Chapter 1 - : To Operations Management

Chapter 1 - Introduction
to
Operations
Management
Wiley 2010
Operations Management is:

The business function responsible
for planning, coordinating, and
controlling the resources needed
to produce products and services
for a company
Wiley 2010
Operations Management is:
A management function
An organizations core function
In every organization whether

Service or Manufacturing, profit or
Not for profit
Wiley 2010
Typical Organization Chart
Wiley 2010
What is Role of OM?
OM Transforms inputs to outputs
Inputs are resources such as
People, Material, and Money
Outputs are goods and services
Wiley 2010
OMs Transformation
Process
Wiley 2010
OMs 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 means performing activities well for least

possible cost
Wiley 2010
Goods & Services
Manufacturing
Tangible product
Product can be
inventoried
Low customer contact
Longer response time
Capital intensive
Services
Intangible product
Product cannot be
inventoried
High customer
contact
Short response time
Labor intensive
Wiley 2010
On the other hand
Both use technology

Both have quality, productivity, & response
issues
Both must forecast demand
Both will have capacity, layout, and
location issues
Both have customers, suppliers, scheduling
and staffing issues
Manufacturing often provides services
Services often provides tangible goods
Wiley 2010
Hybrid organizations
Some organizations are a blend of

service/manufacturing/quasimanufacturing QuasiManufacturing (QM) organizations
QM characteristics include
Low customer contact & Capital

Intensive
Wiley 2010
10
Improving Products
http://www.businessweek.com/magazin
e/content/11_02/b4210048400234.htm?
chan=rss_topStories_ssi_5
http://www.npr.org/templates/story/story
.php?storyId=89070760
Wiley 2010
11
Improving Services
http://www.npr.org/templates/story
/story.php?storyId=88196545
Wiley 2010
12
Improving Services
Wiley 2010
13
Improving Both
Simultaneously
http://www.businessweek.com/glob
albiz/content/sep2009/gb2009099_
395466_page_2.htm
Wiley 2010
14
OM Decisions
All organizations make decisions

and 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
Wiley 2010
15
OM Decisions
Following decisions focus on specifics Tactical decision
Tactical decisions: focus on specific day-today issues like resource needs, schedules, &
quantities to produce
are frequent
Strategic decisions less frequent

Tactical and Strategic decisions must
align
Wiley 2010
16
OM Decisions
Wiley 2010
17
Plan of Book-Chapters link to

Types of OM Decisions
Wiley 2010
18
Todays OM Environment
Customers demand better quality,

greater speed, and lower costs
Companies implementing lean system
concepts a total systems approach to
efficient operations
Recognized need to better manage
information using ERP and CRM systems
Increased cross-functional decision
making
Wiley 2010
19
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 manger, Quality specialists, etc.
All business functions need information

from OM in order to perform their tasks
Wiley 2010
20
Business Information Flow
Wiley 2010
21
OM Across the
Organization
Most businesses are supported by

the functions of operations,
marketing, and finance
The major functional areas must
interact to achieve the
organization goals
Wiley 2010
22
OM Across the
Organization cont
Marketing is not fully able to meet customer needs if

they do not understand what operations can produce
Finance cannot judge the need for capital
investments if they do not understand operations
concepts and needs
Information systems enables the information flow
throughout the organization
Human resources must understand job requirements
and worker skills
Accounting needs to consider inventory management,
capacity information, and labor standards
Wiley 2010
23
Chapter 1 Highlights
OM is the business function that is responsible

for managing and coordinating the resources
needed to produce a companys products and
services.
The role of OM is to transform organizational
inputs into companys products or services
outputs
OM is responsible for a wide range of decisions,
ranging from strategic to tactical.
Organizations can be divided into manufacturing
and service organizations, which differ in the
tangibility of the product or service
Wiley 2010
24
Chapter 1 Highlights
cont
OM is highly important function in todays

dynamic business environment. Among the
trends with significant impact are just-in-time,
TQM, reengineering, flexibility, time-based
competition, SCM, global marketplace, and
environmental issues
OM works closely with all other business functions
Wiley 2010
25
The End
Copyright 2010 John Wiley & Sons, Inc. All rights

reserved. Reproduction or translation of this work
beyond that permitted in Section 117 of the 1976
United State Copyright Act without the express written
permission of the copyright owner is unlawful. Request
for further information should be addressed to the
Permissions Department, John Wiley & Sons, Inc. The
purchaser may make back-up copies for his/her own use
only and not for distribution or resale. The Publisher
assumes no responsibility for errors, omissions, or
damages, caused by the use of these programs or from
the use of the information contained herein.
Wiley 2010
26

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Chapter 1 - Introduction

Operations Management is:

Operations Management is:

An organizations core function

In every organization whether

Typical Organization Chart

What is Role of OM?

OM Transforms inputs to outputs

Inputs are resources such as

People, Material, and Money

Outputs are goods and services

OMs Transformation Role

Increase product value at each stage

Value added is the net increase between output

Provide an efficient transformation

Efficiency means performing activities well for least

Goods & Services

On the other hand

Both use technology

Some organizations are a blend of

Low customer contact & Capital

All organizations make decisions

First decisions very broad Strategic

Strategic Decisions set the direction for

Following decisions focus on specifics Tactical decision

Strategic decisions less frequent

Plan of Book-Chapters link to

Customers demand better quality,

OM has the most diverse organizational

V. P. operations, Director of supply chains,

All business functions need information

Business Information Flow

Most businesses are supported by

Marketing is not fully able to meet customer needs if

OM is the business function that is responsible

OM is highly important function in todays

OM works closely with all other business functions

Copyright 2010 John Wiley & Sons, Inc. All rights

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