Operations

Management
Module

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 The Role of Operations Management

• Operations management - the

transformation process that converts
resources into finished goods and
services.

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 Exhibit MOM-1
The Operations System

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 Services and Manufacturing

• Manufacturing organizations -
organizations that produce physical goods.
• Service organizations - organizations
that produce nonphysical products in the
form of services.

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 What Is Value Chain Management
and Why Is It Important?

• Value - the performance characteristics,

features, attributes, and any other aspects
of goods and services for which customers
are willing to give up resources.
• Value chain - the entire series of
organizational work activities that add
value at each step from raw materials to
finished product.

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 What Is Value Chain Management
and Why Is It Important? (cont.)

• Value chain management - the process

of managing the sequence of activities and
information along the entire value chain.
• Organizational processes The ways that
organizational work is done

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 Value Chain Management

• Requirements for Value Chain

Management
– A new business model incorporating:
• Coordination and collaboration
• Investment in information technology
• Changes in organizational processes
• Committed leadership
• Flexible jobs and adaptable, capable employees
• A supportive organizational culture and attitudes
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 Exhibit MOM-2
Value Chain Strategy Requirement

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Obstacles to Value Chain Management

– Organizational barriers
• Refusal or reluctance to share information
• Reluctance to shake up the status quo
• Security issues
– Cultural attitudes
• Lack of trust and too much trust
• Fear of loss of decision-making power
– Required capabilities
• Lacking or failing to develop the requisite value
chain management skills

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Obstacles to Value Chain Management
(cont.)

– People
• Lacking commitment to do whatever it takes
• Refusing to be flexible in meeting the demands of
a changing situation
• Not being motivated to perform at a high level
• Lack of trained managers to lead value chain
initiatives

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 Exhibit MOM-3
Obstacles to Value Chain Management

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Obstacles to Value Chain Management
(cont.)

• Intellectual property - proprietary

information that’s critical to an
organization’s efficient and effective
functioning and competitiveness

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Current Issues in Managing Operations

• Technology’s Role in Manufacturing

– Increased automation and integration of
production facilities with business systems to
control costs
• Predictive maintenance, remote diagnostics, and
utility cost savings
• Quality - the ability of a product or service
to reliably do what it’s supposed to do and
to satisfy customer expectations

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 Current Issues in
Managing Operations

• Quality Initiatives
– Planning for quality
– Organizing and leading for quality
– Controlling for quality

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 Quality Goals

• ISO 9000 - a series of international quality

management standards that set uniform
guidelines for processes to ensure that
products conform to customer
requirements.
• Six Sigma - a quality program designed to
reduce defects, help lower costs, save
time, and improve customer satisfaction.

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 Mass Customization and
Lean Organization

• Mass customization - providing

customers with a product when, where,
and how they want it.
• Lean organization - an organization that
understands what customers want,
identifies customer value by analyzing all
activities required to produce products,
and then optimizes the entire process from
the customer’s perspective.
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Copyright
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2014Pearson
PearsonEducation,
EducationInc. MOM-17
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