Introduction to Operations Management and its Impact on Business Competitiveness

1. Chapter 1 Introduction to Operations Management

2. Operations Management • Operations Management is: The management of systems or processes that create goods and/or provide services • Operations Management affects: • Companies’ ability to compete • Nation’s ability to compete internationally

3. Examples • Retail Stores (e.g., Wal-Mart) • Inventory Management (e.g., When to order? How many to order?) • Location (e.g., Where to open?) • Manufacturers (e.g., IBM) • Product Design (e.g., Which to produce?) • Quality Management (e.g., How to control?) • Banking Systems (e.g., HSBC) • Facility Layout (e.g., How to provide the best banking service?) • Service Quality (e.g., How to achieve customer satisfaction?)

4. Organization Finance Marketing Operations Business Organizations • Three Basic Functional Areas • Finance: Securing and Allocating Financial Resources; Investment Budget and Analysis • Marketing: Assessing Customer Needs (Wants); Selling and Promoting the Goods/Services • Operations: Producing the Goods/Providing the Services— CORE of what the organization does

5. Value added Inputs Outputs Transformation/ Land Goods Conversion Labor Services process Capital Feedback Control Feedback Feedback Value-Added Process The operations function involves the conversion of inputs into outputs

6. Goods Service Surgery, teaching Song writing, software development Computer repair, restaurant meal Automobile Repair, fast food Home remodeling, retail sales Automobile assembly, steel making Goods-service Continuum

7. Production of Goods vs. Delivery of Services • Production of goods – tangible output • Delivery of services – an act • Service job categories • Government • Wholesale/retail • Financial services • Healthcare • Personal services • Business services • Education

8. Goods vs. Service

9. Scope of Operations Management • Planning • Capacity • Location • Products & services • Make or buy • Layout • Projects • Scheduling • Controlling/Improving • Inventory • Quality • Costs • Productivity • Organizing • Degree of centralization • Process selection • Supply chain management • Staffing • Hiring/laying off • Use of Overtime Directing • Incentive plans • Issuance of work orders • Job assignments

10. General Approaches to Decision Making • Model • A Simplified Representation of the Real Thing, e.g., Toy; Car Crash Test • Quantitative Approaches • Mathematical Methods of Obtaining Optimal/Feasible Decision, e.g., LP • Analysis of Trade-Offs • Balancing the Positive and Negative Effects, e.g., Amount of Inventory • A Systems Approach • A Set of Interrelated Parts that Must Work Together • The whole is greater than the sum of its individual parts

11. Trends in Business Major trends The Internet, e-commerce, e-business Management technology Globalization Management of supply chains Outsourcing Agility Ethical behavior