OPERATIONS - PRODUCING GOODS AND SERVICES
MANAGEMENT- PLANNING, ORGANIZING, AND ACCOMPLISH THE
OBJECTIVES
OPERATION MANAGEMENT - TRANSFORM INPUTS INTO GOODS AND
SERVICES
GOODS - REFER TO TANGIBLE PRODUCTS
SERVICES - ARE ACTIVITIES THAT PROVIDE SOME COMBINATION OF
TIME LOCATION, FORM OR PSYCHOLOGICAL VALUE
FINANCE - IS RESPONSIBLE FOR SECURING FINANCIAL RESOURCES AT
FAVORABLE PRICES AND ALLOCATING THOSE RESOURCES
MARKETING - IS RESPONSIBLE FOR ASSESSING CONSUMER WANTS
AND NEEDS, AND SELLING AND PROMOTING THE ORGANIZATIONS
GOODS OR SERVICES
OPERATIONS - IS RESPONSIBLE FOR PRODUCING THE GOODS OR
PROVIDING THE SERVICES OFFERED BY THE ORGANIZATIONS.
SUPPLY CHAIN -IS THE SEQUENCE OF ORGANIZATIONS – THEIR
FACILITIES, FUNCTIONS, AND ACTIVITIES THAT INVOLVED IN
PRODUCING AND DELIVERING A PRODUCT OR SERVICE.
FOUR MAJOR ELEMENTS OF SUPPLY CHAIN
➢ INTEGRATION
➢ OPERATIONS
➢ PURCHASING
➢ DISTRIBUTION
VALUE ADDED - IS THE TERM USED TO DESCRIBE THE DIFFERENCE
BETWEEN THE COST OF INPUTS AND THE VALUE OR PRICE OF OUTPUTS
IN NONPROFIT ORGANIZATIONS, THE VALUE OF OUTPUTS (E.G.,
HIGHWAY CONSTRUCTION, POLICE AND FIRE PROTECTION) IS THEIR
VALUE TO SOCIETY
• THE GREATER THE VALUE- ADDED, THE GREATER THE
EFFECTIVENESS OF THESE OPERATIONS.
IN FOR PROFIT ORGANIZATIONS, THE VALUE OF OUTPUTS IS
MEASURED BY THE PRICES THAT CUSTOMERS ARE WILLING TO PAY
FOR THOSE GOODS OR SERVICES.
THE GOAL OF OPERATIONS MANAGEMENT - THE GOAL OF
OPERATIONS MANAGEMENT IS TO MAXIMIZE EFFICIENCY WHILE
PRODUCING GOODS AND SERVICES THAT EFFECTIVELY FULFILL
CUSTOMER NEEDS.
THREE CATEGORIES OF BUSINESS PROCESSES
• UPPER MANAGEMENT PROCESSES
• OPERATIONAL PROCESSES
• SUPPORTING PROCESSES
MANAGING A PROCESS TO MEET DEMAND - IDEALLY, THE CAPACITY
OF A PROCESS WILL BE SUCH THAT ITS OUTPUT JUST MATCHES
DEMAND
PROCESS VARIATION IS THE DEVIATION OF A PROCESS OUTPUT
FROM ITS DESIRED OR EXPECTED VALUE.
• IT CAN BE CAUSED BY VARIOUS FACTORS, SUCH AS
HUMAN ERROR, EQUIPMENT FAILURE, ENVIRONMENTAL
CHANGES, OR CUSTOMER DEMAND FLUCTUATIONS
FOUR BASIC SOURCES OF VARIATION
THE VARIETY OF GOODS OR SERVICES BEING OFFERED - THE
GREATER THE VARIETY OF GOODS AND SERVICES, THE GREATER
THE VARIATION IN PRODUCTION OR SERVICE REQUIREMENTS.
STRUCTURAL VARIATION IN DEMAND. -A MEASURE OF HOW MUCH
VARIABILITY THERE IS IN DEMAND.
• IT IS THE DIFFERENCE BETWEEN WHAT ONE EXPECTS TO
HAPPEN AND WHAT ACTUALLY HAPPENS." OR IN OTHER
WORDS, IT'S WHEN THINGS DON'T GO ACCORDING TO
PLAN.
