Professional Documents
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Operations Management797
Operations Management797
INPUT
•Material
TRANSFORMATION OUTPUT
•Machines
•Goods
•Labor PROCESS
•Services
•Management
•Capital
Feedback
Operations Function
Operations
Marketing
Finance
and
accounting
Human
resources
Outside
suppliers
How is operations relevant to my
major?
Accounting “As an auditor you must
understand the fundamentals of
operations management.”
Information “IT is a tool, and there’s no better
Technology place to apply it than in
operations.”
“We use so many things you learn
Management in an operations class—
scheduling, lean production,
theory of constraints, and tons of
quality tools.”
How is operations relevant to my
major?
Economics “It’s all about processes. I
live by flowcharts and
Pareto analysis.”
“How can you do a good
Marketing job marketing a product if
you’re unsure of its quality
or delivery status?”
Finance “Most of our capital
budgeting requests are
from operations, and most
of our cost savings, too.”
Evolution of Operations
Management
Craft production
process of handcrafting products or services
for individual customers
Division of labor
dividing a job into a series of small tasks
each performed by a different worker
Interchangeable parts
standardization of parts initially as
replacement parts; enabled mass
production
Evolution of Operations
Management (cont.)
Scientific management
systematic analysis of work methods
Mass production
high-volume production of a
standardized product for a mass
market
Lean production
adaptation of mass production that
prizes quality and flexibility
Historical Events in
Operations Management
B2B B2C
Commerceone.com Amazon.com
Consumer
C2B C2C
Priceline.com eBay.com
Categories of E-Commerce
An Integrated Value Chain
Flow
Flow of
of information
information (customer
(customer order)
order)
Flow of product (order fulfillment)
Impact of E-Business on
Operations Management
Germany: $26.18
USA: $21.33
Taiwan: $5.41
Mexico: $2.38
Measures of Productivity
Changes in Productivity for
Select Countries
Internet-enabled
productivity
Source: “International Comparisons of Manufacturing Productivity and Unit Labor Cost Trends, 2002,” Bureau of Labor
Statistics, U.S. Department of Labor, September 2003. U.S. figures for 2002–2003 from “Major Sector Productivity and
Costs Index,” Bureau of Labor Statistics, U.S. Department of Labor, March 2004
Productivity Increase
Become efficient
output increases with little or no increase in input
Expand
both output and input grow with output growing
more rapidly
Achieve breakthroughs
output increases while input decreases
Downsize
output remains the same and input is reduced
Retrench
both output and input decrease, with input
decreasing at a faster rate
Competitiveness and
Productivity
Breakthrough
Performance
More Efficient
Retrench