Operations Management- Recent Trends and Development

in both Teaching and Research

Jiaqin YangProfessor of Management

Georgia College & State UniversityBeijing, ChinaJuly 11, 2009

My E-mail address:<jiaqin.yang@gcsu.edu>

My Official Website<http://hercules.gcsu.edu/~jyang/>

The winning companies in the global competition will be those companies that can put together the best of research, engineering, design, manufacturing, distribution – wherever they can get it, anywhere in the world – and the best of each of these will not come from one country or from one continent.

Jack Welch

Management Expert, Author and CEO of GE

As all organizations are created and designed to provide certain meaningful and useful outputs (tangible or intangible) to the public (e.g., Society as a whole) with minimal inputs (tangible or intangible) through a conversion process.

Operations: All activities that involved in the Conversion Process of Input to Output (Goods/service)

“Management" refers to all the managerial activities in such a conversion process, including:

– Planning and Organizing– Leading and Motivating– Communicating and Monitoring– Executing and Correcting– Evaluating and Reporting

A General Definition of “Operations Management”

Operations Management as a Function

Today, I want to talk about a few topics:

• Why “OM” is one of most important function of any business organizations?

• OM Focus – shifting from “Manufacturing to Services” operations.

• Small Business vs. Large Business • OM – must focus on “how to help a business compete in a

right way”!• Important research topics in OM for Chinese OM scholars.• Recent Development in OM field: Teaching and Research

1. Why “OM” is one of most important function of any business organizations?

Functions of Operations Management

MarketinMarketingg

ProductionProductionFinanceFinance

Relationship between Operations and Other Functions:

Three Primary Functions in Business:

Broader Perspective of Operations Management:

An Integrated Production System Including:Inventory Control / Aggregate Planning / Demand Forecasting

2. OM Focus – shifting from “Manufacturing to Services” operations?

Manufacturing vs Service

• Manufacturing: Provide Tangible Goods (Cars / TV Sets / Foods /……

• Service: Provide Intangible (Goods) (Education / Banking / Legal/Repairing / Medical Service / Transportations/……

• Four Major Differences between Manufacturing and Service:

，

Measure of Measure of ProductivityProductivity

Measure of QualityMeasure of Quality

Customer Customer InvolvementInvolvement

Ability to InventoryAbility to Inventory

ManufacturiManufacturingng

EasyEasy

EasyEasy

LowLow

YesYes

ServiceService

DifficultDifficult

DifficultDifficult

HighHigh

NoNo

Most important OM Principles and Techniques can be applied to both Manufacturing and Service Operations.

Manufacturing vs Service

3. Small Business vs. Large Business - don’t forget small businesses in your OM teaching and research!

与沃尔玛对弈之技巧

• 掩卷遐思，沃尔玛的案例带来很多企业运营的启示。

• 案例介绍了在沃尔玛和其它大型百货商店、大型折扣店的重重压力之下，一些当地的小型零售商店是如何生存的经验。

与沃尔玛对弈之技巧

• 从成功的经验看，成功的小型商店经营者都认识到，沃尔玛所代表的大型商店所具备的低成本低价格优势是小商店不能企及的，所以通过低成本竞争不可能战胜沃尔玛，甚至不足于与之提及抗衡。

• 既然如此，从竞争策略上看，采用“差异化竞争”或者超越低成本和差异化竞争的“蓝海策略”才是获胜之道，这也是与沃尔玛对弈的生存、发展之路。既然如此，从竞争策略上看，采用“差异化竞争”或者超越低成本和差异化竞争的“蓝海策略”才是获胜之道，这也是与沃尔玛对弈的生存、发展之路。

与沃尔玛对弈之技巧

• 案例提及很多小商店的经营策略，即通过专注好自身的经营，扬长避短，在竞争中存活，最重要的就是，专注于沃尔玛没能提供的产品和服务。具体而言包括：

• 1、发展自有品牌• 2、提供特殊的商品• 3、接受特殊的订单• 4、更加密切的售后服务• 5、与每一个顾客打好关系

4. POM – must focus on “how to use your OM unit to help your company compete in a right way in the market place”!

The reality of market competition

• The competition is the primary principle of market economy.

• The trend of international competition – “a global village”.

• A business must – and has to - survive under intensified competition.

• In competition, there always are “winners” and “losers”.

The reality of market competition (II)

During the history of competition, however, Someone being winners more of the time

– becoming a big one.Someone being losers more of the time –

eliminated eventually.Why?

In certain degree, we can say: For winners – they know “how to

compete correctly?”For losers – they competed in a wrong

way.

Time line for Competition Strategies

Alternative Order-Wining Criteria in the Marketplace

1.Cost leader 2.Unique feature of products/services3.Variety of products/services 4.High quality5.New product introduction leader6.Flexibility to Market changes7. product customization8.Delivery Speed9.delivery reliability 10. ……………………

How to compete correctly? ( 竞争之道 )

  Traditional competition criteria (like low price) is no longer the major and only competitive weapon!

• -- Ford Company: T-Model Story.

Ford Motor Company Example

• From 1910-1925, through technology development/labor specialization/……, Ford improved the productivity of their Auto-Assembly Line significantly. Their average production cost was reduced from ＄ 4,000 to ＄ 1,000. Ford was the most Efficient Car-Maker in the world at that time.

Ford Motor Company Example• In 1930, Ford had to shut down their production

line. Ford was still the most Efficient Car-Maker in the world, but they lost the Competitive Advantages in the Marketplace.

