Explain what operations management is. Relate operations management as a competitive tool for business. Discuss the production system in services and a manufacturing environment. Describe the historical development of operations management in organizations. Describe manufacturing-based inventory system. Elaborate on quality control and supply-chain management.
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Of the processes that transform inputs into products
and services, or in short, the production systems. BUSINESS MANAGEMENT: A Malaysian Perspective (Second Edition) All Rights Reserved Oxford Fajar Sdn. Bhd. (008974-T), 2012 7 4 OPERATIONS MANAGEMENT (cont.)
Like other functional fields of business such as
marketing and finance. Main goal is to ensure efficient transformation of production inputs to outputs. Can be applied in all functional areas. Operations are doing of work for things like superior quality, speed-to-market, low cost, or customization.
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Oxford Fajar Sdn. Bhd. (008974-T), 2012 7 5 VALUE ADDING OF OPERATIONS MANAGEMENT
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plan work schedule, ensure quality, arrange shipment, produce products, and deliver services. Operations decisions can be classified as either strategic or tactical in nature. Strategic decisions are long-term and have long-term consequences. Strategic decisions are also less structured. Tactical decisions have relatively short-term consequence, more structured, routine, and repetitive. BUSINESS MANAGEMENT: A Malaysian Perspective (Second Edition) All Rights Reserved Oxford Fajar Sdn. Bhd. (008974-T), 2012 7 7 PRODUCTION SYSTEMS
A process that uses operations resources to transform inputs
into some desired output. Products can exist in two forms: (1) the tangible form of manufactured goods, and (2) the intangible form of services rendered. Main concern of a production system is that to ensure high productivity. Productivity is defined as the value of outputs produced divided by the values of input resources. BUSINESS MANAGEMENT: A Malaysian Perspective (Second Edition) All Rights Reserved Oxford Fajar Sdn. Bhd. (008974-T), 2012 7 8 PRODUCTION SYSTEMS (cont.)
Many processes involved in a production system.
Main responsibility of an operations manager is to identify problems and gaps of each process and establish the connectivity among them within a production system.
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Oxford Fajar Sdn. Bhd. (008974-T), 2012 7 9 OPERATIONS MANAGEMENT: ITS HISTORICAL DEVELOPMENT
The history of operations management can be traced
back to early 1910s. Concept of scientific management by an imaginative engineer from the United States, Frederick W. Taylor. In 1913, the concept of moving assembly line was introduced by Henry Ford. In 1930s, quantitative procedures dominated the evolution of operations management.
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Oxford Fajar Sdn. Bhd. (008974-T), 2012 7 10 OPERATIONS MANAGEMENT: ITS HISTORICAL DEVELOPMENT (cont.)
During 1940s, the production issues surrounding
World War II provided the catalyst for the development of the interdisciplinary, mathematically oriented field of operations research (OR). In the late 1950s and early 1960s, operations management had slowly gained currency and prominence as a field of management among scholars, i.e. Edward Bowman, Robert Fetter and Elwood S. Buffa. BUSINESS MANAGEMENT: A Malaysian Perspective (Second Edition) All Rights Reserved Oxford Fajar Sdn. Bhd. (008974-T), 2012 7 11 OPERATIONS MANAGEMENT: ITS HISTORICAL DEVELOPMENT (cont.) The 1970s saw an era when the widespread use of computers in solving operations problems began. The main contribution was the application of material requirements planning (MRP) to production control. In the 1980s, managerial concepts like just-in-time (JIT) and total quality control (TQC) were incorporated in the way productions are carried out. Total Quality Management (TQM) was widely practised in the 1990s as well as at the present.
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strategy aimed at embedding awareness of quality in all organizational processes and involves every member of the organization to achieve its set goals. Quality gurus such as W. Edwards Deming, Joseph M. Juran and Philip Crosby are instrumental in advocating quality management in business processes.
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Oxford Fajar Sdn. Bhd. (008974-T), 2012 7 13 OPERATIONS MANAGEMENT IN SERVICE SECTOR
Another major development in OM field saw more and
more attention given to the service sector as the world economy transforms itself from pure manufacturing- based to more of service-oriented. Various concepts were introduced to attain high customer satisfaction of the services rendered. Customer relation management (CRM) systems were implemented to assist enterprises to attract new customers and to retain old ones. Customers satisfaction index (CSI) helps to measure the level of customer satisfaction. BUSINESS MANAGEMENT: A Malaysian Perspective (Second Edition) All Rights Reserved Oxford Fajar Sdn. Bhd. (008974-T), 2012 7 14 OPERATIONS MANAGEMENT IN ORGANIZATIONAL CHART
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the physical location of its business facilities. Facility location is the central point for transforming production inputs into outputs or the place for the delivery of goods and services to the customers. It is a strategic decision in deciding where to locate new manufacturing facilities, service outlets, branch offices, as well as how to lay them out.
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There are several principal issues to consider before
deciding on business facilities location such as: Proximity to customers Business climate Costs of doing business Infrastructure Supplier and supporting industries Quality of labour and technical expertise
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Oxford Fajar Sdn. Bhd. (008974-T), 2012 7 17 INVENTORY SYSTEM
Inventory is a list of goods and materials, or those
goods and materials themselves, held available in stock by a business. Inventory can be grouped in the following categories: Raw materials Work-in-progress Finished goods Raw materials are inventories needed as inputs for the production of goods and services.
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(manufacturing) or processes (service) that have been transformed or processed but have yet to reach the final products stage. Sometimes work-in-process is also called semi- finished goods. Finished goods are the items that have come out from the entire transformation process and ready to be sold to the firms customers.
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Inventory provides cushion or buffer for the effect of
imperfections such as defect and sub-standard quality parts and materials in the manufacturing process. However, keeping high inventory level is costly. Key to an efficient and effective inventory management is to create the safety net for the just-in-case manufacturing scenario but at the same time to keep the inventory cost as low as possible.
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the Japanese. JIT system eliminates manufacturing wastes by producing only the right amount and combination of parts at the right place at the right time. Parts are moved from one stage to the next in the production process as they are needed, with only minimal buffer inventories in between stages.
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Supply-chain is the interconnected set of linkages
between suppliers of materials and services that spans the transformation of raw materials into finished products and services, and the delivery of the finished products to a firms customers. Supply-chain management (SCM) involves overseeing and controlling materials, information, and finances as they move in a process from supplier to manufacturer, to wholesaler to retailer, and finally to consumer.
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Improved delivery performancequicker customer response and fulfilment rates Greater productivity and lower costs Reduced inventory throughout the chain Improved forecasting precision Fewer suppliers and shorter planning cycles Improved quality and products that are more technologically advanced Enhanced interoperational communications and cooperation Shortened repair times and enhanced equipment readiness More reliable financial information
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service processes is crucial to ensure that customers are happy and satisfied with the money spent on their purchased products. The most internationally renowned institution for quality assurance is the International Organization for Standardization (ISO).
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values in the aspects of leadership, design planning and improvement initiative. TQM forms a part of the corporate strategic management that encompasses all aspects of business processes and involves everyone in the organization.
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