CHAPTER 1

Operations Management--= The systematic direction and c= ontrol of the processes that transform inputs into finished goods and services. Important because what operatio= ns does, influences costs and revenues, thus profits.

WHY KNOW IT? Perspective on problems (an eye towards efficiency), career opportunities, systems view of organizational processes, useful in managing other functions of an organization.

Supply Chain Management—managing the flow of inputs, into, through, and out of a business system and in to t= he hands of its customers.

Supplier network/Upstream reso= urce flows --à Operations--à Downstream product flows/Distribution Network

Inbound Logistics &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; Outbound Logistics

Note: Buying and selling companies (curr= ent trend) does not contribute real value to society like improvements in operations.

Efficiency Minimizing the resources to produce a given level of output / maximizing the output for a given level of input.

Effectiveness Achieving company, unit, and subunit goals

Value =3D Price / Quality

The Operations area of a business is where:

INPUTS-->TRANSFORMED-->O= UTPUTS

Operations can be categorized = as:

A. MANUFACTURING

B. NON-MANUFACTURING

INPUTS, TRANSFORMATIONS, AND OUTPUTS OF SOME OPERATIONS SYSTEMS

INPUTS

            &= nbsp;   *raw materials

            &= nbsp;   *skills and knowledge

            &= nbsp;   *human effort

            &= nbsp;   *energy

            &= nbsp;   *equipment

            &= nbsp;   *capital

            &= nbsp;   *technology

TRANSFORMATIONS

            &= nbsp;   *cutting        =            *subtracting

            &= nbsp;   *welding        =            *sorting

            &= nbsp;   *machining        =          *retrieving

            &= nbsp;   *painting        =           *transporting

            &= nbsp;   *weaving        =            *storing

            &= nbsp;   *sewing        =             *repairing

            &= nbsp;   *refining        =           *entertaining

            &= nbsp;   *blending        =           *serving

            &= nbsp;   *grinding        =           *teaching

            &= nbsp;   *merging        =            *assembling

            &= nbsp;   *sorting        =            *typing

            &= nbsp;   *freezing        =           *printing

            &= nbsp;   *analyzing        =          *drawing

            &= nbsp;   *adding        =             *heating

OUTPUTS

            &= nbsp;   *houses        =         =   *transportation

            &= nbsp;   *books        =              *bikes

            &= nbsp;   *appliances        =         *automobiles

            &= nbsp;   *food        =             &nb= sp; *furniture

            &= nbsp;   *movies        =             *meals

            &= nbsp;   *entertainment        =      *clothing

            &= nbsp;   *repaired objects        = *trained persons

            &= nbsp;   *accounting services

            &= nbsp;

        =             &nb= sp;

THE OPERATIONS SYSTEM

        =

        =             &nb= sp;                 =             &nb= sp;            =         =            Ta= ngible

        =             &nb= sp;           Manufacturing or

      Inputs------------> Non-Manufactu= ring --------->Outputs

        =             &nb= sp;          Transformations    <= /span>

        =             &nb= sp;            =             &nb= sp;            =             &nb= sp;          Non-Tangible

OUTPUTS ARE NOT JUST PRODUCTS = of the BUSINESS AS A WHOLE (ex: IT Dept.).

Non Manufacturing Operations h= ave two basic types of output:

        1. Tangible Outputs

        2. Non-Tangible outputs

Tangible outputs come from wholesalers= and retailers. Both provide time, place, and possession utility. Ex. grocery wholesaler, and K-Mart.

Non-Tangible outputs (pure services) can be:

1. Custom: Usually require a high level of interaction with the customer.&nb= sp; (Ex. A dentist)

        2. Standard: Often low level of interaction with customer. (Ex. A car wash)

*Services are often consumed as created—customer co-production is not uncommon. (Inventory of finished goods usual= ly not an issue)

The output of some businesses = has both characteristics and may even overlap with manufacturing (production).<= span style=3D'mso-spacerun:yes'> (Ex. McDonalds)<= /p>

TWO MAJOR CATEGORIES OF SERVICES:

Core Services vs. Value-added Services

Core: Quality, flexibility, speed, dependability and price (traditional bases for competition, or competitive priorities)

Value Added: Information, problem solving, sales support, field support

        Benefits:

            &= nbsp;   Differentiate organization from competitors

            &= nbsp;   Customer relationships enhanced

TWO MAJOR CATEGORIES OF PRODUCTION:

1. Continuous

2. Intermittent

Continuous production is characterized b= y:

1. A standardized product<= /span>

2. Anticipated demand

3. Make to stock operations

        Ex. production of 9 volt batteries (Duracell)

4. Large volume

5. Capital intensive

6. A fixed flow

Intermittent production can be characteriz= ed by:

1. A discrete product or batches=

2. Demand not easily anticipated=

3. Make to order operations

        Ex. production of special purpose filters

4. Small to medium volume<= /span>

5. Labor intensive<= /p>
6. A variable flow<= /p>

            &= nbsp;           =     Flexible        =             &nb= sp;          =             &nb= sp;            =             S= pecific

        &= nbsp;                  =        purpose     = ;            &n= bsp;            = ;            &n= bsp;                   = ;    purpose

            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;

            &= nbsp;   home construction print shop    carpet mill     auto assembly &n= bsp;   refinery         =

Custom <-------------------------------= -----------------------------------------------à Commodity

            &= nbsp;   projects             = job shops       hybr= id or    repetitive        =       flow line

            &= nbsp;           &nbs= p;            &= nbsp;                  =       batch

         =           Inter= mittent        =             &nb= sp;            =             &nb= sp;            =                     =             &nb= sp;      Continuous<= /b>

Goods-Services Continuum (book)

Pure        &= nbsp; Core           Core                  Pure

        Goods     &= nbsp;           &nbs= p;           Services

= HISTORICAL DEVELOPMENTS IN OM<= /span>

=

.   Scientific Management (Taylor, Gilbreths, and Ford)

.   Socio-Technical Systems Theory

.   OM= as separate field of study (Edward Bowman, Robert Fetter,Elwood Buffa)

.   Le= an Manufacturing, JIT and TQC

.   Mf= g. Strategy Paradigm (factory focus and manufacturing tradeoffs)

.   Se= rvice quality and productivity

.   productivity (outputs/inputs)

. TQM, Quality Certification (ISO 900= 0, etc.), and Six Sigma Quality

.   BP= R

.   SC= M

.   E-Commerce and E-Business

.   Ag= ility and Virtual Enterprise

.   Se= rvice Science--apply what we have learned in manufacturing and related operations= to services and apply IT to service operations

        =

= KEY ISSUES IN OPERATIONS MANAGEMENT TODAY:

= Then: 90s

.   qu= ality

.   flexibility

.   integration

.   productivity (outputs/inputs)

.   continuous improvement

.   cu= stomer service

.   ti= me to market

= Now: 21^st Century=

.   coordinating relationships between mutually supportive but separate organizations

.   Optimizing global supplier, production, and distribution networks

.   increased co-production of goods and services (brings customer close= r to firm)

.   ma= naging customer touch points

.   ra= ising senior management awareness of operations as a significant competitive weap= on (not really new at all)

.   ISO Certification

.   M-Commerce

        =             &nb= sp;