Management

Fourteenth Edition, Global Edition

Chapter 18B
Managing Operations
Module

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The Role of Operations Management
• Operations management: the transformation
process that converts resources into finished
goods and services

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Exhibit MO-1
The Operations System

Exhibit MO-1 portrays the transformation process that converts resources into finished
goods and services in a simplified fashion.
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Services and Manufacturing
• Manufacturing organizations: organizations that
produce physical goods
• Service organizations: organizations that
produce nonphysical products in the form of
services

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Managing Productivity
• For countries, high productivity can lead to
economic growth and development.
• For individual organizations, increased
productivity gives them a more competitive cost
structure and the ability to offer more competitive
prices.

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Strategic Role of Operations Management
• Today, successful organizations recognize the
crucial role that operations management plays as
part of the overall organizational strategy to
establish and maintain global leadership.

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What is Value Chain Management? (1 of 2)
• Value: the performance characteristics, features,
and attributes, and any other aspects of goods
and services for which customers are willing to
give up resources
• Value chain: the entire series of organizational
work activities that add value at each step from
raw materials to finished product

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What is Value Chain Management? (2 of 2)
• Value chain management: the process of
managing the sequence of activities and
information along the entire value chain

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Goal of Value Chain Management
• The goal of value chain management is to create
a value chain strategy that meets and exceeds
customers’ needs and desires and allows for full
and seamless integration among all members of
the chain.

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Benefits of Value Chain Management
• Four primary benefits:
– Improved procurement
– Improved logistics
– Improved product development
– Enhanced customer order management

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Value Chain Strategy
• Six main requirements of a successful value chain
strategy:
– Coordination and collaboration
– Technology investment
– Organizational processes
– Leadership
– Employees
– Organizational culture and attitudes

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Exhibit MO-2
Value Chain Strategy Requirements

Exhibit MO-2 shows the six main requirements of a successful value chain strategy.
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Organizational Processes
• Organizational processes: the ways that
organizational work is done

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Obstacles to Value Chain Management
• Organizational barriers
• Cultural attitudes
– Intellectual property: proprietary information
that’s critical to an organization’s efficient and
effective functioning and competitiveness
• Required capabilities
• People

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Exhibit MO-3
Obstacles to Value Chain Management

Exhibit MO-3 shows the obstacles in managing value chain.

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Technology’s Role in Operations
Management
• Smart companies are looking at ways to harness
technology to improve operations management.

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Quality Initiatives
• Quality: the ability of a product or service to
reliably do what it’s supposed to do and to satisfy
customer expectations
• Quality initiatives:
– Planning for quality
– Organizing and leading for quality
– Controlling for quality

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Quality Goals
• ISO 900: a series of international quality
management standards that set uniform
guidelines for processes to ensure products
conform to customer requirements
• Six Sigma: a quality program designed to reduce
defects and help lower costs, save time, and
improve customer satisfaction

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Mass Customization and Lean Organization
• Mass customization: providing customers with a
product when, where, and how they want it
• Lean organization: an organization that
understands what customers want, identifies
customer value by analyzing all activities required
to produce products, and then optimizes the entire
process from the customer’s perspective

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