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1 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted.

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Presentation on theme: "1 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted."— Presentation transcript:

1 1 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. GOODS, SERVICES, AND OPERATIONS MANAGEMENT CHAPTER 1 DAVID A. COLLIER AND JAMES R. EVANS

2 2 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT LO1 Explain the concept and importance of operations management. LO2 Describe what operations managers do. LO3 Explain the differences between goods and services. LO4 Describe a customer benefit package. LO5 Explain the role of processes in OM and identify three general types of processes. LO6 Summarize the historical development of OM. LO7 Describe current challenges facing OM.

3 3 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT W alt Disney clearly put us on the path toward things like quality, great guest service, creativity and innovation. Disney theme parks and resorts are designed to provide exceptional guest experiences and accomplish the mission to create happiness by providing the finest in entertainment for people of all ages, everywhere. How do they accomplish this? By meticulous attention to the management of operations!

4 4 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Disney theme parks and resorts, for example, focus on: training employees (cast members) to provide exceptional guest service; the use of technologyboth for entertainment and operational efficiency; on the physical setting (i.e., facility layout, lighting, signage, music, appealing to all five senses); separating onstage public areas from backstage work operations that include a complex underground system to move materials and people around the properties; process design issues like efficient waiting lines; and continuous improvement of everything they do.

5 5 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Describe one experience you had at a theme park that illustrates either good or bad customer service or operational design. What can we learn from your experience regarding how a theme park can create a positive customer experience or improve on a bad one through its design and operations? What do you think?

6 6 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Operations management (OM) is the science and art of ensuring that goods and services are created and delivered successfully to customers. Design of goods, services, and the processes that create them. Day-to-day management of those processes. Continual improvement of these goods, services, and processes.

7 7 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Three Issues at the Core of Operations Management Efficiency Cost Quality

8 8 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT What Do Operations Managers Do? Forecasting Supply chain management Facility layout and design Technology selection Quality management Purchasing Resource and capacity management Process design Job design Service encounter design Scheduling

9 9 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT

10 10 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT United Performance Metals: The Life of an Operations Manager United Performance Metals (UPM), located in Hamilton, Ohio, is a supplier of stainless steel and high temperature alloys for the specialty metal market. UPMs primary production operations include slitting coil stock and cutting sheet steel to customer specifications with rapid turnaround times from order to delivery.

11 11 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT United Performance Metals: The Life of an Operations Manager The Director of Operations and Quality is involved in a variety of daily activities that draw upon knowledge of not only OM and engineering, but also finance, accounting, organizational behavior, and other subjects. While understanding specialty metals is certainly a vital part of the Directors job, the ability to understand customer needs, apply approaches to continuous improvement, understand and motivate people, work cross-functionally across the business, and integrate processes and technology within the value chain define the job of an Operations Manager.

12 12 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT OM in the Workplace Operations Managers have such titles as: Chief Operating Officer Hotel or Restaurant Manager Vice President of Manufacturing Customer Service Manager Plant Manager Field Services Manager Supply Chain Manager

13 13 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT OM in the Workplace Shelly Decker, an accounting and information systems major in college, and her sister created an entrepreneurial venture to manufacture and sell natural soaps and body products.

14 14 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT OM in the Workplace Shelly uses OM skills every day: Process design – When a new product is to be introduced, the best way to produce it must be determined. This involves charting the detailed steps needed to make the product. Inventory management – Inventory is tightly controlled to keep cost down and to avoid production that isn't needed. Inventory is taken every four weeks and adjusted in the inventory management system accordingly.

15 15 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT OM in the Workplace Scheduling – Production schedules are created to ensure that enough product is available for both retail and wholesale customers, taking into account such factors as current inventory and soap production capacity. Quality management – Each product is inspected and must conform to the highest quality standards. If a product does not conform to standard (for example, wrong color, improper packaging, improper labeling, improper weight, size, or shape), then it is removed from inventory to determine where the process broke down and to initiate corrective action.

16 16 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT OM in the Workplace Brooke Wilson is a Process Manager for J.P. Morgan Chase in the Credit Card Division. He was an accounting major in college. Among his OM-related activities are: Planning and budgeting: Representing the plastic card production area in all meetings, developing annual budgets and staffing plans, and watching technology that might affect the production of plastic credit cards. Inventory management: Overseeing the management of inventory for items such as plastic blank cards, inserts such as advertisements, envelopes, postage, and credit card rules and disclosure inserts.