Different Products/Industries - Must Compete Differently

• Different industries, different markets, different products/services, must compete differently!Example: Sugar vs. TV ?(In Service): Education vs. telephone

service

Different Products/Industries - Must Compete Differently (III)

• All of your business function must support your competitive strategy:Why watch is so cheaper today? (Timex

Example)A firm must change technology before it is

too late – (Tire Industry example – S-curve application).

Technology Improvement S-Curve

Return on Technology Investment

Resources Investment in Technology Development

Early stage Late stage

Middle stage

TIMEX – (Its early Success)

Not taken seriously at first by U.S. and Swiss watch manufacturers, Timex introduced its line of inexpensive watches in 1950. By 1970, half of the watches sold in the U.S. (and lots of foreign countries) were made by Timex. The success of Timex depended upon a careful matching of production and marketing strategies. The Timex formula through the early years: Mass Production and Mass Marketing.

TIMEX: Mass Production

• Single, simple product focus • Simple process technology • Unskilled labor• Economies of Scale• Product durability stressed• High degree of standardization

Swiss Timex

168 parts

80 parts

6 plates 2 plates

31 screws

6 screws

100 steps

6 steps

Many changes have been happened during the last decades. There have been significant changes and new developments in the academic field of “Operations Management" - to reflect new demands, new trends, new requirements, and new changes in management practice.

5. New Topics and Developmentsin Operations Management

And Related Research Directions and Topics - Important research

topics in OM for Chinese OM scholars.

From Planning & Controlling:

– Total Quality Management (TQM)– Supply Chain Management (SCM)– Technology Management (TM)– IT (e.g., ERP, MIS, et al.) in POM – E-Business for POM– Long-Term Business Planning

Research Topics in OM for Chinese Scholars

– Supply Chain Management (SCM) * How the specific feature of Chinese culture, tradition, norms, and the

economic system impact SCM application in China? (can be a case study, a field study, or analytic study if you can develop a

specific model). – Technology Management (TM) * Current status of TM in China? * Technology transfer and upgrading issues (S-curve)? * How do select the most appropriate technology for Chinese firms?– IT in POM (so many research issues in China) * IT application and firms operational performance in China – an empirical

investigation. * Key success factors for IT applications in Chinese firms * …………..

Research Topics in OM for Chinese OM Scholars (II)

– E-Business for POM

* What are major issues and challenges in e-business in China today – an investigative research.

* How different e-business should compete in a given market – i.e., different competitive advantages?

- All major other OM topics in China:

* Operations Scheduling issues

* Facility Selection

* Facility Layout Design

* Facility Capacity Planning

* ………..

Research Topics in “Across All Functions” for Chinese OM Scholars

• International Business and Management (IB) - Successful factors for a Chinese enterprise in a foreign nations (an

empirical study).

- Successful factors for a foreign enterprise in China.

- The impact of government (Central vs. local) policy and regulations on an international business in China.

- (Everything which has an impact on the operations of an international company may be a good research topic.)

• Comparative Study of Management - Different Approaches in management practice

- Different Styles in management leadership

- Different Culture and Values in management practice

- ……. (many more)

6. Recent Trends in POM – for Both Teaching and Research

- A continuing shift toward Service Operations – especially in business school Teaching, because more of your students will work in a service oriented company.- More focus on those new emerging fields, like: Supply Chain Management, Operational issues in E-business, The increased impact of new IT technology in OM, like ERP.

Recent Trends and Development (II)

• Most traditional OM topics – like: Process selection, capacity planning, inventory management, APP and MPS, MRP, scheduling, are now combined or incorporated with those new topics, like SCM, E-Business, ERP Application.

• New emphasis on technology management (like S-curve) in OM field.• New development in JIT production system, like:

* “Lean” production system – emphasis that JIT is much more that “timing” issue – “be everything Just-Right”.

* From “zero defective” to “Six Sigma” Quality

* From “zero inventory” to “VMI” or “JIT II”.

* From “cleanliness principle” to “5-S” theory.

* Re-emphasis “continuing improvement” as a never-ending objective and a daily-operation procedure, make it as a part of “organizational culture”.

• Environmental concern and “clean production”

Research and Publications in OM Field

• There are many new research journals in OM available for your research paper submission consideration.

• Different journals have different focus and orientation.

• Different journals have different reviewing systems.• Different ones have different acceptance rate.• Communicating with Editors more aggressively.• Select the most appropriate journal that fitting your

paper’s quality and contributions.• Empirical OM research papers are more likely to get

published than a model-building analytical paper.

Research Productivity: ( 事半功倍 与 事倍功半 )

• You must learn – how to co-author with other scholars - (inside or outside campus).

• You must learn – how to produce multiple papers from the same research projects and data base.

• You must learn – from an early draft (conference presentation and proceedings) to final draft (journal publications).

• Try your best to gain the opportunity to do research cooperation with foreign professors and co-author with “big-name” scholars.

Conclusions

• There is a “golden opportunity for all of you –Chinese OM Scholars in your future teaching and research effort.

• There are unlimited research topics for you to choose from – just select the one that you have a real interest.

• Hope the above discussion provides you a guideline for your future working interest in POM field in both teaching and research.

• Value the opportunity and do your best.• Looking forward to seeing more high level

OM scholars on the international stage and international publications.

• Welcome any questions!