Chapter 8: Operations Management

Operations Management

A specialized area in management that converts or transforms resources (including human resources) into goods and services.

Forms of Utility Operations Management Provides:

1. Time- Getting it quick.

2. Place- Placement of their products/ convience.

3. Ownership- The benefit costumers get from owning product.

4. Form- Benefits the consumer, the type of form it is.

Operations Manager

Managers who are in charge of the process that transforms inputs into outputs.

Primary functions of manufacturers and service providers:

1. Intangibility

2. Customization

3. Customer contact

Make-to-Order

Producing low-volume, high-variety goods customized to meet specific customer needs. Usually slower but highly personalized.

Mass Production (Make-to-Stock)

Producing large quantities of standardized products in advance of demand. Uses economies of scale to lower costs per unit.

Mass Customization

Combining mass production efficiency with customer customization. Products are partly standardized but tailored to individual preferences.

Just-in-Time (JIT) Production

Producing goods only as they are needed; materials arrive "just in time" for use, reducing storage and inventory costs.

Ex. A car company gets tires delivered the same day they put them on cars.

They don't store hundreds of tires in a warehouse.

Computer-Aided Design (CAD)

Using computer software to create, test, and refine product designs before manufacturing.

Computer-Aided Manufacturing (CAM)

Using computer systems to control and automate production machines and processes.

Computer-Integrated Manufacturing (CIM)

Linking CAD and CAM into one automated system that handles design, production, inventory, and quality control.

Capacity

The maximum number of goods or services a business can produce under normal conditions.

Capacity Planning

Determining how much a company can produce to meet demand without over- or under-producing.

Material Requirements Planning (MRP)

A computer-based system that calculates the materials and parts needed for production based on forecasts and schedules.

Location

The decision of where to place a facility or office — affects shipping, costs, and competitiveness.

Availability of Production Inputs

Assessing access to raw materials, equipment, and labor needed for production.

Marketing Factors

External + customer side:

How the location affects customer satisfaction, speed, convenience.

Manufacturing Environment

Internal + production side:

How the location affects production efficiency.

Local Incentives

Tax breaks or financial benefits offered by governments to attract or keep companies.

International Location Considerations

Factors like lower labor costs or proximity to new markets that influence choosing a foreign location.

Designing the Facility

Planning the most efficient layout for production or service delivery.

Layout

The physical arrangement of equipment, work areas, and departments to optimize efficiency and customer service.

Total Quality Management (TQM)

A management approach that ensures products or services consistently meet customer expectations through continuous improvement, employee involvement, and customer satisfaction.

Customer Satisfaction

The goal of meeting or exceeding customer needs and expectations through quality design, production, and service.

Employee Involvement

When all employees—at every level—take responsibility for quality improvement and customer satisfaction. Often includes teamwork and quality circles (groups that identify and solve problems).

Continuous Improvement

Ongoing efforts to enhance products, services, or processes by increasing efficiency, reducing waste, and improving customer experience.

Quality Circles

Small groups of employees who regularly meet to identify and solve quality or productivity issues.