Overview

OM I
SESSION 1
OVERVIEW
OPERATIONS MANAGEMENT
Process adopted to satisfy
customers.
Critical business function
Design , operation & improvement of
processes that creates & delivers the
products/services.
VALUE ADDING PROCESS
VALUE ADDING PROCESSES

Physicalmanufacturing ( Plastic
surgery)
Locationaltransportation (Couriers)
Exchangeretailing
Storage/Distribution--warehousing
Physiological--health care
Informational--telecommunications
OM
Operations account for 6080% of the direct expenses

that burden a firms profit.
PRODUCTS VS. SERVICES
PRODUCT - SERVICE
BUNDLE
Goods
Services
Facilitating services
Facilitating goods
EVOLUTION : OM
The Industrial Revolution

Scientific Management
Human Relations and Behaviorism
Operations Research
The Service Revolution

The industrial revolution :1700s.
The steam engine, invented by James Watt in
1764, largely replaced human and water
power for factories.
Adam Smiths The Wealth of Nations in 1776
specialization of labor.
By late-1700s factories had
machine power
ways of planning and controlling the
tasks of workers.

In 1790 an American, Eli Whitney,
developed the concept of
interchangeable parts. (machine tools
could make standardized parts to
exact specifications)
1800s : development of the gasoline
engine and electricity
By the mid-1800s, the old cottage
system of production had been
replaced by the factory system.
SCIENTIFIC MANAGEMENT
Frederick Taylor (1881)
One best way of doing a job
Best method to be standardize
Material specifications, tools ,
jigs/fixtures to be standardize
Train workmen with the best method
Incentive pay systems (measured day
work)
Frank & Lillian Gilbreth

Frank (1868-1924); Lillian (1878-1972)
Husband-and-wife engineering team
Further developed work
measurement methods
HUMAN RELATIONS AND

BEHAVIORALISM
In the 1927-1932 period, researchers in
the Hawthorne Studies realized that
human factors were affecting
productivity.
Researchers and managers alike were
recognizing that psychological and
sociological factors affected productivity.
From the work of behavioralists came a
gradual change in the way managers
thought about and treated workers.
Operations Research
World War II,
Optimization of allocation of
resources (personnel, supplies,
equipment, )
OR : Optimization decisions (when
problems are complex and wrong
decisions are costly.)
QUALITY MANAGEMENT
Deming
Juran
Today's Factors Affecting OM

Global Competition
Quality, Customer Service, and Cost
Challenges
Rapid Expansion of Advanced
Technologies
Continued Growth of the Service Sector
Scarcity of Operations Resources
Social-Responsibility Issues
New Trends in OM
Past
Causes
Future
Local or
national
focus
Reliable worldwide
communication and
transportation networks
Global focus,
moving
production
offshore
Batch (large)
shipments
Short product life cycles

and cost of capital put
pressure on reducing
inventory
Just-in-time
performance
Low-bid
purchasing
Supply chain competition

requires that suppliers be
engaged in a focus on the
end customer
Supply chain
partners,
collaboration,
alliances,
outsourcing
New Trends in OM
Past
Causes
Future
Lengthy
product
development
Shorter life cycles,

Internet, rapid international
communication, computeraided design, and
international collaboration
Rapid product
development,
alliances,
collaborative
designs
Standardized
products
Affluence and worldwide

markets; increasingly
flexible production
processes
Mass
customization
with added
emphasis on
quality
Job
specialization
Changing socioculture
milieu; increasingly a
knowledge and information
society
Empowered
employees,
teams, and lean
production
New Trends in OM
Past
Causes
Future
Low-cost
focus
Environmental issues, ISO

14000, increasing disposal
costs
Environmentally
sensitive
production, green
manufacturing,
recycled
materials,
remanufacturing
Ethics not
at forefront
Businesses operate more

openly; public and global
review of ethics; opposition
to child labor, bribery,
pollution
High ethical
standards and
social
responsibility
expected
Decision Making in OM
Strategic Decisions
Operating Decisions
Control Decisions
Strategic Decisions
Decisions of strategic importance
Have long-term significance for the
organization.
Product Design
Production process
Capacity & Location
Manpower planning
Operating Decisions
Decisions to satisfy customers
demands.
Production Planning
Inventory Management
Quality Managemnet
Control Decisions
Operations

Overview

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OM I

VALUE ADDING PROCESS

VALUE ADDING PROCESSES

Operations account for 6080% of the direct expenses

PRODUCTS VS. SERVICES

The Industrial Revolution

The Industrial Revolution

The Industrial Revolution

Frank & Lillian Gilbreth

HUMAN RELATIONS AND

Today's Factors Affecting OM

Short product life cycles

Supply chain competition

Shorter life cycles,

Affluence and worldwide

Environmental issues, ISO

Businesses operate more

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