Oper & Supply Key Terms

Operations Management (OM)

Activities that create value by transforming inputs into outputs in the form of goods and services.

Goods

Tangible products that can usually be stored in inventory and are often standardized.

Services

Economic activities that typically produce an intangible product and are often produced and consumed at the same time.

Operations

The major business function that creates the product or service.

Finance/Accounting

The major business function that tracks performance, pays bills, and collects money.

Marketing

The major business function that generates demand.

Supply Chain

A global network of organizations and activities that supplies a firm with goods and services.

What Operations Managers Do

Perform the management functions of planning, organizing, staffing, leading, and controlling to manage operations.

Eli Whitney

Demonstrated the use of standardized/interchangeable parts made to exact specifications.

Frederick W. Taylor

Known as the father of scientific management; studied how jobs were performed and developed efficiency principles.

Taylor's Principles

Match employees to the right jobs, provide proper training, provide proper methods/tools, and establish incentives.

Frank & Lillian Gilbreth

Further developed work-measurement and efficiency methods.

Henry Ford

Introduced the moving assembly line for production of the Model T.

W. Edwards Deming

Used statistics to analyze processes and promoted quality-control methods and worker involvement.

Four Parts of the Process

Inputs → Process/Transformation → Outputs → Feedback.

Single-Factor Productivity

Measures productivity using one resource input, such as labor.

Multifactor Productivity

Measures productivity using multiple resource inputs together.

Current OM Challenges

Globalization, supply-chain partnering, sustainability, technological change, mass customization, and lean operations.

Strategy

An action plan for achieving the organization's mission.

Mission

The purpose or reason an organization exists.

Differentiation

Competing by being better or different in a way customers value.

Cost Leadership

Competing by providing maximum customer value at low cost.

Response

Competing by being more responsive through flexibility, reliability, and quickness.

Globalization

Expanding business operations internationally to gain advantages from global markets and resources.

Benefits/Reasons to Globalize

Improve supply chain, reduce costs/exchange-rate risks, improve operations, understand markets, improve products, and attract/retain global talent.

Product Life Cycle

The four stages a product progresses through: Introduction → Growth → Maturity → Decline.

Introduction

Product is newly introduced to the market.

Growth

Demand and sales for the product increase.

Maturity

Product is established and growth begins to stabilize.

Decline

Demand for the product decreases.

SWOT Analysis

Analysis of Strengths, Weaknesses, Opportunities, and Threats.

Key Success Factors (KSFs)

Important activities or factors that are necessary for the organization to successfully execute its strategy.

Core Competency

A major strength or capability that an organization does especially well.

Outsourcing

Transferring activities traditionally performed internally to external suppliers.

Risks of Outsourcing

Increased logistics/inventory costs, loss of control, possible future competition, negative employee effects, and risks that may not appear for years.

Project Management

Managing a project through planning, scheduling, and controlling.

Planning

Setting objectives, defining the project, creating the WBS, and determining resources.

Scheduling

Determining when activities occur and relating activities and resources to each other.

Controlling

Monitoring resources, costs, quality, and budgets and making adjustments when necessary.

Project Manager Responsibilities

Ensure activities are completed in proper sequence and on time, within budget, meet quality goals, and workers receive motivation, direction, and information.

WBS (Work Breakdown Structure)

Breaks the project into project → major tasks → subtasks → activities/work packages.

AON (Activity on Node)

Network where nodes represent activities.

AOA (Activity on Arrow)

Network where arrows represent activities.

CPM

Critical Path Method; a project scheduling technique using fixed activity-time estimates.

PERT

Program Evaluation and Review Technique; a project scheduling technique that allows for variability in activity times.

Slack

Amount of time an activity can be delayed without delaying the entire project.

Forward Pass

Work start → finish to calculate ES and EF.

Backward Pass

Work finish → start to calculate LF and LS.

Gantt Chart

Visual scheduling chart showing project activities and their timing.

Critical Path

The sequence/path of critical activities that determines the project's completion time.

Dummy Activity

Used in an AOA network to show a required precedence relationship; uses no time or resources.

ES — Earliest Start

Earliest time an activity can start after its predecessors are completed.

EF — Earliest Finish

Earliest time an activity can finish.

LS — Latest Start

Latest an activity can start without delaying the entire project.

LF — Latest Finish

Latest an activity can finish without delaying the entire project.