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McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved 1-1

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Chapter 1

Introduction to the Field

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What is Operations and Supply Management?

Operations and Supply

Management (OM) is defined as
the design, operation, and
improvement of the systems
that create and deliver the firm’s
primary products and services

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Why Study Operations Management?

Systematic Approach
to Org. Processes

Business Education Operations Career Opportunities

Management

Cross-Functional
Applications

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What is a Transformation Process?

Defined

Transformation
Input Process Output
(Value Adding)

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

• Physical--manufacturing

• Locational--transportation

• Exchange--retailing

• Storage--warehousing

• Physiological--health care

• Informational--telecommunications

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Operations and Supply Management

Supply Chain Processes

Manufacturing
Processes
Sourcing Distribution
Processes Processes
Logistics Logistics
Processes Processes

Service
Processes

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What is a Service and What is a Good?

• “If you drop it on your foot, it won’t

hurt you.” (Good or service?)

• “Services never include goods and

goods never include services.” (True
or false?)

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What about McDonald’s?

• Service or Manufacturing?

• The company certainly

manufactures tangible products

• Why then would we consider

McDonald’s a service business?
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Front and Back Office

Back Office

Service Provider

Front Office

Customer

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The Goods-Services Continuum

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Core “Factory Services”

• Quality

• Flexibility

• Speed

• Price (or production cost)

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Value-Added Factory Services

• Information

• Problem Solving

• Sales Support

• Field Support
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Development of OM as a Field

Scientific Computers TQM & Quality

Management (MRP) Certification

Moving Assembly JIT/TQC & Business Process

Line Automation Reengineering

Hawthorne Manufacturing Electronic

Studies Strategy Enterprise

Operations Service Quality Global Supply

Research and Productivity Chain Mgmt.

Historical OM's Emergence

Underpinnings as a Field
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Current Issues in OM

• Coordinate the relationships between

mutually supportive but separate
organizations.

• Developing flexible production systems to

enable mass customization of products
and services.

• Optimizing global supplier, production,

and distribution networks.

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Current Issues in OM (cont’d)

• Increased co-production of goods and

services

• Managing the customers experience

during the service encounter

• Raising the awareness of operations

as a significant competitive weapon

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