Professional Documents
Culture Documents
What is Operations?
Operations is the production activities that go on in the organization, regardless of whether the end product is a good or a service
Operations management is the management of systems or processes that creates value in the form of goods and services by transforming inputs into desired outputs
Outputs:
Goods
Services
Control
Feedback Feedback
Examples
Farming, mining, construction , manufacturing, power generation Warehousing, trucking, mail service, moving, taxis, buses, hotels, airlines Retailing, wholesaling, banking, renting, leasing, library, loans Films, radio and television, concerts, recording Newspapers, radio and television newscasts, telephone, satellites
Communication
Operations
creates product or service
Finance/Accounting
Obtains funds Tracks organizational performance
Marketing
Finance
Marketing
Operations
Finance/ Accounting
Teller Scheduling
Check Clearing
Transactions Processing
Security
Marketing
Operations
Flight Operations
Ground Support
Facility Maintenance
Catering
Marketing
Operations
Manufacturing
Production Control
Quality Control
Purchasing
Suppliers
Marketing
Operations
Material availability Quality data Delivery schedules Designs Personnel needs Skill sets Performance evaluations Job design/work measurement Sales forecasts Customer orders Customer feedback Promotions Hiring/firing Training Legal requirements Union contract negotiations
Human Resources
Manufacturing or Service
Tangible
Act
Easy Generally difficult Tangible Intangible, often unique Easy Difficult Low Little Difficult Not so obvious
Opportunity to correct problems High Inventory Much Quality evaluation Production activities Easier Obvious
Goods
Separate
Service
Generally take place at the same time Generally dispersed Revenue-oriented Not possible Not usually Slower and awkward
Computer
Fast-food Meal Restaurant Meal Auto Repair Hospital Care Advertising Agency Investment Management Consulting Service 0
Surgery, Teaching,Counseling
Percent of Product that is a Service
100
75
50
25
25
50
75
100
Goods-services Continuum
Steel production Automobile fabrication House building Road constructio Auto Repair Appliance repair Dressmaking Farming Maid Service Manual car wash Teaching Lawn mowing
02
Percent
Services in Manufacturing
In manufacturing, services can be divided into two groups: Core Services Value-added Services
Core Services
Core services are basic things that customers want from products they purchase
Flexibility
Operations Management
Speed
Value-Added Services
Value-added services differentiate the organization from competitors and build relationships that bind customers to the firm in a positive way
Information
Operations Managemen t
Sales Support
Field Support
Critical OM Decisions
Critical OM Decisions
Service, product design Process, capacity design Planning of the technology Location Layout design Human resources, job design Production planning and scheduling Supply chain management Inventory management Maintenance Quality management
Models
A model is an abstraction of reality. Types of models:
Physical Schematic
Mathematical
Limitations of Models:
Quantitative information may be emphasized at the expense of qualitative information May be incorrectly applied and results may be misinterpreted
Tradeoffs
Decision on the amount of inventory to stock
Increased cost of holding inventory vs. Level of customer service
Systems Approach
The whole is greater than the sum of the parts.
Suboptimization
Historical Events in OM
The Industrial Revolution (1770s) Scientific Management (1911) Human Relations Movement (1920-1960) Decision Models Management Science (1915, 1940-70s) Quality Revolution (1970s-1990s ) Globalization (1970s- ) Information Age/Internet Revolution (1990s-)
Industrial Revolution
Steam engine Division of labor Interchangeable parts 1769 1776 1790 James Watt Adam Smith Eli Whitney
Scientific Management
Principles Time and motion studies Activity scheduling chart Moving assembly line 1911 1911 1912 1913 Frederick W. Taylor Frank & Lillian Gilbreth Henry Gant Henry Ford
Historical Events in OM (2 of 4) :
Human Relations and Management Science
Human Relations
Hawthorne studies Motivation theories 1930 1940s 1950s 1960s Elton Mayo Abraham Maslow Frederick Hertzberg Douglas McGregor
Management Science
Linear programming Digital computer Simulation, PERT/CPM, Waiting line theory MRP 1947 1951 1950s 1960s George Dantzig Remington Rand Operations research groups Joseph Orlicky, IBM
Globalization
European Union and other trade agreements EDI, EFT, CIM 1970s 1980s IBM and others
Historical Events in OM (4 of 4) :
Information Age/Internet Revolution Information Age/ Internet Revolution
Internet, WWW, ERP Supply chain management, E-commerce 1990s ARPANET, Tim Berners-Lee, SAP, i2 Technologies, ORACLE, PeopleSoft, Amazon, Yahoo, eBay, and others
Suppliers Suppliers
Direct Suppliers
Producer
Distributor
Final Consumer
Value Added
$0.15 $0.08 $0.15 $0.08 $0.54 $0.08 $0.21
Value of Product
$0.15 $0.23 $0.38 $0.46 $1.00 $1.08 $1.29
Total Value-Added
$1.29
Other Trends (1 of 2)
Enhancing Value-Added Services Management of Technology Emphasis on Operations Strategy Increasing Emphasis on Cost Control and Productivity Improvement Quality and Process Improvements Increasing emphasis on business and social responsibility
Other Trends (2 of 2)
Developing flexible supply chains to enable mass customization of products and services
Achieving the Service Factory
Globalization
Nestl Nokia Philips Bayer ABB SAP Exxon Mobil Royal Dutch/Shell IBM McDonalds
Switzerland Finland Netherlands Germany Germany Germany United States Netherlands United States United States
98.2 97.6 94.0 89.8 87.2 80.0 79.6 73.3 62.7 61.5
% Foreign Workforce
NA NA NA NA NA 51
% Foreign Workforce
ICI
Nestl Philips Electronics Siemens Unilever
Britain
Switzerland Netherlands Germany
Britain & Netherlands
NA
97 82 38
64
Country
Italy
Australia
Parts
Wing flaps
Rudder
Spain Japan
United Kingdom Korea Canada Ireland Singapore
Ailerons Landing gear doors, wing section Flight computers Flap supports Landing gears
Landing gear doors Landing gear doors