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OM Introduction

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21 views26 pages

OM Introduction

Uploaded by

Shyre Audrey Peralta
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 PPTX, PDF, TXT or read online on Scribd
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Introduction to

Operations Management

CBM001
#DTHIM20
Learning Objectives
• Define and explain 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


Learning Objectives – con’t

• Identify current trends in OM

• Describe the flow of information between


OM and other business functions

3
Operations Management is:

The business function responsible for


planning, coordinating, and controlling
the resources needed to produce products
and services for a company
Operations Management is:

• A management function
• An organization’s core function
• In every organization whether Service or
Manufacturing, profit or Not for profit
Typical Organization Chart
What is Role of OM?

• OM Transforms inputs to outputs


– Inputs are resources such as
• People, Material, and Money

– Outputs are goods and services

7
OM’s Transformation Process

© Wiley 2010 8
OM’s 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 – means performing activities well for least possible
cost
Manufacturers vs Service Organizations

• Services: • Manufacturers:
• Tangible product
• Intangible product
• Product is inventoried
• Product cannot be
• Low customer contact
inventoried
• High customer contact • Longer response time
• Short response time • Capital intensive
• Labor intensive
Similarities for Service/Manufacturers

• Both use technology

• Both have quality, productivity, & response issues

• Both must forecast demand

• Both can have capacity, layout, and location issues

• Both have customers, suppliers, scheduling and


staffing issues
Service vs 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
Growth of the Service Sector

● Service sector growing


to 50-80% of non-farm
jobs
● Global
competitiveness
● Demands for higher
quality
● Huge technology
changes
● Time based
competition
● Work force diversity
OM Decisions

• All organizations make decisions and


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
OM Decisions
• Following decisions focus on specifics -
Tactical decision
– Tactical decisions: focus on specific day-to-day
issues like resource needs, schedules, &
quantities to produce

– are frequent

• Strategic decisions less frequent

• Tactical and Strategic decisions must align


OM Decisions
Historical Development of OM

• Industrial revolution Late 1700s


• Scientific management Early 1900s
• Human relations movement 1930s-60s
• Management science 1940s-60s
• Computer age 1960s
• Environmental Issues 1970s
• JIT & TQM* 1980s

*JIT= Just in Time, TQM= Total Quality Management


Historical Development con’t

• Reengineering 1990s
• Global competition 1980s
• Flexibility 1990s
• Time-Based Competition 1990s
• Supply chain Management 1990s
• Electronic Commerce 2000s
• Outsourcing & flattening of world 2000s
For long-run success, companies must place much importance on their
operations
Today’s OM Environment
• Customers demand better quality, greater
speed, and lower costs

• Companies implementing lean system concepts


– a total systems approach to efficient
operations

• Increased cross-functional decision making


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
Business Information Flow
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 2010 22
OM Across the Organization – con’t

• Marketing is not fully able to meet 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
Highlights...
• OM is the business function that is responsible for
managing and coordinating the resources needed to
produce a company’s products and services.

• The role of OM is to transform organizational inputs into


company’s 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
Highlights – con’t
• Many historical milestones have shaped OM.
Some of these are the Industrial Revolution,
scientific management, the human relations movement,
management science, and the computer age

• OM is highly important function in today’s 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


The End! :)

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