1. Introduction to Ops Mgmt

Operations as a Competitive Weapon

• Recommended Book: Lee J. Krajewski, Larry P. Ritzman, Pearson, 2019.

Overview of Operations Management Philosophy

• Operations Management encompasses various management processes including:

  • Operations Strategy

  • Project Management

  • Process Strategy

  • Process Analysis

  • Process Performance and Quality

  • Constraint Management

  • Process Layout

  • Lean Systems

  • Supply Chain Strategy

  • Location

  • Inventory Management

  • Forecasting

  • Sales and Operations Planning

  • Resource Planning

  • Scheduling

Definition of Operations Management

• Operations Management is:

  • The systematic design and control of processes that transform inputs into services and products for internal and external customers.

• Operations Management can be viewed through different lenses:

  • Addresses issues related to the transformation process converting inputs to useful outputs that yield revenue for the system.

Operations System Characteristics

• Defined as a system where several activities are performed to transform inputs into outputs using a transformation process.

• Key Characteristics:

  • Transforms a set of inputs into output.

  • Employs a systematic approach to handle transformation issues and improve efficiency.

Types of Organizations Involved in Operations Management

• Various sectors include:

  • Construction

  • Health Care

  • Manufacturing

  • Retailing

  • Transportation

  • Wholesaling

• Common functions across these sectors:

  • Accounting

  • Distribution

  • Engineering

  • Operations

  • Finance

  • Human Resources

  • Marketing

Processes in Operations Management

• Processes are essential and should add value.

• Can be divided into sub-processes, referred to as nested processes.

• Each process has identifiable inputs and outputs.

Customer Types in Operations

• External Customers: Purchase goods/services.

• Internal Customers: Receive outputs from processes within the organization.

Manufacturing vs. Service Processes

• Manufacturing Processes improve physical dimensions of products:

  • Changes in properties, shapes, finishes, or joining materials.

• Service Processes do not transform material in such ways, focusing instead on providing intangible services.

Comparison of Manufacturing and Service Organizations

• Manufacturing Organizations vs. Service Organizations:

  • Physical, durable products vs. Intangible, perishable products.

  • Inventoried outputs vs. Non-inventoried outputs.

  • Low customer contact vs. High customer contact.

  • Regional vs. Local markets.

  • Large facilities vs. smaller facilities.

  • Capital vs. Labor intensive.

  • Quality measurements differ across sectors.

• Both sectors must focus on quality, productivity, customer response, resource planning, and demand estimation.

Value Chains in Operations

• Value chains consist of interrelated processes producing services/products satisfying customer needs.

• Distinction between core processes (directly deliver value) and support processes (facilitate core functions).

Key Core Processes

• Customer Relationship Processes: Attract and build relationships with customers.

• New Service/Product Development: Design based on external customer feedback.

• Order Fulfillment Processes: Execute service/product delivery.

• Supplier Relationship Processes: Manage supplier interactions and item flows.

Support Processes and Internal Value Chains

• Support processes are essential for the operation of core processes.

• Include relationships with external suppliers and customers.

Decision-Making in Operations

• Steps for effective decision-making:

  • Recognize and define the problem.

  • Collect necessary information for analysis.

  • Choose the most effective alternative.

  • Implement the selected solution.

Strategic and Tactical Decisions

• Strategic Decisions: Capabilities development, process design, and performance measures.

• Tactical Decisions: Project planning, inventory management, and resource scheduling.

Productivity Definition

• Productivity as:

  • Output value (services/products) divided by input resources (labor, materials, etc.).

Productivity Calculation Examples

• Single Factor Productivity:

  • Example: Three employees process 600 policies in a week (5 policies/hr).

• Multi-factor Productivity:

  • Example: 400 products valued at $10 each, actual costs calculated for productivity measurement.

Homework and Practice Problems

• Recommended book: Lee J. Krajewski, Larry P. Ritzman, Pearson, 2019.

• Problems include calculation of labor and multifactor productivities based on given data.