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Amity Business School

What Is Operations Management?What Is Operations Management?

Production is the creation of goodsand services, and

Operations management (OM)Operations management (OM) isisthe set of activities thatthe set of activities thatcreates value in the form ofcreates value in the form ofgoods and services bygoods and services bytransforming inputs into outputstransforming inputs into outputs

Amity Business SchoolWhat is Operations Management?Defined (Contd.)Operations management (OM) isdefined as the design, operation,and improvement of the systemsthat create and deliver the firmsprimary products and services

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The Role of OperationsManagement

The role of operations management is to managethe transformation of an organisations inputsinto finished goods and services

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The Importance of Operations Management

Synergies must exist with otherfunctional areas of theorganization

Operations account for 60-80%of the direct expenses thatburden a firms profit.

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What Operations and Supply ChainManagers Do

What is Operations Management? design, operation, and improvement of productive systems

What is Operations? a function or system that transforms inputs into outputs of

greater value What is a Transformation Process?

a series of activities along a value chain extending fromsupplier to customer

activities that do not add value are superfluous and should beeliminated

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Organizing to Produce Goods and ServicesOrganizing to Produce Goods and Services

Essential functions: Marketing generates demand Production/operations creates the

product Finance/accounting tracks how well

the organization is doing, pays bills,collects the money

Amity Business SchoolWhat is a TransformationProcess?DefinedA transformation process is definedas a user of resources to transforminputs into some desired outputs

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Physical: as in manufacturing operations Locational: as in transportation orwarehouse operations

Exchange: as in retail operations Storage: as in warehousing Physiological: as in health care Psychological: as in entertainment Informational: as in communication

TransformationProcess

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INPUTMaterialMachinesLaborManagementCapital

TRANSFORMATIONPROCESS

OUTPUTGoodsServices

Feedback & RequirementsFeedback & Requirements

Operations as aTransformation Process

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The two main types of transformingresources are:

Facilities, such as building, equipment andprocess technology.

Staff, all the people involved in the operationsprocess. In services the customer may well beinvolved as a transforming resource.

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Amity Business School The three main types of transformed resource

are: Materials, these can be transformed either physically

(e.g. manufacturing), by location (e.g. transportation),by ownership (e.g. retail) or by storage (e.g.warehousing),

Information, this can be transformed by property (e.g.accountants), by possession (e.g. market research), bystorage (e.g. libraries), or by location (e.g.telecommunications),

Customers, they can be transformed either physically(hairdresser), by storage (e.g. hotels), by location (e.g.airlines), by physiological state (e.g. hospitals), or bypsychological state (e.g. entertainment).

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What is a Service and What is aGood?

If you drop it on your foot, it wonthurt you. (Good or service?)

Services never include goods andgoods never include services. (Trueor false?)