TUĞÇE ÇAY 2009503071

Industrial Engineering Department,

Dokuz Eylul University, Turkey

Introduction to Operations

What is Operations Management?

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.

company

What is Operations Management Role?

• OM Transforms inputs to outputs

– Inputs are resources such as

• People, Material, and Money

– Outputs are goods and services

To convert, to change

OM’s Transformation Process

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 – perform activities well at lowest possible cost

OM at the core of Businesses

• Three basic functions– Operations/Production

• Goods oriented (manufacturing and assembly)• Service oriented (health care, transportation and retailing)• Value-added (the essence of the operations functions)

– Finance-Accounting• Budgets (plan financial requirements)• Provision of funds (the necessary funding of the operations)

– Marketing• Selling, Promoting• Assessing customer wants and needs

Organization

Finance Operations Marketing

The center of an object

directed, guided

Marketing-OM-Finance should work together

Operations

FinanceMarketing

Accounting

IndustrialEngineering

Operations

Maintenance

Public Relations

PersonnelPurchasing

Distribution

Responsibilities of Operations Management• Planning

– Capacity utilization– Location– Choosing products or services– Make or buy– Layout– Projects– Scheduling– Market share– Plan for risk reduction, plan B?– Forecasting

SUPPLY SIDE DEMAND SIDE

• Controlling– Inventory– Quality– Costs

• Organization– Degree of standardization– Subcontracting– Process selection

• Staffing– Hiring/lay off– Use of overtime– Incentive plans reward

Standardization is the ability to realize in practice in the short run as well asin the long run a set of methods and conditions that makes possible repeated high performance.

OM Decisions• All organizations are based on decisions• Decisions 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

– Following decisions focus on specifics - Tactical decision

OM Decisions• Tactical decisions focus on

– Specific day-to-day issues• Resource needs, schedules, & quantities to

produce– Tactical decisions are very frequent.– Strategic decisions are less frequent.– Tactical decisions must align with strategic

decisions.

OM Decisions

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 manager, Quality specialists, etc.• All business functions need information from OM

in order to perform their tasks.

Today’s Essay Topic

Explain the relationship between operations management, marketing and finance in an organization.