GOODS, SERVICES, AND OPERATIONS MANAGEMENT. CHAPTER 1. DAVID A. COLLIER AND JAMES R. EVANS. 1-1 Explain the concept and importance of operations management. 1-2 Describe what operations managers do. 1-3 Explain the differences between goods and services.
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DAVID A. COLLIER AND JAMES R. EVANS
1-2Describe what operations managers do.
1-3Explain the differences between goods and services.
1-4Describe a customer benefit package.
1-5Explain the role of processes in OM and identify three general types of processes.
1-6Summarize the historical development of OM.
1-7Describe current challenges facing OM.
“iwant to be a director of a museum like this one day,” Carol said to her mom as they walked through Chicago’s Museum of Science and Industry. Carol’s family had just finished a tour of the 1944 German submarine known as the U-505 that was captured during WWII. They had spent the day learning about coal mines, the science of the human body, Dr. Seuss, and much more. As they walked past the museum offices, Carol noticed a directory of eight departments:
Can you provide examples of the type of work activities and decisions that are made in each of these eight departments at the Chicago Museum of Science and Industry?
Operations management (OM) is the science and art of ensuring that goods and services are created and delivered successfully to customers.
Shelly Decker, an accounting and information systems major in college, and her sister created an entrepreneurial venture to manufacture and sell natural soaps and body products.
Brooke Wilson is a Process Manager for J.P. Morgan Chase in the Credit Card Division. He was an accounting major in college. Among his OM-related activities are:
How Goods and Services Affect Operations Management Activities
People usually think that when they buy a new car, they
are simply purchasing the vehicle. Far from it. Most automobiles, for example, bundle a good, the automobile, with many peripheral services. Such services might include the sales process, customized leasing, insurance, warranty programs, loaner cars when a major service or repair is needed, free car washes at the dealership, opportunities to attend a
manufacturer’s driving school, monthly newsletters sent by email, and Web-based scheduling of oil changes and other service requirements. Such bundling is described by the customer benefit package framework.6
Examples of Goods and Service Content
Why would someone pay, for example, to crush grapes with their feet? Might it be that the process of doing this is as valuable to the customer as the outcome itself? Entertainment is the act of providing hospitality, escapism, fun, excitement, and/or relaxation to people as they go about their daily work and personal activities. The addition of entertainment to an organization’s customer benefit package provides unique opportunities for companies to increase customer satisfaction and grow revenue.
Biztainmentis the practice of adding entertainment content to a bundle of goods and services in order to gain a competitive advantage.
The old business model of just selling and servicing a physical vehicle is gone. For example, a BMW automobile dealership in Fort Myers, Florida, recently opened a new 52,000-square-foot facility that offers a putting green, private work areas, a movie theater, wireless Internet access, massage chairs, a golf simulator, and a café, so that customers have multiple entertainment options during their visits.
Build-A-Bear Workshop boasts an average of $600 per square foot in annual revenue, double the U.S. mall average, and Holiday Inns found that hotels with holidomes have a 20% higher occupancy rate and room rates are, on average, $28 higher.
* Durable goods are items such as instruments, vehicles, aircraft, computer and office equipment, machinery, furniture, glass, metals, and appliances.
** Nondurable goods are items such as textiles, apparel, paper, food, coal, oil, leather, plastics, chemicals, and books.
Source: United States Bureau of Labor Statistics, October 2001, http://www.bls.gov/EMP
U.S. Employment by Major Industry (continued)
Today, more than 90 percent of the jobs in the U.S. economy are in service processes (half of the jobs in goods-producing industries, or about 9%, plus 81% in service industries). Service involves designing and managing service-, information-, or entertainment-intensive processes.
Most people in the United States are working in the service sector or service processes such as health care and education, or in service-related aspects of manufacturing firms such as human resource management and accounting.
Sustainabilityrefers to an organization’s ability to strategically address current business needs and successfully develop a long-term strategy that embraces opportunities and manages risk for all products, systems, supply chains, and processes to preserve resources for future generations.
Examples of Sustainability Practices