What is Operations? What is Operations? a function or system that transforms inputs into outputs of greater value. i.e. a transformation process.

OM is a process oriented discipline Inputs Transformation Outputs

Transformation process Tuna can process Inputs and outputs? Hospital process

Why do the Operations management and Supply Chain Management matter? In early 2005, HP New CEO search committee when Carly Fiorina stepped down as CEO New CEO of HP Mark Hurd improved operations through supply chain

Transformation Process Physical: as in manufacturing operations Locational: as in transportation or warehouse operations Exchange: as in retail operations Physiological: as in health care Psychological: as in entertainment Informational: as in communication

What is Operations Management? What is Operations Management (OM)? Operations Management is the management of process used to design, supply, produce, and deliver valuable goods and services to customers.

Operations Management (OM) is everywhere Construction Schools Restaurants Banks Hospitality Military Transportation Agriculture Sport Teams Health Care Municipalities Gov’t Services Manufacturers Entertainment Retail Not-for-Profit Organizations

Operations Management (OM) is everywhere Marketing Finance and Accounting Human Resources Outside Suppliers

Supply Chain Management Supply chain: the global network of organizations and activities involved in (1) designing a set of goods and services and their related processes (2) transforming inputs into goods and services (3) consuming goods and services (4) disposing of these goods and services Supply chain management: the design and execution of relationship and flows that connect the parties and processes across supply chain

Supply Chain Network Example Resources and Technology Supply Chain Financial Underwriters Screen Writers Talent Agencies Casting Company Film Maker / Producer Director Raw Materials Suppliers Chemical Dye Manufacturer Wood Pulp Supplier Cellulose Acetate Manufacturer Film Manufacturer Stock Film Wholesaler DVD Sales/Rentals Theaters Distributors Production Company Product Supply Chain Tier 4 Tier 3 Tier 2 Tier 1 Echelon 1 Echelon 2 Upstream Product Supply Chain Downstream Product Supply Chain Costume Supplier Props Supplier Equipment Supplier 1–11

Characteristics of Goods and Services Tangible Can be inventoried Little customer contact Long lead time Often capital-intensive Quality easily assured Material is transformed Intangible Cannot be inventoried Extensive customer contact Short lead time Often labor intensive Quality harder to assess Information or customer is transformed

Value-Added & Product Packages Value-added is the difference between the cost of inputs and the value or price of outputs. Product packages are a combination of goods and services. Product packages can make a company more competitive.

Decline in Manufacturing Jobs Productivity Increasing productivity allows companies to maintain or increase their output using fewer workers Outsourcing Some manufacturing work has been outsourced to more productive companies

Functional activities that connect Operations managers Customer Management: interfaces with customers and order processing and fulfillment Supply Management: processes to identify, acquire and administer inputs Logistics Management: movement of materials and information within, into and out of the firm

Historical events in OM

Historical events in OM Industrial revolution (Before 1800): Steam engine: James Watt Division of labor: Adam Smith Interchangeable parts: Eli Whitney Technical capitalist (1800-1850): Improved manufacturing technology Emerging transportation network

Historical events in OM mass production (1850-1890): Emergence of local factory Introduction of steam and electrical power Scientific management(1890-1920): More scientific management Moving assembly (Henry Ford)

Historical events in OM Human relations and Demand growth (1920-1960): Hawthorne studies (Elton Mayo) Motivation theories (Abraham Maslow and Douglas Mcgregor) Introduction of computer usage and quantitative methods Increased automation

Historical events in OM Global competition (1960-1980): Just in time system Early outsourcing World class manufacturing (1980-2000): Increased computerization and information system Global sourcing and need for supply chain coordination E-commerce (2000-present): Internet revolution

CWU College of Business Supply Chain Management specialization SCM 310 Supply chain management SCM 425 Procurement and supply management SCM 435 Advanced topics in operations and supply chain management SCM 475 Global supply chain management SCM 480 Supply chain strategy

CWU College of Business Supply Chain Management certificate SCM 310 Supply chain management SCM 425 Procurement and supply management SCM 435 Advanced topics in operations and supply chain management SCM 475 Global supply chain management

CWU College of Business Supply Chain Management certificate (Choose one from ) ACCT 305 Cost accounting Bus 490 Cooperative education MGT 384 Intro. to international business MGT 484 international management SCM 324 Quality and continuous improvement

Chapter 1 homework problems Do problems 2, 3(a), 4(c), 7 on page 21 and 22.