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Chapter 1

Introduction to the Field

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Operations Management Why Study Operations Management? Transformation Processes Defined Operations as a Service The Importance of Operations

Management Historical Development of OM Current Issues in OM

OBJECTIVES

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What is Operations Management?Defined

Operations management (OM) is defined as the design, operation, and improvement of the systems that create and deliver the firm’s primary products and services

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Why Study Operations Management?

Business Education

Systematic Approach to Org. Processes

Career Opportunities

Cross-Functional Applications

OperationsManagement

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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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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?)

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OM in the Organization Chart

OperationsOperations

Plant Manager

Plant Manager

OperationsManager

OperationsManager

DirectorDirector

Manufacturing, Production control, Quality assurance, Engineering,

Purchasing, Maintenance, etc

Manufacturing, Production control, Quality assurance, Engineering,

Purchasing, Maintenance, etc

Finance Marketing

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Core services are basic things that customers want from products they purchase

Core ServicesDefined

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Core Services Performance Objectives

OperationsManagemen

t

Flexibility

Quality

Speed

Price (or cost Reduction)

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Value-added services differentiate the organization from competitors and build relationships that bind customers to the firm in a positive way

Value-Added ServicesDefined

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Value-Added Service Categories

OperationsManagement

Information

Problem Solving

Sales Support

Field Support

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The Importance of Operations Management

Synergies must exist with other functional areas of the organization

Operations account for 60-80% of the direct expenses that burden a firms profit.

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Historical Development of OM JIT and TQC

Manufacturing Strategy Paradigm

Service Quality and Productivity

Total Quality Management and Quality Certification

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Historical Development of OM (cont’d)

Business Process Reengineering

Supply Chain Management

Electronic Commerce

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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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Current Issues in OM (cont’d)

Managing the customers experience during the service encounter

Raising the awareness of operations as a significant competitive weapon

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End of Chapter 1