Management July 2001

Welcome and Introduction What the Class is About Course Outline Teaching Style Course Web Page

Questions?

Introductions Your name Where you are in your program If you work – where?

Introduction What: How Operations Management relates to productivity, strategy, and the global environment Where: business foundations Why: Application to real world businesses

Operations and Productivity

What is Operations Management? “Operations Management is the set of activities that creates goods and services by transforming inputs into outputs”

What are the Inputs and Outputs? A Sony TV Factory A Bank A Hospital A University

Why Study Operations Management? Study how people organize themselves for productive enterprise Study how goods and services are produced Understand what operations managers do Understand how operations management affects costs for an organization

Operations Management Breakdown Design of Goods and Services Managing Quality Process Strategy Location Strategy Layout Strategy

Breakdown Continued Human Resources Supply-chain Management Inventory Management Scheduling Maintenance

Framework of Business All businesses perform three functions to create goods and services: Finance and Accounting Marketing Operations and Production

Operations Management and Services

Goods vs Services Goods Resold Inventoried Measurable Quality Sales distinct from Production Services Reselling Unusual Difficult to Inventory Quality Difficult to Measure Selling Part of Service

Goods vs Services Continued Goods Product Transportable Location for Cost Easy to Automate Services Provider Transportable Location for Customer Contact Difficult to Automate

Trends in Services Your job Your parents’ job

Growth of Services Percent United States Canada France Italy Britain Japan W Germany Services Industry Farming % U.S. Employment, % ShareServices as a Percent of GDP U.S. Exports of Services In Billions of Dollars Year 2000 data is estimated

Mix of Goods and Services Automobile Computer Installed Carpeting Fast-food Meal Restaurant Meal Auto Repair Hospital Care Advertising Agency Investment Management Consulting Service Counseling Percent of Product that is a Good Percent of Product that is a Service

Pure Service Pure Service: No physical product provided along with a service

Applying OM to Services Can be very difficult to apply operations management concepts to the service sector

Productivity

Productivity Definition Productivity is the ratio of outputs of an enterprise divided by its inputs Productivity = Outputs Inputs

Productivity Definition Outputs? Inputs? Productivity = Products and Services Labour, Material, Energy, Capital

Productivity Definition It is the function of Operations Management to improve the ratio of outputs to inputs – to make the operation more efficient. How?

Productivity Improvement Why measure national productivity? Only by increasing productivity does the standard of living improve Three variables: Labour Capital Management

Strategy Effective endeavors have a mission Strategy is an organization’s plan to achieve a mission

Competitive Advantage We want to craft the strategy that will achieve the best competitive advantage Competitive advantage is the creation of a unique advantage over competitors

Three Basic Strategies Differentiation Cost Leadership Response

Critical Success Factors Activities that are key to achieving a competitive advantage

Strategy Related to Operations Management Design of Goods and Services Managing Quality Process Strategy Location Strategy Layout Strategy Human Resources Supply-chain Management Inventory Management Scheduling Maintenance

Video Case What Strategy was Xerox’ competitors using? How did Xerox answer these questions? What were Xerox Critical Success Factors?

Global Environment

Operations Management in a Global Context Reduce Costs Improve Supply Chain Better Goods and Services New Markets Learn to Improve Operations Attract and Retain Global Talent

Achieving Global Operations Product Design Process Design Facility Location Culture and Ethics

Global Operations Strategies International Strategy Multidomestic Strategy Global Strategy Transnational Strategy

Conclusion Productivity Strategy Global Environment Thursday: Forecasting