MGMT 330 Ch 1 Operations Management Value Chains

Operations Management

Science and art of ensuring that goods and services are created and delivered successfully to customers

OM depends on:

Efficiency, cost of operations and quality of goods

What do Operation Managers do?

oversee the day-to-day functions of a business to ensure efficiency and effectiveness

Goods vs Services

Goods are tangible, don’t need direct involvement and demands are easier to predict.

Services are intangible, need direct involvement and demands are difficult to predict.

Service Management

Integrates marketing, human resources, and operations functions to: Plan, Create, Deliver goods and services, and Deal with service encounters

Moments of truth

Episodes, transactions, or experiences in which customer encounters the delivery system and forms an impressions

Value

Perception of the benefits associated with a good, service, or bundle of goods and services in relation to what a buyer pays

Customer Benefit Packages (CBP)

Clearly defined set of tangible and intangible features that a customer recognizes, pays for, uses, or experiences

Primary good or service

Core offering that attracts customers and responds to their basic needs

Peripheral goods or services

offerings that are not essential but enhance the primary good or service

Value chain

Describes the flow of materials, finished goods, services, information, and financial transactions from suppliers

Supply Chain

The portion of the value chain that focuses on physical movement of goods and materials and supporting flow of information and financial transactions

Business Process: Core

Focuses on producing or delivering an organizations primary goods or services

Business Process: Support

Focuses on purchasing, managing inventory, installation, health benefits, technology, day care services and research

Business Process: General Management

Focuses on accounting and information systems, HR management, and marketing

Process Design:

When a new product was to be introduced, the best way to produce it had to be determined. This involved charting the detailed steps needed to make the product

Inventory Management

Inventory was tightly controlled to keep cost down and to avoid production that wasn’t needed.

Scheduling

Production schedules were created to ensure that enough product was available for both retail and wholesale customers, taking into account such factors as current inventory and soap production capacity.

Quality Management

Each product was inspected and had to conform to the highest quality standards. If the product is poor then it was removed from inventory to determine where the process broke down and to initiate corrective action.

Value formula

Perceived benefits / cost

Process

is a sequence of activities that is intended to create a certain result, such as a physical good, a service, or information.

Distributions Centers

warehouses that act as intermediaries between factories and customers, shipping directly to customers or to retail stores where products are made available to customers.

Inventory

raw materials, work-in-process, or finished goods that are maintained to support production or satisfy customer demand.

A Focus on Efficency

During the Industrial Revolution, many inventions came into being that allowed goods to be manufactured with greater ease and speed, and led to the development of modern factories.

Sustainability

refers to an organization’s ability to strategically address current business needs and successfully develop a long-term strategy that embraces opportunities and manages risk for all products

Environmental Sustainability

An organization’s commitment to the long-term quality of our environment.

Social Sustainability

An organization’s commitment to maintain healthy communities and a society that improves the quality of life.

Economic Sustainability

An organization’s commitment to address current business needs and economic vitality, and to have the agility and strategic management to prepare successfully for future business

Examples of Sustainability Practices

Waste management, energy optimization, transportation optimization, technology upgrades, air quality, sustainable product design, product safety, workforce health and safety, ethics, community, performance excellence.

Business Analytics

a process of transforming data into actions through analysis and insights in the context of organizational decision making and problem solving.