01B-Introduction To Operations Management

Introduction to Operations
1 Management
PowerPoint presentation to accompany

Heizer and Render
Operations Management, 10e, Global Edition
Principles of Operations Management, 8e, Global Edition
PowerPoint slides by Jeff Heyl
© 2011 Pearson Education 1-1

Why Study OM?
1. OM is one of three major functions of
any organization, we want to study
how people organize themselves for
productive enterprise
2. We want (and need) to know how
goods and services are produced
3. We want to understand what
operations managers do
4. OM is such a costly part of an
organization
Ten Critical Decisions
Ten Decision Areas Chapter(s)
1. Design of goods and services 5
2. Managing quality 6, Supplement 6
3. Process and capacity 7, Supplement 7
design
4. Location strategy 8
5. Layout strategy 9
6. Human resources and 10
job design
7. Supply-chain 11, Supplement 11
management
8. Inventory, MRP, JIT 12, 14, 16
9. Scheduling 13, 15
10. Maintenance 17 Table 1.2
Goods and Services
Automobile
Computer
Installed carpeting
Fast-food meal
Restaurant meal/auto repair
Hospital care
Advertising agency/
investment management
Consulting service/
teaching
Counseling
100% 75 50 25 0 25 50 75 100%
| | | | | | | | |
Percent of Product that is a Good Percent of Product that is a Service

Ethics and
Social Responsibility
Challenges facing
operations managers:
 Developing and producing safe,
quality products
 Maintaining a clean environment
 Providing a safe workplace
 Honoring stakeholder commitments

Scope of Operations
Management
The scope of operations management ranges across
the organization.
The operations function includes many interrelated activities
such as:
 Forecasting
 Capacity planning
 Facilities and layout
 Scheduling
 Managing inventories
 Assuring quality
 Motivating employees
 Deciding where to locate facilities
 And more . . .
Student Slides 1-6
Role of the Operations
Manager
The Operations Function consists of all activities directly related
to producing goods or providing services.
A primary function of the operations manager is to guide the

system by decision making.
– System Design Decisions
– System Operation Decisions
Student Slides 1-7

Why Study OM?
• Every aspect of business affects or is affected by operations
• Many service jobs are closely related to operations
– Financial services
– Marketing services
– Accounting services
– Information services
• There is a significant amount of interaction and collaboration
amongst the functional areas
• It provides an excellent vehicle for understanding the world in
which we live
1-8
Student Slides
OM and Supply Chain
Career Opportunities
• Operations manager
• Supply chain manager
• Production analyst
• Schedule coordinator
• Production manager
• Industrial engineer
• Purchasing manager
• Inventory manager
• Quality manager
1-9
Student Slides
Historical Evolution of OM
• Industrial Revolution
• Scientific Management
• Human Relations Movement
• Decision Models and Management Science
• Influence of Japanese Manufacturers
Student Slides 1-10

Key Issues for Operations
Managers Today
• Economic conditions
• Innovating
• Quality problems
• Risk management
• Competing in a global economy
Student Slides 1-11

The Need for Supply Chain Management
• In the past, organizations did little to manage

the supply chain beyond their own operations
and immediate suppliers which led to
numerous problems:
– Oscillating inventory levels
– Inventory stockouts
– Late deliveries
– Quality problems
Student Slides 1-12

What is Operations
Management?
“ Operation Management is the set of

activities that create goods and
services through the transformation
of inputs into outputs.”
(Slack, 2001)
13
Typical Organization Chart
Source: Reid and Sanders, 2005. 14

Activities of Operations
manager
 Understand the operation’s strategic

objectives
 Developing an operation’s strategy for the
organization
 Designing the operation’s products, services
and processes
 Planning and controlling the operation
 Improving the performance of the operation.
15
Some Activities of an Operations Manager
Design elegant products

which can be flat packed
efficiently
Storage
Quality
Design Store Layout

Site Location
16
The input-transformation-output model
Transformed
resources
Materials
Information
Customers
Transformation Goods
Input Output and
process services
Transforming
resources
Facilities
Staff
Source: Slack, 2001

