Production and Operations

Management (POM):
An Introduction

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 Overview


Introduction

Historical Milestones in OM

Factors Affecting OM Today

Different Ways of Studying OM

Wrap-Up: What World-Class Producers Do

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 Introduction


Operations management is the management of an
organization’s productive resources or its production
system.

A production system takes inputs and converts them
into outputs.

The conversion process is the predominant activity of
a production system.

The primary concern of an operations manager is the
activities of the conversion process.

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 Organizational Model

Finance
Sales HRM

OM
QA
Marketing

MIS Accounting
Engineering

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 Organization Chart-Major Elements

M a n u f a c t u r in g O r g a n iz a t io n

O p e r a tio n s F in a n c e /A c c o u n tin g M a r k e tin g

F a c ilit ie s D is b u r s e m e n ts S a le s P r o m o t i o n
P r o d u c tio n & & C r e d its A d v e r tis in g
In v e n to ry C o n tro l Funds M anagem ent S a le s
Q u a lit y A s s u r a n c e C a p ita l R e q u ir e m e n ts M a rke t R e s e a rch
& C o n tro l
P ro c u re m e n t
E n g in e e r in g D e s ig n
I n d u s t r ia l E n g in e e r i n g
P r o c e s s E n g in e e r in g
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 Introduction

Evolution in Operations Management

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 Entry-Level Jobs in OM


Purchasing planner/buyer

Production (or operations) supervisor

Production (or operations) scheduler/controller

Production (or operations) analyst

Inventory analyst

Quality specialist

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 Historical Milestones in OM


The Industrial Revolution

Post-Civil War Period

Scientific Management

Human Relations and Behaviorism

Operations Research (1960’s and 70’s)

The Service Revolution (1970’s and 80’s)

Supply Chain Integration and Management (1990’s)

E-Commerce (late 1990’s)

CRM (early 2000)
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 Today's Factors Affecting OM


Global Competition

Quality, Customer Service, and Cost Challenges

Rapid Expansion of Advanced Technologies

Continued Growth of the Service Sector

Scarcity of Operations Resources

Social-Responsibility Issues

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 Studying Operations Management


Operations as a System

Decision Making in OM

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 Operations as a System

Production System

Conversion
Inputs Outputs
Subsystem

Control
Subsystem

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 Inputs of an Operations System


External

Legal, Economic, Social, Technological

Market

Competition, Customer Desires, Product Info.

Primary Resources

Materials, Personnel, Capital, Utilities

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 Conversion Subsystem


Physical (Manufacturing)

Locational Services (Transportation)

Exchange Services (Retailing)

Storage Services (Warehousing)

Other Private Services (Insurance)

Government Services (Federal)

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 Outputs of an Operations System


Direct

Products

Services

Indirect

Waste

Pollution

Technological Advances

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 Production as an Organization Function


US companies cannot compete with marketing,
finance, accounting, and engineering alone.

We focus on OM as we think of global
competitiveness, because that is where the vast
majority of a firm’s workers, capital assets, and
expenses reside.

To succeed, a firm must have a strong operations
function teaming with the other organization
functions.

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Service Operations

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 Decision Making in OM


Strategic Decisions

Operating Decisions

Control Decisions

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 Strategic Decisions


These decisions are of strategic importance and have
long-term significance for the organization.

Examples include deciding:

the design for a new product’s production process

where to locate a new factory

whether to launch a new-product development plan

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 Operating Decisions


These decisions are necessary if the ongoing
production of goods and services is to satisfy market
demands and provide profits.

Examples include deciding:

how much finished-goods inventory to carry

the amount of overtime to use next week

the details for purchasing raw material next month

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 Control Decisions


These decisions concern the day-to-day activities of
workers, quality of products and services, production
and overhead costs, and machine maintenance.

Examples include deciding:

labor cost standards for a new product

frequency of preventive maintenance

new quality control acceptance criteria

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 What Controls the Operations System?


Information about the outputs, the conversions, and
the inputs is fed back to management.

This information is matched with management’s
expectations

When there is a difference, management must take
corrective action to maintain control of the system

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 Wrap-Up: World Class Practice


OM important in any organization

Global competition forces rapid evolution of OM

Decision based framework focus of course

Strategic, Operating, and Control

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End of Chapter 1

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