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Chapter 1

Overview: Introduction to the Field

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• Operations Management

• Why Study Operations Management?

• Production System Defined

• Operations as a Service

• Plan of This Book

• 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 Production System?Defined

A production system 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

OperationsManagement

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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Plan of This Book

I. Operations Strategy and Managing Change

1. Introductionto the Field

2. Operations Strategy and Competitiveness

3. Project Management

III. SupplyChain Design

9. Supply Chain Strategy

10. Strategic Capacity

Management

11. Just-in-Time and Lean Systems

IV. Planning and Controlling the Supply Chain

12. Forecasting and Demand Management

13. Aggregate Sales and Operations Planning

14. Inventory Control

15. Materials Requirements Planning 8. Operations Consulting

and Reengineering

16. Operations Scheduling

II. Product Designand Process

Selection

4. ProcessAnalysis

5. ProductDesign and

Process Selection-Manufacturing

6. ProductDesign and

Process Selection-Services

7. QualityManagement

17. Synchronous Manufacturing and Theory of Constraints

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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

• Effectively consolidating the operations resulting from mergers

• Developing flexible supply chains to enable mass customization of products and services

• Managing global supplier, production and distribution networks

• Increased “commoditization” of suppliers

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Current Issues in OM (cont’d)

• Achieving the “Service Factory”

• Enhancing value added services

• Making efficient use of Internet technology

• Achieving good service from service firms

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Question BowlA 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

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Question BowlIn 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”.)

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Question BowlIn which of the following decades did the

concept of quality control originate?a. 1920’sb. 1930’sc. 1940’sd. 1950’se. 1970’s

Answer: b. 1930’s (Tools such as sampling inspection and statistical tables where first developed by Walter Shewhart, H. F. Dodge, and H. G. Romig.)

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End of Chapter 1