Operations Management

Operations Management

Operations Management

The management of systems or processes that create goods and/or provide services.

Strategic Decisions

Decisions about the size and location of factories and appropriate supply chains.

Tactical Decisions

Decisions about factory design, project management, and equipment selection.

Operational Decisions

Decisions about production scheduling and quality control.

Goods vs

Goods are tangible products, while services are intangible, perishable outputs.

Manufacturing-Service Continuum

Manufacturing processes convert materials into products, while service processes produce intangible outputs.

Sustainable Development

Consists of economic, social, and environmental sustainability.

Transformation Process

The series of activities that convert inputs into outputs, creating value.

Value Chain

A series of activities from supplier to customer that add value to a product or service.

Supply Chain

A sequence of activities and organizations involved in producing and delivering a good or service.

Core Processes

Activities that deliver external value to customers.

Support Processes

Provide vital resources and inputs to the core processes.

Steps in Analyzing Operations Management Challenges

Identify, analyze, generate solutions, recommend, adopt, maintain, and re-evaluate.

Business Aspects for Management Decisions

Design, quality, process, location, layout, human resources, supply chain, inventory, scheduling, and maintenance.

Current Challenges in Operations Management

Globalization, supply-chain partnering, sustainability, rapid product development, mass customization, and lean operations.

Competitiveness

How effectively a company meets the wants and needs of customers relative to others.

Identifying Consumer Wants and Needs

Achieving the perfect match between consumer wants and needs with the organization's goods and services.

Price and Quality

Understanding the trade-off decision consumers make between price and quality.

Advertising and Promotion

Using different approaches to inform potential customers of the organization's goods/services and attract buyers.

Product & Service Design

Designing goods and services to meet customer needs and preferences.

Capacity Planning

Ensuring that the firm can meet current and future demand.

Process Selection

Deciding on the way production of goods or services will be organized.

Job Shop

Used for low volume, high-variety goods or services with small jobs and high skill level of workers.

Batch

Used for moderate volume, moderate variety goods or services with lower skill level of workers.

Repetitive

Used for higher volumes, standardized goods or services with slight flexibility of equipment and low skill level of workers.

Continuous

Used for continuous production of high volumes of highly standardized goods or services.

Mass Production

Used when a very high volume of non-discrete, highly standardized output is desired. Almost no variety in output; thus, no need for equipment flexibility.

Project

Used for non-routine work, with a unique set of objectives to be accomplished in a limited time frame. Equipment flexibility and worker skills range from low to high.

Value

The amount customers are willing to pay for what an organization provides. Benefits can be informational, emotional, and economic. It is also the quality received relative to expectations.

Value-adding

A positive contribution that a process makes to the final usefulness or value of a product.

Cost-adding

A negative contribution that a process makes to the final usefulness or value of a product.

Primary process

Performs the main value-added activities of an organization.

Secondary process

Creates value for the internal customer (i.e., from within the organization).

Value- & Cost-Adding Processes

Processes that are either value-adding or cost-adding, mutually exclusive. Value-adding processes create value for the external customer, while secondary processes create value for the internal customer.

Examples of Secondary Processes

Hiring and terminating employees, checking the credit rating of new customers, closing accounting activities without disrupting normal operations, researching and developing new products and services, identifying new suppliers and sources of materials.

The Perfect Process

A process that creates the right value for the customer, whether external or internal. Each primary and secondary process must be valuable, capable, available, adequate, and flexible.