1-1 operations management operations management is: the management of systems or processes that...
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Operations ManagementOperations Management
Operations Management is:
The management of systems or processes that create goods and/or provide services
Operations Management affects: Companies’ ability to compete Nation’s ability to compete internationally
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Value-Added ProcessValue-Added Process
The operations function involves the conversion of inputs into outputs
Inputs Land Labor Capital
Transformation/Conversion
process
Outputs Goods Services
Control
Feedback
FeedbackFeedback
Value added
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Value-Added & Product Value-Added & Product PackagesPackages
Value-added is the difference between the cost of inputs and the value or price of outputs.
Product packages are a combination of goods and services.
Product packages can make a company more competitive.
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Production of Goods vs. Delivery of Production of Goods vs. Delivery of ServicesServices
Production of goods – tangible output Delivery of services – an act Service job categories
Government Wholesale/retail Financial services Healthcare Personal services Business services Education
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Key DifferencesKey Differences
1. Customer contact
2. Uniformity of input
3. Labor content of jobs
4. Uniformity of output
5. Measurement of productivity
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Key DifferencesKey Differences
6. Production and delivery
7. Quality assurance
8. Amount of inventory
9. Evaluation of work
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Goods vs ServiceGoods vs Service
Characteristic Goods Service
Customer contact Low High
Uniformity of input High Low
Labor content Low High
Uniformity of output High Low
Output Tangible Intangible
Measurement of productivity Easy Difficult
Opportunity to correct problems High Low
Inventory Much Little
Evaluation Easier Difficult
Patentable Usually Not usual
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Automobile assembly, steel making
Home remodeling, retail sales
Automobile Repair, fast food
Goods-service ContinuumGoods-service Continuum
Computer repair, restaurant meal
Song writing, software development
Goods Service
Surgery, teaching
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Manufacturing or Service?Manufacturing or Service?
Tangible Act
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Types of OperationsTypes of Operations
Operations ExamplesGoods Producing Farming, mining, construction,
manufacturing, power generationStorage/Transportation Warehousing, trucking, mail
service, moving, taxis, buses,hotels, airlines
Exchange Retailing, wholesaling, banking,renting, leasing, library, loans
Entertainment Films, radio and television,concerts, recording
Communication Newspapers, radio and televisionnewscasts, telephone, satellites
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Challenges of Managing Challenges of Managing ServicesServices
Service jobs are often less structured than manufacturing jobs
Customer contact is higher Worker skill levels are lower Services hire many low-skill, entry-level workers Employee turnover is higher Input variability is higher Service performance can be affected by worker’s
personal factors
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Key Decisions of Operations Key Decisions of Operations ManagersManagers
WhatWhat resources/what amounts
WhenNeeded/scheduled/ordered
WhereWork to be done
HowDesigned
WhoTo do the work
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Decision MakingDecision Making
System Design– capacity– location– arrangement of departments– product and service planning– acquisition and placement of
equipment
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Decision MakingDecision Making
System operation– personnel– inventory– scheduling– project
management– quality assurance
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Operations Management includes: Forecasting Capacity planning Scheduling Managing inventories Assuring quality Motivating employees Deciding where to locate facilities Supply chain management And more . . .
Scope of Operations ManagementScope of Operations Management
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The OrganizationThe Organization
The Three Basic Functions
Organization
Finance Operations Marketing
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Business Operations OverlapBusiness Operations Overlap
Operations
FinanceMarketing
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Operations InterfacesOperations Interfaces
Public Relations
Accounting
IndustrialEngineering
Operations
Maintenance
Personnel
Purchasing
Distribution
MIS
Legal
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Historical Evolution of Operations Historical Evolution of Operations ManagementManagement
Industrial revolution (1770’s) Scientific management (1911)
Mass production Interchangeable parts Division of labor
Human relations movement (1920-60) Decision models (1915, 1960-70’s) Influence of Japanese manufacturers
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Trends in BusinessTrends in Business
Major trends The Internet, e-commerce, e-business Management technology Globalization Management of supply chains Outsourcing Agility Ethical behavior
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Management TechnologyManagement Technology
Technology: The application of scientific discoveries to the development and improvement of goods and services
Product and service technology Process technology Information technology
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Suppliers’ Suppliers
DirectSuppliers Producer Distributor Final
Consumer
Simple Product Supply ChainSimple Product Supply Chain
Supply Chain: A sequence of activitiesAnd organizations involved in producingAnd delivering a good or service
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Other Important TrendsOther Important Trends
Working with fewer resources Revenue management Process analysis and improvement Increased regulation and product liability Lean production