This is the typical breakdown one finds in many business courses. It may be helpful to the students if you discuss each of these elements in relationship to something you or they have done. Work on a group project, for example, can provide a useful vehicle for the discussion.
Using this and subsequent slides, you might go through in more detail the decisions of Operations Management. While greater detail is provided by these slides than the earlier one, you may still decide to have the students contribute examples from their own experience.
Introduction toOperations Management
OM DefinedOperations management: The business function responsible for planning, coordinating, and controlling the resources needed to produce a company’s products and services
Transformation ProcessPhysical: as in manufacturing operationsLocational: as in transportation operationsExchange: as in retail operationsPhysiological: as in health carePsychological: as in entertainmentInformational: as in communication
Service - ManufacturingServices: Manufacturing:• Intangible product • Tangible product• No inventories • Can be inventoried• High customer • Low customer contact contact• Short response time • Capital intensive• Labor intensive • Long response time
What Operations Managers Do Plan - Organize - Staff - Lead - Control
OM Decisions• Strategic decisions: – Decisions that set the direction for the entire company. – Broad in scope & long-term in nature• Tactical decisions: – Short-term & specific in nature – Bound by the strategic decisions
The Critical Decisions• Quality management – Who is responsible for quality? – How do we define quality?• Service and product design – What product or service should we offer? – How should we design these products and services?
The Critical Decisions - Continued • Process and capacity design – What processes will these products require and in what order? – What equipment and technology is necessary for these processes? • Location – Where should we put the facility – On what criteria should we base this location decision?
The Critical Decisions - Continued • Layout design – How should we arrange the facility? – How large a facility is required? • Human resources and job design – How do we provide a reasonable work environment? – How much can we expect our employees to produce?
The Critical Decisions - Continued • Supply chain management – Should we make or buy this item? – Who are our good suppliers and how many should we have? • Inventory, material requirements planning, – How much inventory of each item should we have? – When do we re-order?
Major Historical DevelopmentsIndustrial Revolution Late 1700sScientific Management Early 1900sHuman Relations Movement 1930s to 1960sManagement Science Mid-1900sComputer Age 1970sJust-In-Time Systems 1980sTotal Quality Management (TQM) 1980sReengineering 1980sFlexibility 1990sTime-based Competition 1990sSupply Chain Management 1990sGlobal Competition 1990sEnvironmental Issues 1990sElectronic Commerce Late 1990s – Early 21st Century
Industrial Revolution Late 1700s• Replaced traditional craft methods• Substituted machine power for labor• Major contributions: – James Watt (1764): steam engine – Adam Smith (1776): division of labor – Eli Whitney (1790): interchangeable parts
Scientific Management Early 1900s• Separated ‘planning’ from ‘doing’• Management’s job was to discover worker’s physical limits through measurement, analysis & observation• Major contributors: – Fredrick Taylor: stopwatch time studies – Henry Ford: moving assembly line
Human Relations Movement 1930s to 1960s• Recognition that factors other than money contribute to worker productivity• Major contributions: – Understanding of the Hawthorn effect: Study of Western Electric plant in Hawthorn, Illinois intended to study impact of environmental factors (light & heat) on productivity, but found workers responded to management’s attention regardless of environmental changes – Job enlargement – Job enrichment
Management Science Mid-1900s• Developed new quantitative techniques for common OM problems: – Major contributions include: inventory modeling, linear programming, project management, forecasting, statistical sampling, & quality control techniques
Computer Age 1970s• Provided the tool necessary to support the widespread use of Management Science’s quantitative techniques – the ability to process huge amounts of data quickly & relatively cheaply• Major contributions include the development of Material Requirements Planning (MRP) systems for production control
Developments: 1980s Japanese Influence• Just-In-Time (JIT): – Techniques designed to achieve high-volume production using coordinated material flows, continuous improvement, & elimination of waste• Total Quality Management (TQM): – Techniques designed to achieve high levels of product quality through shared responsibility & by eliminating the root causes of product defects• Business Process Reengineering: – ‘Clean sheet’ redesign of work processes to increase efficiency, improve quality & reduce costs
Developments: 1990s• Flexibility: – Offer a greater variety of product choices on a mass scale (mass customization)• Time-based competition: – Developing new product designs & delivering customer orders more quickly than competitors• Supply Chain Management – Cooperating with suppliers & customers to reduce overall costs of the supply chain & increase responsiveness to customers
Developments: 1990s• Global competition: – International trade agreements open new markets for expansion & lower barriers to the entry of foreign competitors (e.g.: NAFTA & GATT) – Creates the need for decision-making tools for facility location, compliance with with local regulations, tailoring product offerings to local tastes, managing distribution networks, …• Environmental issues: – Pressure from consumers & regulators to reduce, reuse & recycle solid wastes & discharges to air & water
Electronic Commerce• Internet & related technologies enable new methods of business transactions: – E-tailing creates a new outlet for retail goods & services with global access and 24-7 availability – Internet provides a cheap network for coordinating supply chain management information• Developing influence of broadband & wireless
Trends in Business• Major trends – The Internet, e-commerce, e-business – Management technology – Globalization – Management of supply chains – Outsourcing – Agility – Ethical behavior 1-26
Management Technology• Technology: The application of scientific discoveries to the development and improvement of goods and services• Product and service technology• Process technology• Information technology 1-27
Simple Product Supply ChainSuppliers’ Direct Final Producer DistributorSuppliers Suppliers Consumer Supply Chain: A sequence of activities And organizations involved in producing And delivering a good or service 1-28
Other Important Trends• Working with fewer resources• Revenue management• Process analysis and improvement• Increased regulation and product liability• Lean production 1-29