Chapter 8 Operations and Value Chain Management 1

Operations Management The design, operation, and control of the transformation process that converts such resources as labor and raw materials into goods and services that are sold to customers Every organization has an operations system that creates value by transforming inputs into outputs

The Transformation Process Inputs Outputs People Technology Capital Equipment Materials Information Goods Services Transformation Process Source: Management, Seventh Canadian Edition, by Stephen P. Robbins, Mary Coulter, and Robin Stuart-Kotze, page 444. Copyright © 2003. Reprinted by permission of Pearson Education Canada Inc. 4 4

Outputs (Labour+Capital+Materials) Productivity = Outputs (Labour+Capital+Materials) 6

Value Performance characteristics, features, and attributes, and any other aspects of goods and services for which customers are willing to give up resources Organizations must provide value to attract and keep customers Value provided through the transformation of raw materials into some product or service that end-users need where, when, and how they want it

Value Chain Management Process of managing an entire sequence of activities along the entire value chain Is externally oriented Focuses on both incoming materials and outgoing products and services Is effectiveness oriented and aims to create the highest value for customers

The Requirements For Successful Value Chain Management Organizational Culture and Attitudes Coordination and Collaboration Technology Investment Employees Value Chain Strategy Organizational Processes Leadership Source: Management, Seventh Canadian Edition, by Stephen P. Robbins, Mary Coulter, and Robin Stuart-Kotze, page 449. Copyright © 2003. Reprinted by permission of Pearson Education Canada Inc. Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc. 7

Value Chain Management Requirements Coordination and collaboration Technology Organizational processes (continued)

Value Chain Management Requirements (continued) Leadership Employees/human resources Organization culture and attitudes

Benefits of Value Chain Management Improved customer service - the major benefit Cost savings Accelerated delivery times Improved quality

Obstacles to Value Chain Management Organizational barriers Cultural attitudes Intellectual property Required capabilities People

Technology’s Role in E-Manufacturing Improve operations management Link plant-floor automation with enterprise-wide business network systems Technology is helping to reduce manufacturing costs

Quality Control Ensures what is produced meets established standards Monitors weight, strength, consistency, colour, etc. Needed at one or more points, beginning with the receipt of inputs 21

Managing Projects Project Project management Project manager 22

Gantt Chart Planning tool that shows in bar graph form when tasks are supposed to be done and compares that with the actual progress on each 23

PERT Flowchart-like diagram that depicts the sequence of activities needed to complete a project and the time or costs associated with each activity 25