Presentation on theme: "Operations Management"— Presentation transcript:
1 Operations Management BUSINESS PLUG-IN B16Operations Management
2 LEARNING OUTCOMES Define the term operations management Explain operations management role in business
3 LEARNING OUTCOMESDescribe the correlation between operations management and information technologyDescribe the five characteristics of competitive priorities
4 OM FUNDAMENTALSProduction - is the creation of goods and services using the factors of productionProduction management - describes all the activities managers do to help companies create goodsOperations management (OM) - the management of systems or processes that convert or transform resources into goods and services
5 OM FUNDAMENTALSTransformation process - the actual conversion of inputs to outputs
7 OM FUNDAMENTALSValue-added - the term used to describe the difference between the cost of inputs and the value of price of outputs
8 OM IN BUSINESSHow does an airline service organization’s OM team adds value?ForecastingCapacity planningSchedulingManaging inventoryAssuring qualityMotivating and training employeesLocating facilities
9 IT’S ROLE IN OMManagers use IT to heavily influence OM decisions including :What: What resources will be needed and in what amounts?When: When should the work be scheduled?Where: Where will the work be performed?How: How will the work be done?Who: Who will perform the work?
10 OM Strategic Business Systems Operations strategy addresses broad questions about using major resources to achieve corporate objectivesMajor long-term issues addressed in operations strategy include:How big to make the facilities?Where to locate the facilities?When to build additional facilities?What type of process(es) to install to make the products?
11 OM Strategic Business Systems Strategic planning - focuses on long range planningStrategic business units (SBUs) - consist of several stand-alone businessesMaterials requirement planning (MRP) - use sales forecasts to make sure that needed parts and materials are available at the right time and place
12 OM Strategic Business Systems Tactical planning - focuses on producing goods and services as efficiently as possible within the strategic planGlobal inventory management system - provides the ability to locate, track, and predict the movement of every component or material anywhere upstream or downstream in the production process
13 OM Strategic Business Systems Operational planning and control (OP&C) - deals with the day-to-day procedures for performing work, including scheduling, inventory, and process managementInventory management and control systemTransportation planning systemDistribution management system
14 COMPETITIVE OM STRATEGY Five key competitive priorities which a company can add value to its OM decisions including:CostQualityDeliveryFlexibilityService
15 COMPETITIVE OM STRATEGY Cost: There can be only one lowest-cost producer, and that firm usually establishes the selling price in the marketQuality: Is divided into two categories product and process qualitySix Sigma QualityMalcolm Balridge National Quality AwardsISO 900, ISO 14000CMMI
16 COMPETITIVE OM STRATEGY Delivery: a firms ability to provide consistent and fast deliveryFlexibility: a firms ability to offer a wide variety of productsService: high-quality customer service adds tremendous value to an ordinary product
17 OM AND THE SUPPLY CHAINSupply chain - consists of all parties involved, directly or indirectly, in the procurement of a product or raw materialSupply Chain Management (SCM) – involves the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability
18 OM AND THE SUPPLY CHAINTypical manufacturing supply chain
19 OM AND THE SUPPLY CHAINTypical service supply chain
20 CLOSING CASE ONE How Levi’s Got Its Jeans into Wal-Mart How did Levi Strauss achieve business success through the use of supply chain management?What might have happened to Levi’s if its top executives had not supported investments in SCM?David Bergen, Levi’s CIO, put together a cross-functional team of key managers from IT, finance, and sales to transform Levi’s systems to meet Wal-Mart’s requirements. Analyze the relationships between these three business areas and OM. How can OM systems help support these three critical business areas?
21 CLOSING CASE ONE How Levi’s Got Its Jeans into Wal-Mart Describe the five basic SCM components in reference to Wal-Mart’s business modelExplain RFID and provide an example of how Levi’s could use the technology to increase its business operationsIdentify any security and ethical issues that might occur for a company doing business with Wal-Mart
22 CLOSING CASE TWO The Digital Hospital Why would operations management be a critical component to a hospital?How would a hospital use each of the three OM planning strategies to improve its operations?How might a hospital use each of the five competitive priorities to increase value to its goods and services?