© Wiley Chapter 1 - Introduction to Operations Management Operations Management by R. Dan Reid & Nada R. Sanders 2 nd Edition © Wiley 2005 PowerPoint Presentation by R.B. Clough - UNH

© Wiley Introduction to Operations Management Outline What is operations management? Value added, efficiency, and effectiveness The transformation process, measurement, feedback Why do we study operations management? Differences and similarities between manufacturing and services Operations management decisions (Table 1-1) Diagram of the course

© Wiley What is Operations Management? The business function responsible for planning, coordinating, and controlling the resources (inputs) needed to make a company’s products (goods and services)

© Wiley Typical Organization Chart

© Wiley Effectiveness added by EJR5 Value Added, Efficiency, Effectiveness Value added: value of outputs – cost of inputs Efficiency: performing activities at the lowest possible costs Effectiveness: doing what the company must do to serve customers and compete

© Wiley Transformation Process

© EJR Measurement and Feedback Measurement systems in operations collect data about the transformation process, the inputs, and the outputs Feedback is the use of data to improve the transformation process and the inputs, thereby improving the outputs. Data from operations measurements systems Cost data from accounting systems Customer information: returned products, complaints, customer surveys, focus groups

© EJR Typical Measures Used to Improve Operations Management Costs Quality Quantity produced or number of customers served Timeliness (on-time delivery, service time, fast delivery)

© Wiley Why do we study Operations? (1) In most organizations, Operations Uses most of the fixed assets Manages most of the employees Uses most of the materials Incurs most of the fixed and variable costs Improving operations management is often the fastest way to reduce costs and increase profits.

© Wiley Why do we study Operations? (2) Operations helps attract and retain customers by Introducing new technology that allows the firm to offer new or better goods and services Participating in product design teams Providing the quality and timeliness that customers want

© Wiley Why do we study Operations? (3) To learn tasks that professionals do Quality management Project management Job design Scheduling work Increasing productivity

© Wiley Differences between Manufacturers and Service Organizations Services: Intangible product Product cannot be inventoried High customer contact Short response time Labor intensive Manufacturers: Tangible product Product can be inventoried Low customer contact Longer response time Capital intensive

fig_01_03

© Wiley Similarities between Services and Manufacturers They have transformation processes They use technology They have quality, productivity, & response issues They must forecast demand and try to meet it They have capacity, layout, and location issues They have customers and suppliers (also called vendors) They have scheduling and staffing issues

Decisions in Operations Management © Wiley

Operations Management Decisions for Gourmet Wafers Table 1-1, page 8 © Wiley

Operations Management Decisions for Gourmet Wafers (2) © Wiley

Operations Management Decisions for Gourmet Wafers (3) © Wiley

MGMT 326 Foundations of Operations Introduction Strategy Quality Assurance Capacity, Facilities, and Work Design Planning & Control Products & Processes