CBME 1

CHAPTER 1

Introduction to Operations
Management
Prepared by:

REBECCA Q. LISING, MBA, MAED

Learning Objectives
1. Define the terms operations management and supply chain.
2. Identify similarities and differences between production and
service operations.
3. Explain the importance of learning about operations
management.
4. Summarize the two major aspects of process management.
5. Briefly describe the historical evolution of operations
management.
 Topic Outline
01 02 03
Introduction Operations Supply Chain and
Management Value Added

04 05 06
PRODUCTION OF WHY LEARN ABOUT HISTORICAL
GOODS VERSUS OPERATIONS EVOLUTION OF
PROVIDING SERVICES MANAGEMENT? OPERATIONS
MANAGEMENT
““If we deliver on time, but the product
has defects, we have not delivered on
time.”.”

—Phil Crosby
-an American businessman and author who contributed
to management theory and quality management
practices
 Introduction
Operations are that part of a business
organization that is responsible for producing
goods and services.
OPERATIONS MANAGEMENT
– the management of systems or processes that create
goods and/or provide services

- The business function responsible for planning,

coordinating, and controlling the resources needed to produce
products and services for a company.
Operations Management is....

● A management function
● An organization’s core function
● In every organization whether
Service or Manufacturing, profit
or Not for profit
Basic Functions of Business Organizations
Typical Organization Chart
Supply Chain
- A sequence of activities and
organizations involved in producing
and delivering a good or service.
Value-Added
PRODUCTION OF GOODS VERSUS PROVIDING SERVICES

Consider these points of comparison:

✓ Degree of customer contact
✓ Labor content of jobs
✓ Uniformity of inputs
✓ Measurement of productivity
✓ Quality assurance
✓ Inventory
✓ Wages
✓ Ability to patent
Why Learn about Operations
Management
Why Learn about Operations Management

▪ 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
Why Learn about Operations Management

Through learning about operations and supply chains you

will have a better understanding of:

▪ The world you live in

▪ The global dependencies of companies and nations
▪ Reasons that companies succeed or fail
▪ The importance of working with others
Three Major Functions of business organizations overlap
Process
Management
Approaches to Decision Making includes the use of:

❑Models
❑Quantitative Methods
❑Analysis of trade-offs
❑Establishing priorities
❑Ethics
❑Systems Approach
EVOLUTIONS OF
OPERATIONS
MANAGEMENT
HISTORICAL EVOLUTION OF OPERATIONS MANAGEMENT

● The Industrial Revolution

● Scientific Management
● Decision Models and Management
Science
● The Influence of Japanese
Manufacturers
INDUSTRIAL REVOLUTION
● Began in the 1770s in England and spread to the rest of
Europe and to the United States during the 19th century.
● Substituted machine power for human power.
● Most significant machine was steam engine.
● Craft Production
What did take place?
● Production became fast and low costly one
● Economies of scale
● Development of standard gauging system
● Factories grew rapidly
● Provided countless jobs
SCIENTIFIC MANAGEMENT
● Widely changed the management of factories.
● Developed by Frederick Winslow Taylor, the father of scientific management.
● Based on observation, measurement, analysis and improvement of work methods and economic
incentives.
● Studied to identify the best method for doing each job.
● Henry Ford practically adopted the scientific management principles for Taylor.
● Introduced the moving assembly line, which affected too many industries.
● Introduced mass production to the automotive industry.
● The concept of “Interchangeable Parts” was applied by Eli Whitney, an American inventor.
● The basis for interchangeable parts was to standardize parts. Any part in a batch of parts would fit
any automobile coming down the assembly line. Result was a high decrease in assembly time and
cost.
● Concept of division of labor, which Adam Smith wrote about in the wealth of Nations (1776), was
used by Ford. An operation is divided up in to a series of many small tasks; individual workers are
assigned to one of those tasks.
PIONEERS WHO CONTRIBUTED TO THIS MOVEMENT
❖ Frank Gilbreth - was an industrial engineer who is often
referred to as the father of motion study. He developed
principles of motion economy that could be applied to
incredibly small portions of a task.

❖ Henry Gantt - recognized the value of nonmonetary

rewards to motivate workers, and developed a widely
used system for scheduling, called Gantt charts.
PIONEERS WHO CONTRIBUTED TO THIS MOVEMENT
❖ Harrington Emerson - applied Taylor’s ideas to
organization structure and encouraged the use of
experts to improve organizational efficiency. He testified
in a congressional hearing that railroads could save a
million dollars a day by applying principles of scientific
management.

❖ Henry Ford - the great industrialist, employed scientific

management techniques in his factories.
DECISION MODELS AND MANAGEMENT SCIENCE
● Accompanied by the development of several quantitative
techniques.
● F.W. Harris developed a mathematical model for inventory order size
in 1915.
● H.F. Dodge, H.G. Romig and W. Shewhart developed statistical
procedures for sampling and quality control in 1930.
● L.H.C. Tippett conducted studies that provided the groundwork for
statistical sampling theory in 1935.
THE INFLUENCE OF JAPANESE MANUFACTURERS

● Japanese manufactures developed management practices

that increased the productivity and quality.
● Companies which were outside Japan were interested in
their approaches.
● The influence of Japanese companies is continuing for the
foreseeable future.
 Operations Today....
❑ E-commerce Consumer-to-business transactions. Uses
electronic technology to facilitate transactions.
❑ Six Sigma - A process of reducing costs, improving quality, and
ncreasing customer satisfaction.
❑ Agility – The ability of an organization to respond quickly to
demands or opportunities.
❑ Lean System – Systems that uses minimal amounts of
resources to produce a high volume of high-quality goods with
some variety.
OFFICIAL MCC TEACHER’S GUIDE DISCLAIMER
It is not the intention of the author/s nor the
publisher of this module to have monetary gain in
using the textual information, imageries, and other
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Mabalacat City College.

In addition, this module or no part of it thereof may

be reproduced, stored in a retrieval system, or
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electronic, mechanical, photocopying, and/or
otherwise, without the prior permission of
Mabalacat City College.
 References
Operations Management with Total Quality Management 2019 edition by CENGAGE
Learning
Operations Management 7th Edition by Roberta S. Russel and Bernard W. Taylor III
Operations Management by McGraw Hill Education, c.2016

Total Quality Management. Phil. Edition. by James R. Evans and William M. Lindsay

Stevenson, William J., Operations Management 11th Edition (International), McGraw

Hill/Irwin, New York, USA, 2012

Online sources:

Operations Management - https://www.investopedia.com/terms/o/operations-

management.asp
Do you have any questions?