00_introduction to operation management
TRANSCRIPT
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Inputs
Transformation Processes
(Adding value) Outputs
Operations Management is…
“The systematic design, direction and control
of processes that transform inputs into
services and products for internal, as well as
external, customers.”
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Processes
Processes should add value.
Processes can be broken down into
sub-processes, which in turn can be brokendown further.
Any process that is part of a larger process is
considered a “nested process.”Each process and each nested process has
inputs and outputs.
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Process View
of an Ad Agency
Accounting process
Production process• Prepare ad for publication
and deliver to mediaoutlets
Advertisement design and
planning process• Create the ad to the
needs of the client and prepare a planfor media exposure
Output interface process
• Communicate withclient, get needs, and coordinate progress
I n p u
t s
O u t p u t s
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External vs. Internal
Customers
External Customers are those who purchasethe goods and services.
Internal Customers are those who receivethe output of others within the firm. They arepart of the transformation process.
Inputs fromother processes
Transformation Processes(Adding value)
Outputs toInternal or to Externalcustomers
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Service Processes and
Manufacturing Processes
Manufacturing processes change materialsin one or more of the following dimensions:
Physical propertiesShape
Fixed dimensions
Surface finish
Joining parts and materials
If a process isn’t doing at least one of these, then it isa service (non-manufacturing) process.
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Manufacturing
and Service
Goods Production Tangible
Can be inventoried Low customer contact Capital Intensive Quality easily
measured
Service Production
Intangible
Can’t be inventoried
High customer contact
Labor Intensive
Quality hard to measure
Most firms provide both goods and services.
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Value Chains
Value chains are an interrelated series of processes that produce a service or product
to the satisfaction of customers.Value chains may have core processes or support
processes.
Core processes deliver value to external
customers.Support processes provide vital inputs for
the core processes.
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Progressive Insurance
Grew from $1.3 billion to $11 in 13 years.
How did they do it?
Operational Innovation (Designing new processes)
Immediate Response Claims Handling (24 hours a day).
Streamlined claims processing, from 7-10 days to 9 hours.
Web site for agents only.
Web site for customer information, inquiries and routine
processing.
Agents quickly go to scene of accident.
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Operations as a Set of
Decisions
(1) Recognize and clearly define the problem.
(2) Collect the information needed to analyze
possible alternatives.
(3) Choose the most attractive alternative.(4) Implement the chosen alternative.
Basic Decision-making Steps
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Operations as a Set of
Decisions
Strategic Decisions Tactical Decisions
Development of new
capabilities Maintenance of existingcapabilities
Design of newprocesses
Development andorganization of valuechains
Key performancemeasures
Process improvement
and performancemeasures Management and
planning of projects Generation of production
and staffing plans Inventory management Resource scheduling
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Other Challenges in
Operations Management
Rapid technological change
Ethical issues across cultures
Increasing diversity of the workforce
Environmental impact issues
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Addressing the Challenges
in Operations Management
Managing Processes
Process Strategy
Process Performance& Quality
Constraint Management
Process Layout
Lean Systems
Process Analysis
Using Operations
to Compete
Operations As aCompetitive Weapon
Operations Strategy
Project Management
Managing Value Chains
Supply Chain Strategy
Inventory Management
Location
Forecasting
Sales & OperationsPlanning
Scheduling
Resource Planning