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CH 01

operation management

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0% found this document useful (0 votes)
95 views29 pages

CH 01

operation management

Uploaded by

Tanu Bansal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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Wiley 2007 1

Chapter 1 - Introduction to
Operations Management
Operations Management
by
R. Dan Reid & Nada R. Sanders
3
rd
Edition Wiley 2007
PowerPoint Presentation by R.B. Clough UNH
M. E. Henrie - UAA
Wiley 2007 2
Learning Objectives
Define Operations Management (OM)
Explain the role of OM in business
Describe the decisions that operations
managers make
Describe the differences between service
and manufacturing operations
Identify major historical developments in
OM
Wiley 2007 3
Learning Objectives - continued
Identify current trends in OM
Describer the flow of information between
OM and other business functions
Wiley 2007 4
What is Operations Management?
The business function responsible for
planning, coordinating, and
controlling the resources needed to
produce a companys products and
services

Wiley 2007 5
What is Operations Management?
It is a management function
Organizations core function
Every organization has OM function
Service or Manufacturing
For profit or Not for profit
Wiley 2007 6
Typical Organization Chart
Wiley 2007 7
What is Operations Management
Role?
OM Transforms inputs to outputs
Inputs are resources such as
People, Material, and Money
Outputs are goods and services


Wiley 2007 8
OMs Transformation Process
Wiley 2007 9
OMs Transformation Role
To add value
Increase product value at each stage
Value added is the net increase between output product
value and input material value
Provide an efficient transformation
Efficiency perform activities well at lowest possible cost
Wiley 2007 10
Differences between Manufacturers
and Service Organizations
Services:
Intangible product
Product cannot be
inventoried
High customer contact
Short response time
Labor intensive

Manufacturers:
Tangible product
Product can be
inventoried
Low customer contact
Longer response time
Capital intensive

Wiley 2007 11
Similarities-Service/Manufacturers
All use technology
Both have quality, productivity, & response
issues
All must forecast demand
Each will have capacity, layout, and location
issues
All have customers, suppliers, scheduling and
staffing issues
Wiley 2007 12
Service - Manufacturing
Manufacturing often provides services
Services often provides tangible goods
Some organizations are a blend of
service/manufacturing/quasi-
manufacturing Quasi-Manufacturing
(QM) organizations
QM characteristics include
Low customer contact & Capital Intensive
Wiley 2007 13
Trends in OM
Service sector growing
to 50-80% of non-farm
jobs- See Figure 1-4
Global competitiveness
Demands for higher
quality
Huge technology
changes
Time based competition
Work force diversity

Wiley 2007 14
OM Decisions
All organizations are based on decisions
Decisions follow a similar path
First decisions very broad Strategic
decisions
Strategic Decisions set the direction for the
entire company; they are broad in scope and
long-term in nature
Following decisions focus on specifics -
Tactical decision

Wiley 2007 15
OM Decisions
Tactical decisions focus on
Specific day-to-day issues
Resource needs, schedules, & quantities to
produce
Tactical decisions are very frequent
Strategic decisions less frequent
Tactical decisions must align with strategic
decisions
Wiley 2007 16
OM Decisions
Wiley 2007 17
Plan of Book-Chapters link to Types
of OM Decisions
Wiley 2007 18
Why OM?
For long-run success companies must place
much important on their operations
The 1950-1960 era was the U.S. golden era where
primary opportunities were marketing
The 1970-1980 U.S. companies experienced a
large decline in productivity growth international
firms began to challenge in many markets
The 1970-1980 era saw U. S. firms lagging behind
in methods and processes
The resurgence of American business in the
1990s capitalized on improved operations
Wiley 2007 19
Historical Development of OM
Industrial revolution Late 1700s
Scientific management Early 1900s
Human relations movement 1930s to
1960s
Management science Mid-1900s
Computer age 1970s
Environmental Issues 1970s

Wiley 2007 20
Historical Development of OM
Just-in-Time Systems (JIT) 1980s

Total quality management (TQM) 1980s

Reengineering 1990s

Global competition 1980s

Flexibility 1990s

Wiley 2007 21
Historical Development of OM

Time-Based Competition 1990s

Supply chain Management 1990s

Electronic Commerce 2000s

Outsourcing and
flattening of the world 2000s
Wiley 2007 22
Todays OM Environment
Customers demand better quality, greater
speed, and lower costs
Companies implementing lean systems
concepts a total systems approach to
efficient operations
Recognized need to better manage
information using ERP and CRM systems
Increased cross-functional decision making
Wiley 2007 23
OM in Practice
OM has the most diverse organizational
function
Manages the transformation process
OM has many faces and names such as;
V. P. operations, Director of supply chains,
Manufacturing manager
Plant manger, Quality specialists, etc.
All business functions need information from
OM in order to perform their tasks
Wiley 2007 24
Business Information Flow


Wiley 2007 25
OM Across the Organization
Most businesses are supported by the
functions of operations, marketing, and
finance
The major functional areas must
interact to achieve the organization
goals

Wiley 2007 26
OM Across the Organization -
continued
Marketing is not fully capable of meeting customer
needs if they do not understand what operations can
produce
Finance cannot judge the need for capital
investments if they do not understand operations
concepts and needs
Information systems enables the information flow
throughout the organization
Human resources must understand job requirements
and worker skills
Accounting needs to consider inventory management,
capacity information, and labor standards

Wiley 2007 27
Chapter 1 Highlights
OM is the business function that is responsible for
managing and coordinating the resources needed to
produce a companys products and services.
Its role of OM is to transform organizational inputs
into companys products or services outputs
OM is responsible for a wide range of decisions,
ranging from strategic to tactical.
Organizations can be divided into manufacturing and
service organizations, which differ in the tangibility of
the product or service
Wiley 2007 28
Chapter 1 Highlights -
continued
A number of historical milestones have shaped OM.
Some of the more significant of these are the
Industrial Revolution, scientific management, the
human relations movement, management science,
and the computer age
OM is highly important function in todays dynamic
business environment. Among the trends with
significant impact are just-in-time, TQM,
reengineering, flexibility, time-based competition,
SCM, global marketplace, and environmental issues
OM works closely with all other business functions
Wiley 2007 29
The End
Copyright 2007 John Wiley & Sons, Inc. All rights reserved.
Reproduction or translation of this work beyond that permitted
in Section 117 of the 1976 United State Copyright Act without
the express written permission of the copyright owner is
unlawful. Request for further information should be addressed
to the Permissions Department, John Wiley & Sons, Inc. The
purchaser may make back-up copies for his/her own use only
and not for distribution or resale. The Publisher assumes no
responsibility for errors, omissions, or damages, caused by the
use of these programs or from the use of the information
contained herein.

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