Operation Management For Compititive Advantage


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Operation Management For Compititive Advantage

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  • Operation Management For Compititive Advantage

    1. 2. Chapter 1 Introduction to the Field
    2. 3. <ul><li>Operations Management </li></ul><ul><li>Why Study Operations Management? </li></ul><ul><li>Transformation Processes Defined </li></ul><ul><li>Operations as a Service </li></ul><ul><li>The Importance of Operations Management </li></ul><ul><li>Historical Development of OM </li></ul><ul><li>Current Issues in OM </li></ul>OBJECTIVES
    3. 4. What is Operations Management? Defined <ul><li>Operations management (OM) is defined as the design, operation, and improvement of the systems that create and deliver the firm’s primary products and services </li></ul>
    4. 5. Why Study Operations Management? Business Education Systematic Approach to Org. Processes Career Opportunities Cross-Functional Applications Operations Management
    5. 6. The consultancy services market % of world revenues of 40 largest firms Marketing/sales 2 Operations and process management 31 Corporate strategy 17 IT strategy 17 Benefits/Actuarial 16 Organizational design 11 Financial 6 Source: Nigel Slack and Michael Lewis 2003
    6. 7. <ul><li>The Future of Operations </li></ul><ul><ul><li>Outsourcing everything </li></ul></ul><ul><ul><li>Smart factories </li></ul></ul><ul><ul><li>Talking inventory </li></ul></ul><ul><ul><li>Industrial army of robots </li></ul></ul><ul><ul><li>What’s in the box </li></ul></ul><ul><ul><li>Mass customization </li></ul></ul><ul><ul><li>Personalized recommendations </li></ul></ul><ul><ul><li>Sign here, please </li></ul></ul>
    7. 8. <ul><li>Progressive Insurance </li></ul><ul><ul><li>Grew significantly from 1991 to 2002 </li></ul></ul><ul><ul><li>Focused on increased operating efficiency </li></ul></ul><ul><ul><li>Started claims in 9 hours versus 7-10 days </li></ul></ul><ul><ul><li>Adjuster creates a claim on the spot </li></ul></ul><ul><ul><li>Storing or renting ($28/day) reduced. </li></ul></ul><ul><ul><li>Faster processing reduces fraud </li></ul></ul><ul><ul><li>Higher customer satisfaction </li></ul></ul>
    8. 9. <ul><li>Efficiency versus Effectiveness </li></ul><ul><li>Efficiency – doing something at the lowest possible cost </li></ul><ul><li>Effectiveness – doing the right thing to create the most value to the company </li></ul>
    9. 10. <ul><li>Operations Management Decision Types </li></ul><ul><li>Strategic (long-term) </li></ul><ul><li>Tactical (intermediate-term) </li></ul><ul><li>Operational planning and control (short-term) </li></ul>
    10. 11. What is a Transformation Process? Defined <ul><li>A transformation process is defined as a use of resources to transform inputs into some desired outputs </li></ul>
    11. 12. Transformations <ul><li>Physical--manufacturing </li></ul><ul><li>Locational--transportation </li></ul><ul><li>Exchange--retailing </li></ul><ul><li>Storage--warehousing </li></ul><ul><li>Physiological--health care </li></ul><ul><li>Informational--telecommunications </li></ul>
    12. 13. What is a Service and What is a Good? <ul><li>“ If you drop it on your foot, it won’t hurt you.” (Good or service?) </li></ul><ul><li>“ Services never include goods and goods never include services.” (True or false?) </li></ul>
    13. 14. OM in the Organization Chart Operations Plant Manager Operations Manager Director Manufacturing, Production control, Quality assurance, Engineering, Purchasing, Maintenance, etc Finance Marketing
    14. 15. Core services are basic things that customers want from products they purchase Core Services Defined
    15. 16. Core Services Performance Objectives Operations Management Flexibility Quality Speed Price (or cost Reduction)
    16. 17. Value-added services differentiate the organization from competitors and build relationships that bind customers to the firm in a positive way Value-Added Services Defined
    17. 18. Value-Added Service Categories Operations Management Information Problem Solving Sales Support Field Support
    18. 19. The Importance of Operations Management <ul><li>Synergies must exist with other functional areas of the organization </li></ul><ul><li>Operations account for 60-80% of the direct expenses that burden a firm’s profit. </li></ul>
    19. 20. Historical Development of OM <ul><li>JIT and TQC </li></ul><ul><li>Manufacturing Strategy Paradigm </li></ul><ul><li>Service Quality and Productivity </li></ul><ul><li>Total Quality Management and Quality Certification </li></ul>
    20. 21. Historical Development of OM (cont’d) <ul><li>Business Process Reengineering </li></ul><ul><li>Supply Chain Management </li></ul><ul><li>Electronic Commerce </li></ul>
    21. 22. Current Issues in OM <ul><li>Coordinate the relationships between mutually supportive but separate organizations. </li></ul><ul><li>Optimizing global supplier, production, and distribution networks. </li></ul><ul><li>Increased co-production of goods and services </li></ul>
    22. 23. Current Issues in OM (cont’d) <ul><li>Managing the customer’s experience during the service encounter </li></ul><ul><li>Raising the awareness of operations as a significant competitive weapon </li></ul>
    23. 24. Question Bowl <ul><li>A major objective of this book is to show how smart managers can do which of the following? </li></ul><ul><li>Improve efficiency by lowering costs </li></ul><ul><li>Improve effectiveness by creating value </li></ul><ul><li>Increasing value by reducing prices </li></ul><ul><li>Serving customers well </li></ul><ul><li>All of the above </li></ul>Answer: e. All of the above
    24. 25. Question Bowl <ul><li>In the Input-Transformation-Output Relationship, a typical “input” for a Department Store is which of the following? </li></ul><ul><li>Displays </li></ul><ul><li>Stocks of goods </li></ul><ul><li>Sales clerks </li></ul><ul><li>All of the above </li></ul><ul><li>None of the above </li></ul>Answer: e. None of the above (The above are considered “Resources” of a department store. The correct answer is “Shoppers”.)
    25. 26. Question Bowl <ul><li>In which of the following decades did the concept of quality control originate? </li></ul><ul><li>1920’s </li></ul><ul><li>1930’s </li></ul><ul><li>1940’s </li></ul><ul><li>1950’s </li></ul><ul><li>1970’s </li></ul>Answer: b. 1930’s (Tools such as sampling inspection and statistical tables where first developed by Walter Shewhart, H. F. Dodge, and H. G. Romig.)
    26. 27. End of Chapter 1