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Where does operations management fit into a business?
• How are we going to _________ the product or service?
• Other functional areas:– Marketing– Accounting– Finance– Human Resources– Information Systems
What is Operations Management and how does it
fit into the big picture?• The operations function is that part of
the organization that exists primarily to generate and produce the organization’s products or services.
• OM provides a systematic way of looking at organizational processes.
• Concepts and tools of OM are widely used in managing other functions of a business.
Conversions include:
• Physical: manufacturing or haircut• Location: transportation• Exchange: retailing• Storage: warehousing• Physiological: health care• Informational: telecommunications
Operations as a Process
Transformation(Conversion)
Process
EnergyMaterials
LaborCapital
Information
Goods orServices
Feedback information forcontrol of process inputsand process technology
What is managed inside the box?
Plants or Facilities
People
Processes
Planning & Scheduling
Parts & Equipment
Breakout Moment
• How do public concerns about environmental and worker welfare issues affect operations and supply chain management?– Nike– Wal-Mart– Your company– Others examples?
• How does it effect inputs, outputs and transformation changes?
Environmental Concerns
“Volkswagen, Germany’s biggest car maker, was reported to be setting aside DM1 billion ($470m) to pay for compliance with a European directive that will come into force in 2007 forcing car makers to pay for recycling their vehicles. New cars will be
required to be 85% recyclable.” --The Economist, 15 February 2001
Major Decision Responsibilities of Operations (Netflix)
• Process– How to produce & deliver
• Quality– Criteria, measurement & process for achieving
• Capacity– Physical facilities (where, size, activities) & labor
(what kind, how many, when)
• Inventory– What, when & how much?
Key Operating Capabilities (Strategies used to compete in the
market place)• Cost• Quality• Flexibility• Speed• Sustainability (values such as environmental,
social practices, animal practices, and long term economic stability rather than short term profit)
• Movie example
Contemporary Operations & SCM Themes
• Service and Manufacturing (differences and implications)
• Customer-Directed Operations• Time Reduction (Lean Operations)• Integration of Operations and Other Functions• Environmental & Sustainability Concerns• Supply Chain Management• Globalization of Operations
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