Chapter 1

Introduction to the Field

• What is Operations and Supply Management?

• Why Study Operations Management?

• Transformation Processes Defined

• Differences between Services and Goods

• The Importance of Operations Management

• Current Issues in OM

OBJECTIVES

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 firm’s primary products and services

1-3

Why Study Operations Management?

Business Education

Systematic Approach to Org. Processes

Career Opportunities

Cross-Functional Applications

OperationsManagement

1-4

What is a Transformation Process?

Defined

A transformation process is defined as a user of resources to transform inputs into some desired outputs

1-5

Transformations

• Physical--manufacturing

• Locational--transportation

• Exchange--retailing

• Storage--warehousing

• Physiological--health care

• Informational--telecommunications

1-6

Operations and Supply ManagementSupply Chain Processes

SourcingProcesses

ManufacturingProcesses

ServiceProcesses

DistributionProcessesLogistics

ProcessesLogisticsProcesses

1-7

Automobile Factory• Primary Inputs

– Sheet steel, engine parts

• Resources– Tools, equipment, workers

• Primary Transformation Function– Fabrication and assembly of cars

• Desired Output– High quality cars

1-8

Hospital• Primary Inputs

– Patients

• Resources– MDs, nurses, drugs, equipment

• Primary Transformation Function– Health care (diagnosis and

treatment)

• Primary Output– Healthy individuals

1-9

University

• Primary Inputs– High school graduates

• Resources– Professors, staff, drugs, classrooms

1-10

University

• Primary Inputs– High school graduates

• Resources– Professors, staff, drugs, classrooms

1-11

University

• Primary Inputs– High school graduates

• Resources– Professors, staff, computers,

classrooms

• Primary Transformation Function– Imparting knowledge and skills

• Desired Output– Educated individuals

1-12

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?)

1-13

The Goods-Services Continuum

1-14

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

1-15

Current Issues in OM (cont’d)

• Managing the customers experience during the service encounter

• Raising the awareness of operations as a significant competitive weapon

1-16

Question Bowl

A major objective of this book is to show

how smart managers can do which of the

following?

a. Improve efficiency by lowering costs

b. Improve effectiveness by creating value

c. Increasing value by reducing prices

d. Serving customers well

e. All of the above

Answer: e. All of the above

1-17

Question Bowl

In the Input-Transformation-Output Relationship, a typical “input” for a Department Store is which of the following?

a. Displaysb. Stocks of goodsc. Sales clerksd. All of the abovee. None of the above

Answer: e. None of the above (The above are considered “Resources” of a department store. The correct answer is “Shoppers”.)

1-18

End of Chapter 1

1-19