Intr. To Om (Chp1)

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Intr. To Om (Chp1)

  1. 1. Chapter 1 - Introduction to Operations Management Operations Management Mudassar Salman
  2. 2. Learning Objectives <ul><li>Define OM </li></ul><ul><li>Role of OM in business </li></ul><ul><li>Decisions that operations managers make </li></ul><ul><li>OM differences between service and mfg. </li></ul><ul><li>Major historical developments in OM </li></ul><ul><li>Identify current trends in OM </li></ul><ul><li>Define information flow between OM and other business functions </li></ul>
  3. 3. What is Operations Management? <ul><li>The business function responsible for planning , coordinating , and controlling the resources needed to produce a company’s products and services </li></ul>
  4. 4. Typical Organization Chart
  5. 5. Organizational Functions <ul><li>Major Functions </li></ul><ul><ul><li>Finance </li></ul></ul><ul><ul><li>Marketing </li></ul></ul><ul><ul><li>Operations Mnagement </li></ul></ul><ul><li>Support Functions </li></ul><ul><ul><li>Accounting </li></ul></ul><ul><ul><li>Purchasing </li></ul></ul><ul><ul><li>Human Resources </li></ul></ul><ul><ul><li>Engineering </li></ul></ul>
  6. 6. OM’s Transformation Role
  7. 7. Why OM? <ul><li>“ In business today, the emphasis is not so much on what you make , but on how you do business . Dell makes computers just like every other PC manufacturer.” Quote: KT CEO on CNBC 4/99 </li></ul><ul><li>The resurgence of American business in the 1990’s capitalized on improved operations. </li></ul>
  8. 8. Operations Management <ul><li>Many companies like Amazon.com manage almost all aspects of their operations. </li></ul><ul><li>Other companies outsource certain functions to other companies. </li></ul><ul><li>Value added is the net increase between the final value of a product and value of all inputs. </li></ul><ul><li>Efficiency means being able to perform activities well, at the lowest possible cost. </li></ul>
  9. 9. Differences between Manufacturers and Service Organizations <ul><li>Services: </li></ul><ul><li>Intangible product </li></ul><ul><li>Product cannot be inventoried </li></ul><ul><li>High customer contact </li></ul><ul><li>Short response time </li></ul><ul><li>Labor intensive </li></ul><ul><li>Manufacturers: </li></ul><ul><li>Tangible product </li></ul><ul><li>Product can be inventoried </li></ul><ul><li>Low customer contact </li></ul><ul><li>Longer response time </li></ul><ul><li>Capital intensive </li></ul>
  10. 10. Similarities-Service/Manufacturers <ul><li>All use technology </li></ul><ul><li>Both have quality, productivity, & response issues </li></ul><ul><li>All must forecast demand </li></ul><ul><li>Each will have capacity, layout, and location issues </li></ul><ul><li>All have customers and suppliers </li></ul><ul><li>All have scheduling and staffing issues </li></ul>
  11. 11. Trends in OM <ul><li>Service sector growing to 80% of non-farm jobs </li></ul><ul><li>Global competitiveness </li></ul><ul><li>Demands for higher quality </li></ul><ul><li>Huge technology changes </li></ul><ul><li>Time based competition </li></ul><ul><li>Work force diversity </li></ul>
  12. 12. OM Decisions
  13. 13. Plan of Book-Chapters link to Types of OM Decisions
  14. 14. Historical Development of OM <ul><li>Industrial revolution Late 1700s </li></ul><ul><li>Scientific management Early 1900’s </li></ul><ul><li>Human relations movement 1930s to 1960s </li></ul><ul><li>Management science Mid-1900s </li></ul><ul><li>Computer age 1970s </li></ul><ul><li>Just-in-Time Systems (JIT) 1980s </li></ul><ul><li>Total quality management (TQM) 1980’s </li></ul><ul><li>Reengineering 1990s </li></ul><ul><li>Flexibility 1990s </li></ul><ul><li>Time-Based Competition 1990s </li></ul><ul><li>Supply chain Management 1990’s </li></ul><ul><li>Global Competition 1990s </li></ul><ul><li>Environmental Issues 1990s </li></ul><ul><li>Electronic Commerce Late 1990s </li></ul>