Similarities-Service/
Manufacturers
 All use technology
 Both have quality, productivity, &
response issues
 All must forecast demand
 Each will have capacity, layout, and
location issues
 All have customers and suppliers
 All have scheduling and staffing issues
18
Historical Development of
OM
 Industrial revolution Late 1700s
 Scientific management Early 1900’s
 Human relations movement 1930s to 1960s
 Management science Mid-1900s
 Computer age 1970s
 Just-in-Time Systems (JIT) 1980s
 Total quality management (TQM) 1980’s
 Reengineering 1990s
 Flexibility 1990s
 Time-Based Competition 1990s
 Supply chain Management 1990’s
 Global Competition 1990s
 Environmental Issues 1990s
 Electronic Commerce Late 1990s
19
Today’s OM Environment
 Customers demand better quality,
faster deliveries, and lower costs
20
Competitive Priorities- The
Edge
 Four Important Operations
Questions: Will you compete on –
Cost?
Quality?
Time?
Flexibility?
 All of the above? Some? Tradeoffs?
Source: Reid and Sanders, 2005.
21
Lower prices
(or higher profits)
Faster customer Cost

On-time
response Depend- deliveries
Speed
ability
Quality Flexibility
Error-free products Wider variety
and services More customisation
More innovation
Cope with volume
fluctuations
22
Are There Priority
Tradeoffs?
 Which priorities are “Order Qualifiers”?
e.g. Must have excellent quality since everyone expects it
 Which priorities are “Order Winners”?

e.g. Dell competes on all four priorities
Southwest Airlines competes on cost
McDonald’s competes on consistency
FedEx competes on speed
Custom tailors compete on flexibility
 Can you have both high quality and low cost?

e.g. Yes, Coke and Pepsi are good examples
 Can you offer design flexibility and short delivery?

e.g. Yes, modular housing manufacturers do it
23
Measuring Productivity
 Productivity is a measure of how efficiently inputs are
converted to outputs
Productivity = output/input
 Total Productivity Measure

Total Productivity = $sales/inputs $
 Partial Productivity Measure

Partial Productivity = cars/employee
 Multifactor Productivity Measure

Multi-factor Productivity = sales/total
$costs
Source: Reid and Sanders, 2005.

24
Highlights
 Business Strategy is a long  Competitive priorities are
range plan. Functions cost, quality, time, and
develop supporting plans flexibility
 Strategy must address  Productivity measures
mission, environment, and how effectively a firm is
core competencies using resources
 Business strategy provides  Productivity is computed
a guide for designing
operations strategy as a ratio of outputs
divided by inputs
 Operations strategy must
consider which competitive
priorities are essential to
meet business objectives
25
References
 Reid R.D., and Sanders N. R., (2005)
Operations Management, 2nd Edition,
Wiley Publication.
 Slacks Nigel and Lewis Mike, (2002)
Operations Management, Prentice Hall.
26

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Introduction to Operations

PowerPoint presentation to accompany

PowerPoint slides by Jeff Heyl

© 2011 Pearson Education 1-1

Percent of Product that is a Good Percent of Product that is a Service

© 2011 Pearson Education 1-4

© 2011 Pearson Education 1-5

A primary function of the operations manager is to guide the

Student Slides 1-7

Student Slides 1-10

Student Slides 1-11

• In the past, organizations did little to manage

Student Slides 1-12

“ Operation Management is the set of

Source: Reid and Sanders, 2005. 14

 Understand the operation’s strategic

Design elegant products

Design Store Layout

Source: Slack, 2001

Faster customer Cost

 Which priorities are “Order Winners”?

 Can you have both high quality and low cost?

 Can you offer design flexibility and short delivery?

 Total Productivity Measure

 Partial Productivity Measure

 Multifactor Productivity Measure

Source: Reid and Sanders, 2005.

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