Professional Documents
Culture Documents
Operations Management
Learning outcomes
At the end of the session students should be able to:
Define operations management
Explain the differences between goods and services
Define mission and strategy
Define an operations strategy and its role as a source of
competitive advantage in a global marketplace
Identify and explain four global operations strategy options
What is operations management?
Operations management
(OM) is the set of activities
that creates value in the form
of goods and services by
transforming inputs into
outputs
Organising to produce goods and
services
Tangible product
Consistent product definition
Production usually separate from
consumption
Can be inventoried
Low customer interaction
Some aspects of quality are
measurable
Product is transportable
Often easy to automate
Characteristics of services
Intangible product
Produced and consumed simultaneously
Often unique
High customer interaction
Inconsistent product definition
Often knowledge-based so difficult to automate
Frequently dispersed
Goods and services
Automobile
Computer
Installed carpeting
Fast-food meal
Restaurant meal/auto repair
Hospital care
Advertising agency/
investment management
Consulting service/
teaching
Counseling
100% 75 50 25 0 25 50 75 100%
| | | | | | | | |
From To
Local or national
Global focus
focus
Just-in-time
Batch (large) Supply chain
shipments partnering
Low bid purchasing Rapid product
Lengthy product development
development Mass customization
Standard products Empowered
employees, teams
Job specialisation
New trends in OM
Important Note!
Production is a measure of output
only and not a measure of efficiency
Productivity challenge
Production – the making of goods and services
– High production does not imply high productivity
– High production implies more people are working and
that employment levels are high (low unemployment)
Only through increase in productivity can standard of
living improve
Only through increases in productivity can labour, capital
etc. receive additional payment
– If returns to labour, capital etc. increase without
increased productivity, prices rise
– Alternatively, increase in productivity = lower prices
as more is produced with same resources
Productivity measurement
Units produced
Productivity =
Input used
Input measures – labour-hours, capital ($ invested),
materials (tons), or energy (kW of electricity used)
Units produced
Productivity =
Labor-hours used
1,000
= 250 = 4 units/labour-hour
Single- and multi-factor productivity
Single factor productivity = one resource input
Multi-factor productivity – multiple resource inputs
Output
Productivity =
Inputs
Output
Productivity =
Labor + Material + Energy +
Capital + Miscellaneous