Chapter 1

Introduction to Operations Management

By: Catherine U. Malig, MBA

References: R. Dan Reid & Nada R. Sanders

Alex Hill & Terry Hill (3rd Edition)
 Operations Management
 The business function responsible for
planning, coordinating, and controlling the
resources needed to produce products and
services for a company.

 It transforms inputs to outputs.

 It involves managing people, equipment,

technology, information and many other
resources.
 Operations Management
 Before this was known as “production
management”.
 Typical Functions within a Business
TASK Function Responsible Type of function
Generating new service and product Sales and
ideas. Services Marketing
Designing and developing new Research and
services and products. Products Development
Promoting services and products
Sales and Marketing
Selling services and products
Contracting with suppliers and
Executive/ Line
managing the resulting external
phase of the supply chain. Operations
Delivering the services and making
the products sold to customers
Sending out invoices
Collecting payment Accounting and finance
Preparing financial statements
Introducing new systems
Developing existing systems Information Technology
Supporting the IT infrastructure Specialist support
Recruiting staff
Human Resources
Employee relations
Role of Operations Manager

1. Manages a large cost centre.

2. Managing the short and long

term.

3. Managing the strategic

contribution.
Role of Operations Manager

4. Managing Technology

5. Coordinating the whole

6. Using common denominators of

time and money
Role of Operations Manager

7. Managing the process through

people

8. Linking the thinking and doing

ends of a business

9. Managing complexity
Case Study of Sainsbury’s Supermarkets Ltd.
 Service versus Manufacturing
Aspects Processing
Product Information Customer
Nature of Tangible Intangible
service/product Durable Perishable
Highly Server discretion
specified
Organizational Back office Front Office
Arrangements

Level of customer Low High

involvement in the
operations process

Typical competitive Traded Sheltered

environment
Major Historical Developments in Operations
1. Industrial revolution Late 1700s
2. Scientific management Early 1900s
3. Human relations movement 1930s-60s
4. Management science 1940s-60s
5. Computer age 1960s
6. Environmental Issues 1970s
7. JIT & TQM 1980s
8. Reengineering 1990s
9. Global competition 1980s
10. Flexibility 1990s
11. Time-Based Competition 1990s
12. Supply chain Management 1990s
13. Electronic Commerce 2000s
14. Outsourcing & flattening of world 2000s
Major Historical Developments in Operations
Industrial Revolution- Brought in
innovations that changed production by
using machine power instead of human
power (Eli Whitney).

Scientific Management- Brought the

concepts of analysis and measurement of
technical aspects of work design and
development of moving assembly and
mass production.(Frederick W. Taylor).
Major Historical Developments in Operations
 Human Relations Movement- Focused
on understanding human elements of job
design, such as worker motivation and
job satisfaction. (Hawthorne Studies)

 Management Science- Focused on the

development of quantitative techniques
to solve operations problems.(F.W.
Harris)
Major Historical Developments in Operations

Computer Age- Enabled processing of

large amounts of data and allowed
widespread use of quantitative procedures

Environmental Issues- Considered waste

reduction, the nee for recycling and
product reuse.
Major Historical Developments in Operations

Just-in-time systems (JIT)- Designed

to achieve high-volume production
with minimal inventories.

Total Quality Management (TQM)-

Sought to eliminate causes of
production defects
Major Historical Developments in Operations

 Reengineering- Required
redesigning a company’s processes
in order to provide greater efficiency
and cost reduction.

 Global Competition- Designed

operations to compete in global
market.
Major Historical Developments in Operations

 Flexibility-
Offered customization
on a mass scale.

 Time-based competition- Based on

time, such as speed of delivery
Major Historical Developments in Operations

 Supply chain management-Focus on

reducing the overall cost of the system
that manages the flow of materials and
information from suppliers to final
customers.

 Electronic Commerce- Uses the internet

and World Wide Web for conducting
business activity.
Major Historical Developments in Operations

 Outsourcing and flattening of the

world- Convergence of technology has
enabled outsourcing of virtually any job
imaginable from anywhere around he
globe, therefore “flattening” the world.
Business Information Flow
END OF DISCUSSION