RANDOM VARIATION - UNPLANNED AND UNCONTROLLABLE
VARIATIONS
ASSIGNABLE VARIATION - THESE VARIATIONS ARE CAUSED BY
DEFECTIVE INPUTS, INCORRECT WORK METHODS
SCOPE OF OPERATIONS MANAGEMENT
• INCREASE PRODUCTIVITY
• RAISES REVENUE/PROFIT
• ACHIEVEMENT OF ORGANISATION GOALS
• IMPROVE CUSTOMER SATISFACTION
• IMPROVE INNOVATION
OPERATIONS MANAGEMENT AND DECISION MAKING - THE CHIEF
ROLE OF AN OPERATIONS MANAGER IS THAT OF PLANNER AND
DECISION MAKER
 KEY ISSUES FOR TODAY’S BUSINESS OPERATIONS
• ECONOMIC CONDITIONS
• INNOVATING
• QUALITY PROBLEMS
• RISK MANAGEMENT
• CYBER SECURITY
• COMPETING IN A GLOBAL ECONOMY
ETHICAL CONDUCT
UTILITARIAN PRINCIPLE - THE GOOD DONE BY AN ACTION OR
INACTION SHOULD OUTWEIGH ANY HARM IT CAUSES OR MIGHT CAUSE
• AN EXAMPLE IS NOT ALLOWING A PERSON WHO HAS HAD
TOO MUCH TO DRINK TO DRIVE.
RIGHTS PRINCIPLE - ACTIONS SHOULD RESPECT AND PROTECT THE
MORAL RIGHTS OF OTHERS
• AN EXAMPLE IS NOT TAKING ADVANTAGE OF A VULNERABLE
PERSON.
FAIRNESS PRINCIPLE – EQUALS SHOULD BE HELD TO, OR EVALUATED
BY, THE SAME STANDARDS.
• AN EXAMPLE IS EQUAL PAY FOR EQUAL WORK.
COMMON GOOD PRINCIPLE – ACTIONS SHOULD CONTRIBUTE TO THE
COMMON GOOD OF THE COMMUNITY.
• AN EXAMPLE IS AN ORDINANCE ON NOISE ABATEMENT
THE VIRTUE PRINCIPLE - ACTIONS SHOULD BE CONSISTENT WITH
CERTAIN IDEAL VIRTUES.
• EXAMPLES INCLUDE HONESTY, COMPASSION, GENEROSITY,
TOLERANCE, FIDELITY, INTEGRITY, AND SELF-CONTROL.
SUPPLY CHAIN MANAGEMENT ISSUES
THE NEED TO IMPROVE OPERATIONS - EFFORTS ON COST AND TIME
REDUCTION AND PRODUCTIVITY AND QUALITY IMPROVEMENT.
INCREASING LEVELS OF OUTSOURCING - BUYING GOODS OR
SERVICES INSTEAD OF PRODUCING OR PROVIDING THEM THEMSELVES
• AS OUTSOURCING INCREASES, ORGANIZATIONS ARE
SPENDING INCREASING AMOUNTS ON SUPPLY-RELATED
ACTIVITIES (WRAPPING, PACKAGING, MOVING, LOADING,
AND UNLOADING, AND SORTING).
INCREASING TRANSPORTATION COSTS -TRANSPORTATION COSTS
ARE INCREASING, AND THEY NEED TO BE MORE CAREFULLY MANAGED
COMPETITIVE PRESSURES - INCREASING NUMBER OF NEW
PRODUCTS, SHORTER PRODUCT DEVELOPMENT CYCLES, AND
INCREASED DEMAND FOR CUSTOMIZATION
INCREASING GLOBALIZATION - HAS EXPANDED THE PHYSICAL
LENGTH OF SUPPLY CHAINS. A GLOBAL SUPPLY CHAIN INCREASES THE
CHALLENGES OF MANAGING A SUPPLY CHAIN.
INCREASING IMPORTANCE OF E- BUSINESS -HAS ADDED NEW
DIMENSIONS TO BUSINESS BUYING AND SELLING AND HAS PRESENTED
NEW CHALLENGES.
THE COMPLEXITY OF SUPPLY CHAINS - INACCURATE FORECASTS,
LATE DELIVERIES, SUB-STANDARD QUALITY, EQUIPMENT BREAKDOWNS,
AND CANCELED OR CHANGED ORDERS.
THE NEED TO MANAGE INVENTORIES - INVENTORIES PLAY A MAJOR
ROLE IN THE SUCCESS OR FAILURE OF A SUPPLY CHAIN, SO IT IS
IMPORTANT TO COORDINATE INVENTORY LEVELS THROUGHOUT A
SUPPLY CHAIN.