1

McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

 2

Chapter 1

Introduction to the Field

McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

 3

OBJECTIVES
Operations Management
Why Study Operations Management?
Transformation Processes Defined
Operations as a Service
The Importance of Operations
Management
Historical Development of OM
Current Issues in OM

McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

 4

What is Operations Management?

Defined
Operations management (OM) is
defined as the design, operation,
and improvement of the systems
that create and deliver the firms
primary products and services

McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

 5

Why Study Operations

Management?
Systematic Approach
to Org. Processes

Business Education Operations Career Opportunities

Management

Cross-Functional
Applications

McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

 6

What is a Transformation
Process?

Defined
A transformation process is defined
as a use of resources to transform
inputs into some desired outputs

McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

 7

Transformations
Physical--manufacturing

Locational--transportation

Exchange--retailing

Storage--warehousing

Physiological--health care

Informational--telecommunications

McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

 8

What is a Service and What is a

Good?

If you drop it on your foot, it wont

hurt you. (Good or service?)

Services never include goods and

goods never include services. (True
or false?)

McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

 9

OM in the Organization Chart

Finance Operations Marketing

Plant Operations Director

Manager Manager

Manufacturing, Production control,

Quality assurance, Engineering,
Purchasing, Maintenance, etc

McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

 10

Core Services
Defined

Core services are basic things

that customers want from
products they purchase

McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

 11

Core Services Performance Objectives

Quality

Operations
Flexibility Speed
Management

Price (or cost

Reduction)

McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

 12

Value-Added Services
Defined
Value-added services
differentiate the organization
from competitors and build
relationships that bind
customers to the firm in a
positive way

McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

 13

Value-Added Service Categories

Problem Solving

Operations Sales Support

Information
Management

Field Support

McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

 14

The Importance of Operations

Management

Synergies must exist with other

functional areas of the
organization
Operations account for 60-80%
of the direct expenses that
burden a firms profit.

McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

 15

Historical Development of OM
JIT and TQC

Manufacturing Strategy Paradigm

Service Quality and Productivity

Total Quality Management and Quality

Certification

McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

 16

Historical Development of OM
(contd)
Business Process Reengineering

Supply Chain Management

Electronic Commerce

McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

 17

Current Issues in OM
Coordinate the relationships between
mutually supportive but separate
organizations.

Optimizing global supplier, production,

and distribution networks.

Increased co-production of goods and

services

McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

 18

Current Issues in OM (contd)

Managing the customers
experience during the service
encounter

Raising the awareness of

operations as a significant
competitive weapon

McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.