What Is Operations Management?

Operations Management
Operations and Productivity Chapter 1
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Production is the creation of goods and services Operations management is the set of activities that creates value in the form of goods and services by transforming inputs into outputs

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Organizational Functions
Marketing

What Operations Managers Do

Plan - Organize - Staff - Lead - Control

Gets customers

Operations

creates product or service

Finance/Accounting

Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e

Obtains funds Tracks money

1995 Corel Corp.

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Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e

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Why Study OM?

OM is one of three major functions (marketing, finance, and operations) of any organization. We want (and need) to know how goods and services are produced. We want to understand what operations managers do. OM is such a costly part of an organization.
Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e

Why Study OM?

Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e

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New Challenges in OM
From Local or national focus Batch shipments Low bid purchasing Lengthy product development Standard products Job specialization
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To Global focus Just-in-time Supply chain partnering Rapid product development, alliances Mass customization Empowered employees, teams
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The Productivity Challenge

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Productivity
Measure of process improvement Represents output relative to input

Multi-Factor Productivity

Productivity

Units produced Input used

Productivity

Only through productivity increases can our standard of living improve

Output Labor + material + energy + capital + miscellaneous

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Service Productivity
Typically labor intensive Frequently individually processed Often an intellectual task performed by professionals Often difficult to mechanize Often difficult to evaluate for quality

Operations in the Service Sector

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Characteristics of Goods
Tangible product Consistent product definition Production usually separate from consumption Can be inventoried Low customer interaction
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Characteristics of Service
Intangible product Produced & consumed at same time Often unique High customer interaction Inconsistent product definition Often knowledge-based Frequently dispersed
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1995 Corel Corp. 1995 Corel Corp.

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Goods Versus Services

Goods Can be resold Can be inventoried Service Reselling unusual Difficult to inventory Quality difficult to measure Selling is part of service
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Goods Versus Services Continued

Goods Product is transportable Site of facility important for cost Often easy to automate Revenue generated primarily from tangible product
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Service Provider, not product is transportable Site of facility important for customer contact Often difficult to automate Revenue generated primarily from intangible service.
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Some aspects of quality measurable Selling is distinct from production

Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e