing

Organization

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InputsLand

Labor

Capital

Information

OutputsGoods

Services

Transformation/

Conversion

Process

Control

Measurement

and Feedback

Measurement

and Feedback

Measurement

and Feedback

Value-Added

Feedback = measurements taken at various points in the transformation process

Control = The comparison of feedback against previously established

standards to determine if corrective action is needed.

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Automobile Assembly, Steelmaking

Products are typically neither purely service- or purely goods-based.

Goods Services

Home Remodeling, Retail Sales

Computer Repair, Restaurant Meal

Songwriting, Software Development

Surgery, Teaching

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Tangible Act-Oriented

Goods Services

Manufacturing and Service Organizations differ chiefly because

manufacturing is goods-oriented and service is act-oriented.

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1. Degree of customer contact2. Uniformity of input

3. Labor content of jobs

4. Uniformity of output

5. Measurement of productivity

6. Production and delivery

7. Quality assurance

8. Amount of inventory9. Evaluation of work

10. Ability to patent design

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1. Jobs in services are often less structured than in manufacturing

2. Customer contact is generally much higher in services compared tomanufacturing

3. In many services, worker skill levels are low compared to those ofmanufacturing employees

4. Services are adding many new workers in low-skill, entry-level positions

5. Employee turnover is high in services, especially in low-skill jobs

6. Input variability tends to be higher in many service environments than inmanufacturing

7. Service performance can be adversely affected by many factors outside of

the managers control (e.g., employee and customer attitudes)

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Process - one or more actions that transform inputs into outputs

Three Categories of Business Processes:

Upper-management processes These govern the operation of the entireorganization.

Operational processes These are core processes that make up thevalue stream.

Supporting processesThese support the core processes.

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Supply Demand>

Supply Demand