Lesson 1
-The synchronization of a firm’s
Using Operations.
to Create Value.
Operations Management
-The systematic design, direction,
and control of processes that
transform inputs into services and
products for internal, as well as
external customers.
Process
◦ Any activity or group of activities
that takes one or more inputs, transforms
them, and provides one or more outputs
for its customers.
Operation
◦ A group of resources performing all
or part of one or more processes.
Historical Evolution and Perspectives
• Operation Management has been variously
known as Industrial Management,
Management Science, Operation Research,
Production management and Production and
Operation Management.
Historical Evolution and Perspectives
-A new multi-disciplinary approach to problem
Solving called ‘Operation Research’ was
developed.
-application of scientific methods to study and
devise solutions to managerial problems.
-helped solve resource allocation,
scheduling, processing, inventory, location layout
and
control problems replacement methods.
Supply Chain Management
processes with those of its
suppliers and customers to match
the flow of materials, services,
and information with customer
demand.
◦An interrelated series of processes within and
across firms the produces a service or product
to the satisfaction of customers.
Role of Operations in an Organization
Finance-acquires financial resources.
Operations- translate materials and
services into outputs.
Marketing - generate sales of outputs.
Process View
-Departments within an organization typically
have their own set of objectives and a set of
resources with capabilities to meet those
objectives.
concept of a process is much broader:
◦ a process can have its own set of objectives
where the workflow may cross different
department boundaries, and require resources
from several departments.
How Processes Work
Every process and every person in the
organization has customers.
{Customer}
◦ External customers
◦ A customer who is either an end user or an
intermediary
(e.g., manufacturers, financial institutions, or
retailers)
buying the firm’s finished services or products.
 ◦Internal customers
◦One or more employees or processes that rely on Core Processes
inputs • A core process is a set of activities that delivers
from other employees or processes to perform value to external customers.
their work.
Supplier relationship process – A process that
selects the
{Supplier} suppliers of services, materials, and information
◦ External suppliers and facilitates
◦ The businesses or individuals who provide the timely and efficient flow of these items into the
the resources, services, products, and materials firm.
for the firm’s short-term and long-term needs.
◦Internal suppliers New service/product development – A process
◦ The employees or processes that supply that designs and
important develops new services or products from inputs
t information or materials to a firm’s processes. from external
customer.
◦ The concept of a process within a process
• It may be helpful to separate one part of a Order fulfillment process – A process that
process from another for several reasons. includes the activities required to produce and
deliver the service or product to the external
● Difference Between Services and customer.
Manufacturing Processes
Customer relationship process – A process that
°Manufacturing processes - have longer identifies, attracts and builds relationships with
response external customers.
times, are more capital intensive, and their quality
can be measured more easily than those of Support Processes - Processes like Accounting,
service Finance, Human Resources, Management
processes. Information Systems and Marketing that provide
vital resources and inputs to the core processes.
°Service processes- produce intangible,
perishable Supply Chain Processes
outputs. ◦ Business processes that have external
customers or suppliers.
•Similarities between Services and
Manufacturing Processes. Operations Strategy
◦ The means by which operations implements the
- it often performs both types of processes firm’s corporate strategy and helps to build a
- classifications at the process level are much less customer-driven firm.
ambiguous.
Corporate Strategy
◦Provides an overall direction that serves as the
framework for carrying out all the
organization’s functions.

Core Competencies
◦ Good managerial skills alone cannot overcome
environmental changes.

Core Processes
◦ A firm’s core competencies should drive its core
processes: customer relationship, new service or
product development, order fulfillment, and
supplier relationship.

Global Strategies
◦ Identifying opportunities and threats today
requires a global perspective.

◦A market analysis first divides the firm’s

customers into market segments and then
identifies the needs of each segment.

Market Segmentation
◦ is the process of identifying groups of customers
with enough in common to warrant the design and
provision of services or products.

Competitive Competitive
Priorities Capabilities
The critical dimensions The cost, quality, time, and
that a process or flexibility dimensions that a
supply chain must process or supply chain
possess to satisfy its actually possesses and is
internal or external able to deliver.
customers, both now
and in the future.