Define Operations Management
the set of activities that create value of goods and services by transforming inputs into outputs
Basic Management
... [Show More] Functions
-Planning
-Organizing
-Staffing
-Leading
-Controlling
What are the 10 Strategic Decisions?
1. Design of goods and services
2. Managing quality
3. Process and capacity design
4. Location strategy
5. Layout strategy
6. Human resources and job design
7. Supply-chain management
8. Inventory management
9. Scheduling
10. Maintenance
Design of Goods and Services
-Defines what is required of operations
-Product design determines quality, sustainability and human resources
Managing Quality
-Determine the customer's quality expectations
-Establish policies and procedures to identify and achieve that quality
Process and Capacity Design
-How is a good or service produced?
-Commits management to specific technology, quality, resources, and investment
Location Strategy
-Nearness to customers, suppliers, and talent.
-Considering costs, infrastructure, logistics, and government.
Layout Strategy
-Integrate capacity needs, personnel levels, technology, and inventory
-Determine the efficient flow of materials, people, and information
Human Resources and Job Design
-Recruit, motivate, and retain personnel with the required talent and skills
-Integral and expensive part of the total system design
Supply Chain Management
-Integrate supply chain into the firm's strategy.
-Determine what is to be purchased, from whom, and under what conditions.
Inventory Management
-Inventory ordering and holding decisions
-Optimize considering customer satisfaction, supplier capability, and production schedules
Scheduling
-Determine and implement intermediate- and short-term schedules
-Utilize personnel and facilities while meeting customer demands
Maintenance
-Consider facility capacity, production demands, and personnel
-Maintain a reliable and stable process
Define Supply Chains
a global network of organizations and activities that supply a firm with goods and services
-members of the supply chain collaborate to achieve high level customer satisfaction, efficiency, and competitive advantage
-competition is no longer between companies, it is between supply chains
Why Study OM?
1. OM is one of three major functions of any organization, we want to study how people organize themselves for productive enterprise
2. We want (and need) to know how goods and services are produced
3. We want to understand what operations managers do
4. OM is such a costly part of an organization
Essential functions to Produce Goods and Services
1. Marketing - generates demand
2. Production/operations - creates the product
3. Finance/accounting - tracks how well the organization is doing, pays bills, collects the money
Define Services
economic activities that typically produce an intangible product
Characteristics of Services
-Intangible
-Produced and consumed simultaneously
-Unique
-High customer interaction
-Inconsistent product definition
-Often knowledge-based
-Services dispersed
-Quality may be hard to evaluate
-Reselling is unusual
Characteristics of Goods
-Tangible
-Product can usually be kept in inventory
-Similar products produced
-Limited customer involvement in production
-Product standardized
-Standard tangible product tends to make automation feasible
-Product typically produced at a fixed facility
-Many aspects of quality for tangible products are easy to evaluate
-Product often has some residual value
Define Productivity
the ratio of outputs (goods and services) divided by the (resources such as labor and capital) and represents output relative to
-measure of process efficiency and improvement
-only through productivity increases can our standard of living improve
Define Production
a measure of output only and not a measure of efficiency
What country has the largest production?
United State and China second
What country has the highest labor productivity (standard of living)?
Ireland
Single-factor productivity
=(units produced) / (labor-hours used)
multifactor productivity
a productivity score that measures output levels relative to more than one input
(units produced) / (labor+material+energy+capital+miscellaneous)
improved productivity
(new productivity-old productivity) / (old productivity)
Productivity Measurement Problems
-Quality may change while the quantity of inputs and outputs remains constant.
-External elements may cause an increase or decrease in productivity.
-Precise units of measure may be lacking.
Productivity in the Service Sector
Productivity improvement in services is difficult because:
1. Typically labor intensive
2. Frequently focused on unique individual attributes or desires
3. Often an intellectual task performed by professionals
4. Often difficult to mechanize and automate
5. Often difficult to evaluate for quality
Current Challenges in OM
Past Focus:
-local or nation, cost saving, job specialization
Present Focus:
globalization, supply-chain partnering, sustainability, rapid product development, mass customization, lean operations, empowered employee
Define Mission Statement
Tell an organization where it is going
-Organization's purpose for being
-"What do we contribute to society?"
-Provides boundaries and focus
Define Strategy
Tells the organization how to get there
-Action plan to achieve mission
-Functional areas have strategies
-Strategies exploit opportunities and strengths, neutralize threats, and weaknesses
Define Competitive Advantage
the creation of a unique advantage over competitors
Strategies for Competitive Advantage
1. Differentiation - better, or at least different
2. Cost leadership - cheaper
3. Response - more responsive
Competing on Differentiation
Uniqueness can go beyond both the physical characteristics and service attributes to encompass everything that impacts customer's perception of value
Experience Differentiation
Engaging a customer with a product through imaginative use of the five senses, so the customer "experiences" the product
Competing on Cost
Provide the maximum value as perceived by customer. Does not imply low quality.
Competing on Response
- Flexibility is matching market changes in design innovation and volumes [Show Less]