OPERATIONS MANAGEMENT

PART 1
TRUNG-HIEP BUI
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 INTRODUCTION

CONTENT

 Definition of Operations Management

 Identify the elements of Operations Management (OM)
 Evaluate the efficiency of the firm
 Know the potential career opportunities in Operations Management
 Recognize the major concepts that define the Operations Management field
 INTRODUCTION

DEFINITION

Operations refers to manufacturing and service processes that are used to transform the resources
employed by a firm into products desired by customers.
 The manufacturing process would produce some type of physical product, such as an automobile.
 The service process would produce an intangible product, such as a call centre that provides
information to customers.
Operations management (OM) is defined as the design, operation, and improvement of the systems
that create the firm’s primary products and services.
INTRODUCTION

DIFFERENCES BETWEEN SERVICES AND GOODS

SERVICE GOOD/PRODUCT
Intangible process Tangible output of a process
Interaction with the customer Produced in a facility separate from the customer
Heterogeneous (the attitudes of the customers and the Standardized
servers)
Perishable and time-dependent process Can be stored
Specifications of a service:
A package of features that affect the five senses

THE GOODS–SERVICES CONTINUUM

 INTRODUCTION

EFFICIENCY, EFFECTIVENESS, AND VALUE

 EFFICIENCY means doing something at the lowest possible cost. The goal of an efficient process
is to produce a good or provide a service by using the smallest input of resources.
 EFFECTIVENESS means doing the right things to create the most value for the customer.
 VALUE can be abstractly defined as quality divided by price.
 INTRODUCTION

EVALUATING EFFICIENCY

Reduce raw material costs by 5%

 INTRODUCTION

EVALUATING EFFICIENCY

EXAMPLE ($ Millions)

Build a new plant that cost $3 billion

Automobile sales increase by 25%

Profit Margin? Asset Turnover? ROA?

 INTRODUCTION

CAREERS IN OPERATIONS MANAGEMENT

∙ Supply chain manager—Negotiates contracts with vendors and coordinates the flow of material inputs to the production process and the
shipping of finished products to customers.
∙ Purchasing manager—Manages the day-to-day aspects of purchasing, such as invoicing and follow-up.
∙ Logistics manager—Oversees the movement of goods throughout the supply chain.
∙ Warehouse/Distribution manager—Oversees all aspects of running a warehouse, including replenishment, customer order fulfilment,
and staffing.
∙ Quality control manager—Applies techniques of statistical quality control, such as acceptance sampling and control charts, to the firm’s
products.
∙ Department store manager—Oversees all aspects of staffing and customer service at a store.
∙ Project manager—Plans and coordinates staff activities, such as new-product development, new-technology deployment, and new-
facility location.
∙ Plant manager—Oversees the workforce and physical resources (inventory, equipment, and IT) required to produce the product.
∙ Facilities manager—Ensures that the building facility design, layout, furniture, and other equipment are operating at peak efficiency.
∙ Hospital administrator—Oversees HR management, staffing, and finances at a healthcare facility.
∙ Branch manager (bank)—Oversees all aspects of financial transactions at a branch.
∙ Call center manager—Oversees staffing and customer service activities at a call centre.
∙ Business process improvement analyst—Applies the tools of lean production to reduce cycle time and eliminate waste in a process.
∙ Lean improvement manager—Trains organizational members in lean production and continuous improvement methods.
∙ Production control analyst—Plans and schedules day-to-day production.
INTRODUCTION

HISTORICAL DEVELOPMENT OF OPERATIONS MANAGEMENT

INTRODUCTION

OPERATIONS STRATEGY