1. © The McGraw-Hill Companies, Inc., 2004 1 Chapter 1 Overview: Introduction to the Field

2. © The McGraw-Hill Companies, Inc., 2004 2 Operations Management Why Study Operations Management? Production System Defined Operations as a Service Plan of This Book Historical Development of OM Current Issues in OM OBJECTIVES

3. © The McGraw-Hill Companies, Inc., 2004 3 What is Operations Management? Defined Operations management (OM) is defined as the design, operation, and improvement of the systems that create and deliver the firm’s primary products & services. This involves the transformation of inputs to outputs and is the core of any business.

4. © The McGraw-Hill Companies, Inc., 2004 4 Why Study Operations Management? OM is related to all areas of any business There is no business without Operations Education on how to produce goods or services Most costs are incurred in creating goods or services Global nature of operations and competition Impetus of new technologies

5. © The McGraw-Hill Companies, Inc., 2004 5 Why Study Operations Management? Business Education Systematic Approach to Org. Processes Career Opportunities Cross-Functional Applications Operations Management

6. © The McGraw-Hill Companies, Inc., 2004 6 What is a Production System? Defined A production system is defined as a user of resources to transform inputs into some desired outputs

7. © The McGraw-Hill Companies, Inc., 2004 7 OM Involves Managing Transformations People Plants Parts Processes Planning and Control Transformation Process (Value Adding) Transformation Process (Value Adding) InputOutput Transformation is enabled By the 5 P’s of OM

8. © The McGraw-Hill Companies, Inc., 2004 8 Transformations Physical--manufacturing Locational--transportation Exchange--retailing Storage--warehousing Physiological--health care Informational--telecommunications

9. © The McGraw-Hill Companies, Inc., 2004 9 What is a Service and What is a Good? “If you drop it on your foot, it won’t hurt you.” (Good or service?) “Services never include goods and goods never include services.” (True or false?)

10. © The McGraw-Hill Companies, Inc., 2004 10 What About McDonald’s? Service or manufacturing? The company certainly manufactures tangible products Why then would we consider McDonald’s a service business?

11. © The McGraw-Hill Companies, Inc., 2004 11 OM in the Organization Chart Operations Plant Manager Operations Manager Operations Manager Director Manufacturing, Production control, Quality assurance, Engineering, Purchasing, Maintenance, etc FinanceMarketing

12. © The McGraw-Hill Companies, Inc., 2004 12 Core services are basic things that customers want from products they purchase Core Services Defined

13. © The McGraw-Hill Companies, Inc., 2004 13 Core Services Performance Objectives Operations Management Flexibility Quality Speed Price (or cost Reduction)

14. © The McGraw-Hill Companies, Inc., 2004 14 Value-added services differentiate the organization from competitors and build relationships that bind customers to the firm in a positive way Value-Added Services Defined

15. © The McGraw-Hill Companies, Inc., 2004 15 Value-Added Service Categories Operations Management Information Problem Solving Sales Support Field Support Performance data on products Use data for improvements Help internal/external groups solve problems Enhance sales/marketing through equipment demos Replace defective parts quickly

16. © The McGraw-Hill Companies, Inc., 2004 16 Plan of This Book I. Operations Strategy and Managing Change 1. Introduction to the Field 2. Operations Strategy and Competitiveness 3. Project Management III. Supply Chain Design 9. Supply Chain Strategy 10. Strategic Capacity Management 11. Just-in-Time and Lean Systems IV. Planning and Controlling the Supply Chain 12. Forecasting and Demand Management 13. Aggregate Sales and Operations Planning 14. Inventory Control 15. Materials Requirements Planning 8. Operations Consulting and Reengineering 16. Operations Scheduling II. Product Design and Process Selection 4. Process Analysis 5. Product Design and Process Selection -Manufacturing 6. Product Design and Process Selection -Services 7. Quality Management 17. Synchronous Manufacturing and Theory of Constraints

17. © The McGraw-Hill Companies, Inc., 2004 17 Historical Development of OM JIT and TQC Manufacturing Strategy Paradigm Service Quality and Productivity Total Quality Management and Quality Certification

18. © The McGraw-Hill Companies, Inc., 2004 18 Historical Development of OM (cont’d) Business Process Reengineering Supply Chain Management Electronic Commerce

19. © The McGraw-Hill Companies, Inc., 2004 19 Current Issues in OM Effectively consolidating the operations resulting from mergers Developing flexible supply chains to enable mass customization of products and services Managing global supplier, production and distribution networks Increased “commoditization” of suppliers

20. © The McGraw-Hill Companies, Inc., 2004 20 Current Issues in OM (cont’d) Achieving the “Service Factory” Enhancing value added services Making efficient use of Internet technology Achieving good service from service firms