17 17 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT OM in the Workplace Scheduling and capacity: Daily to annual scheduling of all resources (equipment, people, inventory) necessary to issue new credit cards and reissue cards that are up for renewal, replace old or damaged cards, and one's that are stolen. Quality: Embossing the card with accurate customer information and quickly getting the card in the hands of the customer.

18 18 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Understanding Goods and Services A good is a physical product that you can see, touch, or possibly consume. Examples of goods include: oranges, flowers, televisions, soap, airplanes, fish, furniture, coal, lumber, personal computers, paper, and industrial machines. A durable good is a product that typically lasts at least three years. Vehicles, dishwashers, and furniture are some examples of durable goods.

19 19 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Understanding Goods and Services A non-durable good is perishable and generally lasts for less than three years. Examples are toothpaste, software, shoes, and fruit. A service is any primary or complementary activity that does not directly produce a physical product.

20 20 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Similarities Between Goods and Services 1.Goods and services provide value and satisfaction to customers who purchase and use them. 2.They both can be standardized or customized to individual wants and needs. 3.A process creates and delivers each good or service, and therefore, OM is a critical skill.

21 21 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Differences Between Goods and Services 1.Goods are tangible while services are intangible. 2.Customers participate in many service processes, activities, and transactions. 3.The demand for services is more difficult to predict than the demand for goods. 4.Services cannot be stored as physical inventory. 5.Service management skills are paramount to a successful service encounter. 6.Service facilities typically need to be in close proximity to the customer. 7.Patents do not protect services.

22 22 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Understanding Goods and Services Service management integrates marketing, human resources, and operations functions to plan, create, and deliver goods and services, and their associated service encounters. A service encounter is an interaction between the customer and the service provider.

23 23 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Understanding Goods and Services Service encounters consist of one or more moments of truthany episodes, transactions, or experiences in which a customer comes into contact with any aspect of the delivery system, however remote, and thereby has an opportunity to form an impression. Examples: A gracious welcome by an employee at a hotel check-in counter A grocery store employee who seems too impatient to help Trying to navigate a confusing Web site

24 24 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Exhibit 1.1 How Goods and Services Affect Operations Management Activities

25 25 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Customer Benefit Packages A customer benefit package (CBP) is a clearly defined set of tangible (goods-content) and intangible (service-content) features that the customer recognizes, pays for, uses, or experiences. In simple terms, a CBP is some combination of goods and services configured in a certain way to provide value to customers. A CBP consists of a primary good or service, coupled with peripheral goods and/or services.

26 26 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Customer Benefit Packages A primary good or service is the core offering that attracts customers and responds to their basic needs. For example, the primary service of a personal checking account is the capability to do convenient financial transactions. Examples: an airline flight a checking account a brief case a football game tax preparation advice

27 27 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Customer Benefit Packages Peripheral goods or services are those that are not essential to the primary good or service, but enhance it. Examples for a personal checking account: online access and bill payment debit card designer checks paper or electronic account statement

28 28 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Customer Benefit Packages A variant is a CBP attribute that departs from the standard CBP and is normally location- or firm-specific. Example: a fishing pond or pool at an automobile dealership where kids can fish while the parents shop for vehicles

29 29 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Exhibit 1.2 A CBP Example for Purchasing a Vehicle

30 30 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Exhibit Extra Another Example of a Consumer Benefit Package

31 31 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT

32 32 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Customer Benefit Packages Many goods and services have a mixture of both goods and service content. Exhibit 1.3 Examples of Goods and Service Content

33 33 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Biztainment – (Huh?) Why would someone pay, for example, to crush grapes with their feet? Might it be that the process of doing this is as valuable to the customer as the outcome itself? Entertainment is the act of providing hospitality, escapism, fun, excitement, and/or relaxation to people as they go about their daily work and personal activities. The addition of entertainment to an organizations customer benefit package provides unique opportunities for companies to increase customer satisfaction and grow revenue. Biztainment is the practice of adding entertainment content to a bundle of goods and services in order to gain a competitive advantage.

34 34 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Biztainment – (Huh?) The old business model of just selling and servicing a physical vehicle is gone. For example, a BMW automobile dealership in Fort Myers, Florida recently opened a new 52,000 square foot facility that offers a putting green, private work areas, a movie theater, wireless Internet access, massage chairs, a golf simulator, and a cafe´, so that customers have multiple entertainment options during their visits. Build-A-Bear Workshop boasts an average of $600 per square foot in annual revenue, double the U.S. mall average, and Holiday Inns found that hotels with holidomes have a 20% higher occupancy rate and room rates are on average $28 higher.

