College of Tourismand HospitalityManagement

UNIT 1: Introduction to Operations

Management, Its Competitiveness,
Strategy, and Productivity

Week 1:
Introduction to Operations
Management
 Course Content

1. Operations Management
defined

2. Scope and importance of

operations management.
 Learning Objectives
LO 1.1 Define the terms operations management and supply chain
LO 1.2 Identify similarities and differences between production and service
operations
LO 1.3 Explain the importance of learning about operations management
LO 1.4 Identify the three major functional areas of organizations and
explain how they interrelate
LO 1.5 Summarize the two major aspects of process management
LO 1.6 Describe the operations function and the nature of the operations
manager’s job
LO 1.7 Briefly describe the historical evolution of operations management
LO 1.8 Describe the current issues in business that impact operations
management
What is Operations Management?
• What is operations?
The part of a business organization that is
responsible for producing goods or services
• How can we define operations
management?
The management of systems or processes
that create goods and/or provide services
• What is operations?
The part of a business organization that is
responsible for producing goods or services
• How can we define operations
management?
The management of systems or processes
that create goods and/or provide services
• What is operations?
The part of a business organization that is
responsible for producing goods or services
• How can we define operations
management?
The management of systems or processes
that create goods and/or provide services
 Good or Service?

Goods are physical items that include raw

materials, parts, subassemblies, and final
products.
•Automobile
•Computer
•Oven
•Shampoo
 Good or Service?

Services are activities that provide some

combination of time, location, form or
psychological value.
•Air travel
•Education
•Haircut
•Legal counsel
 Supply Chain

Supply chain – a sequence of activities and

organizations involved in producing and
delivering a good or service
 Supply Chain

Supply chain – a sequence of activities and

organizations involved in producing and
delivering a good or service

Suppliers’ Direct Final

Producer Distributor
suppliers suppliers customers
 Manufacturers vs Service Organizations
•Services: •Manufacturers:
• Intangible product
• Tangible product
• Product cannot be inventoried
• Product is inventoried
• High customer contact
• Low customer contact
• Short response time
• Longer response time
• Labor intensive
• Capital intensive

© Wiley 2010 15
 Why Study Operations Management
• All aspects of business is affected by operations.
• Many service jobs are closely related to operations
➢Financial services
➢Marketing services
➢Accounting services
➢Information services
• Learning Operations Management including supply chain
will provide you a better understanding of:
➢ the world you live in
➢ the global dependencies of companies and nations
➢ reasons why companies succeed and fail
➢ the importance of working with others
2018 McGraw-Hill Higher Education
Typical Organization Chart

© Wiley 2010 17
 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 18
 The Transformation Process
Value-Added

Inputs Transformation/ Outputs

•Land Conversion •Goods
•Labor •Services
•Capital Process
•Information

Measurement
and Feedback
Measurement Measurement
and Feedback and Feedback
Control

© Wiley 2010 19
 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 – means performing activities well for

least possible cost
 OM Decisions
◼ All organizations make decisions and follow
a similar path
O’ know! History?
 Historical Development of OM
◼ Industrial revolution Late
1700s
◼ Scientific management Early
1900s
◼ Human relations movement 1930s-60s
◼ Management science 1940s-60s
◼ Computer age 1960s
◼ Environmental Issues 1970s
◼ JIT & TQM* 1980s
*JIT= Just in Time, TQM= Total Quality Management
 Historical Development con’t
◼ Reengineering 1990s
◼ Global competition 1980s
◼ Flexibility 1990s
◼ Time-Based Competition 1990s
◼ Supply chain Management 1990s
◼ Electronic Commerce 2000s
◼ Outsourcing & flattening of world 2000s
For long-run success, companies must place much importance on their operations
Historical Development of OM
 Scope of Operations Management
The scope of operations management ranges across
the organization
The operations function includes many interrelated
activities such as:
• Forecasting
• Capacity planning
• Facilities and layout
• Scheduling
• Managing inventories
• Assuring quality
• Motivating employees
• Deciding where to locate facilities
• And more . . .
 Scope of Operations Management
Forecasting such things as Capacity planning, essential for
weather and landing conditions, the airline to maintain cash flow
seat demand for flights, and the and make a reasonable profit.
growth in air travel. (Too few or too many planes, or
even the right number of planes
but in the wrong places, will hurt
profits.)
 Scope of Operations Management
Locating facilities according to Facilities and layout, important in
managers’ decisions on which achieving effective use of workers
cities to provide service for, and equipment.
where to locate maintenance
facilities, and where to locate
major and minor hubs.
 Scope of Operations Management
Scheduling of planes for flights Managing inventories of such
and for routine maintenance; items as foods and beverages,
scheduling of pilots and flight first-aid equipment, inflight
attendants; and scheduling of magazines, pillows and blankets,
ground crews, counter staff, and and life preservers.
baggage handlers.
 Scope of Operations Management
Assuring quality, essential in flying Motivating and training
and maintenance operations, employees in all phases of
where the emphasis is on safety, operations
and important in dealing with
customers at ticket counters,
check-in, telephone and
electronic reservations, and curb
service, where the emphasis is on
efficiency and courtesy.
 Role of the Operations Manager
The Operations function consists of all activities
directly related to producing goods or providing services.

A primary function of the operations manager is to guide

the system by decision making.
◼ System design decisions
◼ System operation decisions
 Role of the Operations Manager
OM Decision Making
Typical operations decisions include:
◼ What: What resources are needed, and in what
amounts?
◼ When: When will each resource be needed? When
should the work be scheduled? When should materials
and other supplies be ordered?
◼ Where: Where will the work be done?
◼ How: How will the product or service be designed?
How will the work be done? How will resources be
allocated?
◼ Who: Who will do the work?
 Key Issues for Operations Managers Today

◼ Economic conditions
◼ Innovating
◼ Quality problems
◼ Risk management
◼ Competing in a global economy
 Key Issues for Operations Managers Today
◼ Sustainability
◼ Using resources in ways that do not harm
ecological systems that support human
existence
◼ Sustainability measures often go beyond
traditional environmental and economic
measures to include measures that incorporate
social criteria in decision making
 Key Issues for Operations Managers Today
Ethical issues that may arise in many aspects of
operations management:
◼ Financial statements

◼ Worker safety

◼ Product safety

◼ Quality

◼ The environment

◼ The community

◼ Hiring and firing workers

◼ Closing facilities

◼ Workers’ rights
Key Issues for Operations Managers Today
◼ All areas of business will be affected
◼ Product and service design

◼ Consumer education programs

◼ Disaster preparation and response

◼ Supply chain waste management

◼ Outsourcing decisions
 Assignment
• Guidelines for the group activity:
1.Brainstorm and decide a tourism establishment
that will be the object of your Operational plan.
2.Create a diagram on its "transformative process"
with the following process of input-process-output.
3.Explain value added in the process of the
transformation.
4.Use word format with arial 12 font and single
space.
5.Be ready for a 5 minute presentation on the next
synchronous session.