Introduction to Production/Operations

Management
What is Production/Operations Management?

• It is the conversion of resource inputs into goods and services as

outputs.
Input Resources:

Materials
Manpower
Output:
Machines
Method Conversion
Products
Money
Or
Facilities
Services
Utilities
Data and
Information
Technology
 Input – Conversion – Output Characteristics of Typical
Productive Systems

PRODUCTIVE SYSTEMS INPUTS CONVERSION OUTPUTS

Hospital Patients Health Cured Patients

Auto Factory Raw Materials Fabrication and Assembly of Autos Automobiles

Oil Refinery Crude Oil Chemical Processes Gasoline, Oil, Plastics

 Characteristics of Systems to Produce Products vs Services

Products Services

Tangible Intangible and Perishable

Can be produced to inventory Availability achieved by keeping the productive system open for services

Minimal contact with ultimate consumer High Contact with clients or customers

Complex and interrelated processing Simple processing

Demand on system variable on weekly, Demand commonly variable on hourly, daily and weekly bases.

monthly, and seasonal bases

Markets served by productive systems are Markets served by productive system are

regional, national and international usually local

Large units that can take advantage of Relatively small units to serve local markets

economies of scale

Location of system is in relation to regional, Location dependent on location of local

national, and international markets. customers, clients and users.

Productivity - a measure of the efficiency of a person, machine, factory,
system, etc. in converting inputs into useful outputs.
Efficiency – the ratio of the useful work performed by a machine or in a
process to the total energy expended or heat taken in.
Key Performance Indicator – is a measurable value that demonstrates
how effectively a company is achieving key business objectives.
Effectiveness – the degree to which something is successful in
producing a desired result.
Efficiency refers to how well something is done while effectiveness
refers to how useful something is.
Types of Productive Systems

• Process-focused Systems – produce products according to customer

specifications.
• Product-focused Systems – produce high volume products resulting in
continuous use of facilities
Classification of Service Systems

• Stagnant Personal Services – frequently requires direct contact

between the customer and the service provider.
• Substitutable Personal Services – also requires direct personal contact
however, it is possible to substitute the service with available
technology.
• Progressive Services – one component requires little labor and
considerable cost reduction while the second component is highly
labor intensive.
• Explosive Services – virtually no contact between customers and
production labor.
 Business Process

• A collection of linked tasks which find their end in the delivery of a service
or product to a client.

• A set of activities and tasks that once completed will accomplish organizational goals.
 Business Process
STANDARDS / CUSTOMER
SATISFACTION
SU
PR PR DE CU
PPL
OC OD LIV ST
IER
UR UC ER O
EM TIO Y ME
EN N R
supplirSs T

Product Need Forecastin Feedback

Distribution Channel
Process Design
Development Specification gPlanning / Scheduling
Accreditation of Conversion Demand Planning
Capacity
Source Inspection
Contractors Quality Assurance Inventory
Location and Negotiation Inventory Management
Lay-out Inventory Management
Maintenance
Competitiveness

Four dimensions of competitiveness that measure the effectiveness of

the operations function:

• Quality
• Cost
• Dependability as a supplier
• Flexibility/service
Strategy Formulation

- Is a process by which a firm determines how it will compete in its

industry. It involves goal determination and the development of
policies for achieving its goals. The strategy itself must be related to a
broad set of external factors, such as industry economic forces and
societal values, and to the internal factors such as company strengths
and weaknesses and the personal values of key executives.
Functional Areas in a business

1. Marketing
2. Sales
3. Finance
4. Engineering
5. R and D
6. Labor
7. Procurement
8. Production
9. Distribution