Fundamentals of Operations Management BUS 3 – 140 Mr. Jess Marino Spring, 2008

1. Fundamentals ofOperations ManagementBUS 3 – 140Mr. Jess MarinoSpring, 2008

2. Agenda • Introduction • Green Sheet review and other administrative items • Additional comments on the course • Initial Lecture

3. Introduction

4. Marino Background Academics • Graduate in Production and Operations Management • Product of CSU system (San Diego State) • Developed and presented several courses as a Management Consultant Supply Chain Experience • Over 25 years as a practitioner at all levels of responsibility • Leadership in small and large organizations • Many different hourly and professional jobs • Over eight years as a Management Consultant • Certified in Production and Operations Management by the Association for Operations Management (APICS) • Exposure to many industries and organizations • Have done business in 13 countries throughout the world

5. Positions Held Director of Operations Director of Supply Chain Management Director of Materials Production Control Manager Executive Director of Fulfillment Production Supervisor Buyer Production Controller Material Controller Stockroom Manager Machine Operator Mail Room Clerk Production Expediter Warehouse Clerk

6. Have conducted Business in 13 Countries, Worldwide SCOTLAND CANADA ENGLAND HOLLAND FRANCE UNITED STATES CHINA TAIWAN MEXICO THAILAND HONG KONG SINGAPORE MALAYSIA

7. Green Sheet Review

8. Student Information Sheet • NAME • MAJOR (and Emphasis) • CURRENT JOB (Company Optional) • PREVIOUS SUPPLY CHAIN JOBS / EXPERIENCE • OTHER

9. Course Overview and Objectives • Understanding how the Operations function interrelates with other functional organizations in a business • Understanding how an organization uses its resources, processes, data, and technologies to create goods and provide services to customers • Understanding how operational effectiveness can be a critical success factor in determining an organization’s Revenue, Profitability, and Shareholder return • Understanding the managerial responsibility for Operations, even when production is outsourced, or done in regions far from corporate headquarters

10. Student Learning Objectives for the Course • Understand how Operations is relevant to all functions of a business, and all majors within a Business education • Understand Operations Management and how it fits within the overall organization strategy, objectives, and competitiveness • Develop an interest in Operations and apply that understanding, whether in a manufacturing or service career

11. Course Introduction

12. Operations is a Key Element of a Supply Chain Revenue Utilization of Assets (People, Plant, Equip) Cash Inventory BALANCING keeping Customers completely satisfied and Resources optimally utilized ……. against spending the least amount of Cash and carrying the least amount of Inventory

13. Scope of this Course Customer Service Customer Demand Production Scheduling Production Materials Mgmt Shipping • Process Layout • Work System Design • Lean Operations • Quality • Inventory Mgmt • MRP • ERP • Forecasting • Aggregate Planning • Strategic Capacity Planning • Demand & Supply Matching • Scheduling • Just In Time (JIT) • Project Mgmt

14. Highest Level Operations Management Process (Fig 1.2) Process (Transformation) Inputs Outputs Feedback Feedback Feedback Control There is a CONVERSION that takes Information, Intelligence, Resources, and Activities and turns them into something VALUABLE to Customers and / or Society * From Stevenson, Operations Management, Ninth Edition, McGraw Hill Irwin

15. Inputs / Process / Outputs (Table 1.1) * From Stevenson, Operations Management, Ninth Edition, McGraw Hill Irwin

16. Operations are managed for both Production and Services Outputs Process Inputs • Raw vegetables • Metal sheets • Water • Energy • Labor • Building • Equipment • Cleaning • Making cans • Cutting • Cooking • Packing • Labeling Canned Vegetables Food processing Plant PRODUCTION Result is TANGIBLE OUTPUT Outputs Process Inputs • Doctors, nurses • Hospital • Medical supplies • Equipment • Laboratories • Examination • Surgery • Monitoring • Medication • Therapy Treated Patients Hospital SERVICE Result implies an ACT

17. Differences between Goods and Service (Book Table 1.3) * From Stevenson, Operations Management, Ninth Edition, McGraw Hill Irwin

18. Goods and Services continuum (Fig 1.3) * From Stevenson, Operations Management, Ninth Edition, McGraw Hill Irwin

19. Combination of Production and Service Farmer produces & harvests wheat ($0.15) Wheat shipped to mill ($0.08) Mill produces flour ($0.15) Flour shipped to Baker ($0.08) Baker produces bread ($0.54) Bread shipped to Grocery Store ($0.08) Grocery store displays and sells bread ($0.21) $1.29 of total Cost and Profit throughout the Supply Chain $0.45 of Services $0.84 of Production * Adapted from Stevenson, Operations Management, Ninth Edition, McGraw Hill Irwin

20. Manufacturing Jobs U.S. Manufacturing vs. Service Employment 90 > 70% 80 Mfg. 70 Service 60 50 Percent 40 30 20 10 0 45 50 55 60 65 70 75 80 85 90 95 00 02 05 Year • Greater PRODUCTIVITY allows for increased output with fewer workers • Many manufacturing jobs have moved OFFSHORE to lower labor cost areas * From Stevenson, Operations Management, Ninth Edition, McGraw Hill Irwin

21. How Operations Interacts with Other Organizations

22. Key intersections with Sales & Marketing and with Finance FINANCE & ACCOUNTING • Budgeting • Authorizing Capital spending • Authorizing major inventory buys • Cost accounting • Make vs. Buy decisions • Location planning • Managing international trade • Analyzing trade-off decisions

23. Key intersections with Sales & Marketing and with Finance SALES & MARKETING • Forecasting Demand • Influencing demand • Committing supply • Negotiating schedules with customers • Providing competitive information • Requesting new products and services • Opening new markets

24. Interaction with other Functional Organizations