35 35 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Processes A process is a sequence of activities that is intended to create a certain result. Processes are the means by which goods and servicesthe components of a CBPare produced and delivered.

36 36 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Processes Key business processes: Value creation processes, focused on producing or delivering an organizations primary goods or services, such as filling and shipping a customers order, assembling a dishwasher, or providing a home mortgage. Support processes, such as purchasing materials and supplies used in manufacturing, managing inventory, installation, health benefits, technology acquisition, day care on-site services, and research and development. General management processes, including accounting and information systems, human resource management, and marketing.

37 37 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Processes Nearly every major activity within an organization involves a process that crosses traditional organizational boundaries. Networks of processes are called value chains, which we focus on in Chapter 2.

38 38 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Pals Sudden Service Pals Sudden Service is a small chain of mostly drive-through quick service restaurants located in Northeast Tennessee and Southwest Virginia. Pals competes against major national chains and outperforms all of them by focusing on important customer requirements such as speed, accuracy, friendly service, correct ingredients and amounts, proper food temperature, and safety.

39 39 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Pals Sudden Service Pals uses extensive market research to fully understand customer requirements: convenience; ease of driving in and out; easy- to-read menu, simple, accurate order-system; fast service; wholesome food; and reasonable price.

40 40 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Pals Sudden Service Pals value chain begins with raw materials and suppliers providing items such as meat, lettuce, tomatoes, buns, and packaging; uses intermediate processes for order taking, cooking, and final assembly; and ends with order delivery andhopefullyhappy customers. Every process is flowcharted and analyzed for opportunities for error, and then mistake-proofed if at all possible.

41 41 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Pals Sudden Service Entry-level employeesmostly high school students in their first jobreceive 120 hours of training on precise work procedures and process standards in unique self-teaching, classroom, and on-the-job settings, reinforced by a Caught Doing Good program that provides recognition for meeting quality standards and high performance expectations. Pals collects performance measures such as complaints, profitability, employee turnover, safety, and productivity.

42 42 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Exhibit 1.4 Six Eras of Operations Management

43 43 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Exhibit 1.5 U.S. Employment by Major Industry * Durable goods are items such as instruments, vehicles, aircraft, computer and office equipment, machinery, furniture, glass, metals, and appliances. ** Nondurable goods are items such as textiles, apparel, paper, food, coal, oil, leather, plastics, chemicals, and books. Source: United States Bureau of Labor Statistics, October 2001,

44 44 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Exhibit 1.5 U.S. Employment by Major Industry (continued)

45 45 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Today, more than 90 percent of the jobs in the U.S. economy are in service processes (half of the jobs in goods-producing industries, or about 9%, plus 81% in service industries). Service involves designing and managing service-, information-, or entertainment-intensive processes. Most people in the United States are working in the service sector or service processes such as health care and education, or in service-related aspects of manufacturing firms such as human resource management and accounting.

46 46 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Sustainability Sustainability refers to an organizations ability to strategically address current business needs and successfully develop a long-term strategy that embraces opportunities and manages risk for all products, systems, supply chains, and processes to preserve resources for future generations.

47 47 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Sustainability Environmental sustainability is an organizations commitment to the long-term quality of our environment. Social sustainability is an organizations commitment to maintain healthy communities and society that improve the quality of life. Economic sustainability is an organizations commitment to address current business needs and economic vitality, and to have the agility and strategic management to prepare successfully for future business, markets, and operating environments.

48 48 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Exhibit 1.6 Examples of Sustainability Practices

49 49 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Current Challenges in OM Technology Globalization Changing customer expectations Changing job designs Quality Global manufacturing

50 50 OM3 Chapter 1 Goods, Services, and Operations Management © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT Zappos Case Study 1.Draw and describe the customer benefit package that Zappos provides. Identify and describe one primary value creation, one support, and one general management process you might encounter at Zappos. 2.Explain the role of service encounters and service management skills at Zappos. How does Zappos create superior customer experiences? 3.Describe how any three of the OM activities in the box What Do Operations Managers Do? impact the management of both the goods that Zappos sells and the services that it provides.


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