Chapter 1-Operations and Productivity-Part a (2)

8/6/2019 Chapter 1-Operations and Productivity-Part a (2)

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© 2008 Prentice Hall, Inc. 1 ± 1

OperationsManagement OperationsManagement Chapter 1Chapter 1 ± ±Operations and Operations and Productivity Productivity

Lesson 1Lesson 1- -Part APart A




Learning ObjectivesLearning ObjectivesWhen you complete this lesson,When you complete this lesson,you should be able to:you should be able to:

Define operations management Define operations management Explain the distinction betweenExplain the distinction betweengoods and servicesgoods and services

Explain the difference betweenExplain the difference between production and productivity production and productivity




What Is OperationsWhat Is OperationsManagement? Management?

ProductionProduction is the creation of is the creation of goods and servicesgoods and services

Operations management (OM)Operations management (OM) isisthe set of activities that createsthe set of activities that creates

value in the form of goods and value in the form of goods and services by transforming inputsservices by transforming inputsinto outputsinto outputs




Organizing to ProduceOrganizing to ProduceGoods and ServicesGoods and Services

Essential functions:Essential functions:

Marketing Marketing ± ± generates demand generates demand Production/operationsProduction/operations ± ± creates thecreates the

product product

Finance/accounting Finance/accounting ± ± tracks how well tracks how well the organization is doing, pays bills,the organization is doing, pays bills,collects the money collects the money




Why Study OM? Why Study OM?

OM is one of three major functionsOM is one of three major functions(marketing, finance, and operations)(marketing, finance, and operations)of any organizationof any organization

We want ( We want ( and need and need ) to know how ) to know how goods and services are produced goods and services are produced

We want to understand what We want to understand what operations managers dooperations managers do

OM is such a costly part of anOM is such a costly part of anorganizationorganization




What OperationsWhat OperationsManagers DoManagers Do

Planning Planning

Organizing Organizing

Staffing Staffing Leading Leading

Controlling Controlling

Basic Management FunctionsBasic Management Functions




T he Critical DecisionsT he Critical DecisionsDesign of goods and servicesDesign of goods and servicesManaging quality Managing quality Process and capacity designProcess and capacity design

Location strategy Location strategy Layout strategy Layout strategy Human resources and job designHuman resources and job designSupply chain management Supply chain management

Inventory, material requirements planning, and JI T Inventory, material requirements planning, and JI T

Intermediate and short Intermediate and short± ±term scheduling term scheduling MaintenanceMaintenance

Table 1.2Table 1.2




Where are the OM Jobs? Where are the OM Jobs? T echnology/methodsT echnology/methodsFacilities/space utilizationFacilities/space utilizationStrategic issuesStrategic issuesResponse timeResponse timePeople/team development People/team development Customer serviceCustomer service

Quality Quality Cost reductionCost reductionInventory reductionInventory reductionProductivity improvement Productivity improvement




T he Heritage of OM T he Heritage of OM Cost FocusCost Focus

Early ConceptsEarly Concepts (1776(1776--1880) (d ivision of labor,1880) (d ivision of labor, a dama dam smith,smith,charlescharles babbagebabbage, an d , an d Stan darize dStan darize d p arts by Whitney)parts by Whitney)

Scientific Management EraScientific Management Era (1880(1880 --191 0) (Process Analysis191 0) (Process Analysis

by Taylor,by Taylor, gantgant charts, motion an d time stu dy by Frank an d lilycharts, motion an d time stu dy by Frank an d lilyannann GillbertGillbert))

Mass Production EraMass Production Era (191 0(191 0--19 80) (Quality Control,19 80) (Quality Control,Coor dinate d Assembly LineCoor dinate d Assembly Line --For d an d For d an d SorasonSorason, CPN/PERT by, CPN/PERT byDuPont)DuPont)

Quality FocusQuality FocusLean Production EraLean Production Era (19 80(19 80 --1995 ) (J IT, CAD, CAD ban ds)1995 ) (J IT, CAD, CAD ban ds)

Customization FocusCustomization FocusMass Customization EraMass Customization Era (1995(1995--Now) (eNow) (e --commerce)commerce)



© 2008 Prentice Hall, Inc. 1 ±10

Contributions FromContributions From

Human factorsHuman factors

Industrial engineering Industrial engineering

Management science** Management science**

Biological science* Biological science*

Physical sciences* Physical sciences* Information technology** Information technology**




Operations in the Service Sector Operations in the Service Sector

Services:Services: Economic activities that Economic activities that typically produce an intangible product typically produce an intangible product (e ducation, entertainment, lo dging,(e ducation, entertainment, lo dging,government, financial, health)government, financial, health)

Pure Service:Pure Service: A service that does not A service that does not include a tangible product include a tangible product (counseling)(counseling)

Service Sector:Service Sector: T he segment of theT he segment of theeconomy that includes trade, financial,economy that includes trade, financial,lodging, education, legal, medical, and lodging, education, legal, medical, and

other professional occupationsother professional occupations




Goods Versus ServicesGoods Versus Services

T angible product T angible product

Consistent product Consistent product definitiondefinitionProduction usually Production usually separate fromseparate fromconsumptionconsumption

Low customer Low customer interactioninteraction

Can be inventoried Can be inventoried

Intangible product Intangible product

Inconsistent product Inconsistent product definitiondefinitionProduced and Produced and consumed at same timeconsumed at same time

Often uniqueOften unique

High customer High customer interactioninteraction

Often knowledgeOften knowledge- -based based

Frequently dispersed Frequently dispersed

Characteristics of GoodsCharacteristics of Goods Characteristics of ServiceCharacteristics of Service




N ew T rends in OM N ew T rends in OM Global FocusGlobal Focus (decline in communication an d trans port(decline in communication an d trans portcosts) (Global Market) (offshoringcosts) (Global Market) (offshoring --com p.a dv.)com p.a dv.)

Just Just- -inin- - T ime PerformanceT ime Performance

Supply Chain Partnering Supply Chain Partnering Rapid Product Development Rapid Product Development

Mass CustomizationMass Customization

Empowered EmployeesEmpowered Employees

Environmentally Sensitive ProductionEnvironmentally Sensitive Production

EthicsEthics




End of Lesson 1End of Lesson 1- -Part APart A

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Chapter 1-Operations and Productivity-Part a (2)