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Operations management refers to the administration of business practices to create the highest level of efficiency possible within an organization. It is concerned with converting materials and labor into goods and services as efficiently as possible to maximize the profit of an organization.
3. Why Study Operations Management?
Operations
Management
Business Education/
Career Opportunities
Systematic Approach
to Org. Processes
Increase Competitive
Advantage/Survival
Cross-Functional
Applications
4. Key OM Concepts
Efficiency - Doing something at the lowest
possible cost
Effectiveness - Doing the right things to
create the most value for the organization
Value - Quality divided by price
6. Examples of Production Systems
System Inputs Conversion Output
(desired)
Hospital Patients
MDs, Nurses
Medical Supplies
Equipment
Health Care Healthy
Individuals
Restaurant Hungry Customers
Food, Chef
Servers
Atmosphere
Prepare Food
Serve Food
Satisfied
Customers
Automobile
Plant
Sheet Steel
Engine Parts
Tools, Equipment
Workers
Fabrication
and Assembly
of Cars
High Quality
Automobiles
University High School Grads
Teachers, Books
Classroom
Transferring
of Knowledge
and Skills
Educated
Individuals
7. Front and Back Office
Front Office
Customer
Service Provider
Back Office
8. Core “Factory Services”
Core Services are basic things that
customers want from products that they
purchase.
Quality
Flexibility
Speed
Price (or production cost)
9. Competitive Dimensions
Cost
Quality and Reliability
Delivery
Flexibility
Speed
Reliability
Coping with Changes in Demand
New Product Introduction
Speed
Flexibility
Operations Management --> OM, POM, OPS
NOT OR/MS or IE OM uses their tools to manage production.
OM is the management of a company’s production system.
Marketing Sells
Finance keeps track of the money
OPS produces
Systematic approach to Org. Processes:
An Organized way of Looking at work.
Career Opportunities:
Direct – Plant Manager, Production Supervisor
Indirect – Material Manager, Consulting
Cross-Functional Applications:
Everyone needs to plan & control their work.
Business Education:
New ideas such as SCM, ERP, Reengineering, and six sigma
Physical: Saturn
Locational: FedEx
Exchange: Target
Storage: Self or Cold Storage
Physiological: Hospitals, clinics
Informational: Transfer of information, Information networks
Production as a system
Whole is worth more than the sum of its parts.
In Order of Time
Cost for type of market& type of product
Involves tradeoffs
Financial perspective – ultimate benefit to shareholder
Internal perspective – key internal processes
To the future
Leading measures – are descriptive of what has happened
Lagging measures – predictive
Such as: retention versus customer satisfaction
rejects versus absenteeism