OPMAN

Part I Introduction to Operations Management

• What is operations?

– The part of a business organization that is responsible for producing goods or services

– Process consists of one or more actions that transform inputs into outputs

• How can we define operations management?

– The management of systems or processes that create goods and/or provide services

Goods or Service?

Goods are physical items that include raw materials, parts, subassemblies, and final products.

• Automobile

• Computer

• Oven

• Shampoo

Services are activities that provide some combination of time, location, form or psychological value.

• Air travel

• Education

• Haircut

• Legal counsel

Why is Operations Management important?

The success or failure of companies’ operations functions has an impact on the ability of a nation to
compete with other nations, and on the nation’s economy.

Goal of Operations Management

The economic match: Supply = Demand

Excess = Wasteful and Costly

Too Little = Loss Opportunity & Customer Dissatisfaction

Supply Chain Management

Supply Chain – a sequence of activities and organizations involved in producing and delivering a good or
service
Suppliers’ Direct Fin
Producer Distributor
suppliers suppliers Custo

Example: A Supply Chain for Bread

Value-added

The difference between the cost of inputs and the value or price of outputs.

Decision Making

– 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?

Historical Evolution

• 1770s

• INDUSTRIAL REVOLUTION

• 1911

• SCIENTIFIC MANAGEMENT

• 1920-60

• HUMAN RELATIONS MOVEMENT

• 1960-1970

• DECISION MODELS

Operations Management Concepts from Scientific Management Era by Henry Ford

• Mass production - System in which low-skilled workers use specialized machinery to produce
high volumes of standardized goods.

• Division of labor - The breaking up of a production process into small tasks, so that each worker
performs a small portion of the overall job.

The Influence of Japanese Manufacturers

Quality Revolution

Lean Production

Key Trends

• E-Business & E-Commerce

• Management of Technology

– Product and Service Technology refers to the discovery and development of new
products and services

– Process Technology refers to methods, procedures, and equipment used to produce

goods and provide services

– Information Technology refers to the science and use of computers and other electronic
equipment to store, process and send information

• Globalization

• Outsourcing
Issues in Business

• Environmental Concerns

– Global warming and pollution

– Sustainability means using resources in ways that do not harm ecological systems that
support human existence

– Environmental Compliance Certification

• Ethical Conduct

– Code of ethics

– Ethics – standard behavior that guides how one should act in various situations

• Managing the Supply Chain

Reference:

Stevenson, William J. (2009). Operations Management, 11 th ed. McGraw Hill Companies, Inc.