  15. 15. Historical Developments of OM – Contd. <ul><li>Industrial Revolution – Brought in innovations that changed production by using machine power, instead of human power. ( Steam Engine & Division of Labor ) </li></ul><ul><li>Scientific Management – Brought the concepts of analysis and measurement of the technical aspects of work design, and development of moving assembly lines and mass production. ( piece rate incentives & stop watch studies ) </li></ul><ul><li>Human Resource Movement – Focused on human elements of job design, such as worker motivation and job satisfaction. ( Hawthorne effect, Job enlargement & Job enrichment ) </li></ul><ul><li>Management Science – focused on development of quantitative techniques to solve operations problems. </li></ul><ul><li>Computer Age – enabled processing large amounts of data and allowed widespread use of quantitative procedures. ( Material Resource Planning, MRP ) </li></ul>
  16. 16. Historical Developments of OM – Contd. <ul><li>Environmental Issues – considered waste reduction, the need for recycling and product reuse. ( ISO-14000 ) </li></ul><ul><li>Just-in-time Systems – designed to achieve high-volume production with minimal inventories. </li></ul><ul><li>Total Quality Management – sought to eliminate causes of production defects. ( ISO-9000 ) </li></ul><ul><li>Reengineering – required redesigning a company’s processes in order to provide greater efficiency and cost reduction. ( We’ve been doing things in this way since long ) </li></ul><ul><li>Global Competition – designed operations to compete in global environment. ( NAFTA, GATT, EU & SAFTA ) </li></ul><ul><li>Flexibility – offered customization on a large scale. ( mass customizations ) </li></ul><ul><li>Time-based Competition – based on time, such as speed of delivery. </li></ul>
  17. 17. Historical Developments of OM – Contd. <ul><li>Supply Chain Management – focused on reducing the overall cost of the system that manages the flow of materials and information from suppliers to final customers. </li></ul><ul><li>Electronic Commerce – used the internet for conducting business activity. </li></ul><ul><ul><li>Business to business (B2B) </li></ul></ul><ul><ul><li>Business to customers (B2C) </li></ul></ul><ul><ul><li>Customer to customer (C2C) </li></ul></ul>
  18. 18. Today’s OM Environment <ul><li>Customers demand better quality, faster deliveries, and lower costs </li></ul><ul><li>Increased cross-functional decision making (among various functions of organization) </li></ul><ul><li>Recognized need to better manage information using ERP and CRM systems. </li></ul><ul><ul><li>Customer relationship management – collection of customer specific data. </li></ul></ul><ul><ul><li>Enterprise resource planning – software systems, used to identify & plan the organization wide resources needed to coordinate all activities, involved in producing and delivering products. </li></ul></ul><ul><ul><li>Lean systems – total system approach to create efficient operations. </li></ul></ul>
  19. 19. OM in practice <ul><li>OM – most diverse in terms of tasks performed </li></ul><ul><li>Chief of Operations </li></ul><ul><ul><li>Mid-level managers – Manufacturing, Operations, QC, Plant and other managers </li></ul></ul><ul><ul><li>Below – Quality specialist, Production analyst, Inventory analyst and Production supervisor </li></ul></ul><ul><li>OM jobs offer </li></ul><ul><ul><li>High salaries </li></ul></ul><ul><ul><li>Interesting work, </li></ul></ul><ul><ul><li>Career advancement opportunities </li></ul></ul><ul><li>All business functions need information from OM and at the same time OM requires information from all business functions. </li></ul>
  20. 20. Business Information Flow
  21. 21. Chapter 1 Highlights <ul><li>OM is function that manages the resources that add value </li></ul><ul><li>Its role is to transform inputs into products or services </li></ul><ul><li>Decisions are many and vary from daily tactical to strategic </li></ul><ul><li>Key differences between mfg. and service companies are tangibility of product and degree of customer contact </li></ul><ul><li>Historical milestones range from 1700s Industrial Revolution to the modern Electronic Commerce age </li></ul><ul><li>OM must understand and implement major process changes like JIT, TQM, supply chain management, and environmental changes </li></ul><ul><li>OM works closely with all other business functions </li></ul>

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