1

©The McGraw-Hill Companies, Inc., 2004

 2

Chapter 1
Overview: Introduction to the
Field

©The McGraw-Hill Companies, Inc., 2004

 3

OBJECTIVES

• Operations Management
• Why Study Operations Management?
• Production System Defined
• Operations as a Service
• Plan of This Book
• Historical Development of OM
• Current Issues in OM

©The McGraw-Hill Companies, Inc., 2004

 4

What is Operations Management?

Defined

Operations management (OM) is

defined as the design, operation, and
improvement of the systems that
create and deliver the firm’s primary
products and services

©The McGraw-Hill Companies, Inc., 2004

 5

Why Study Operations Management?

Systematic Approach
to Org. Processes

Business Education Operations Career Opportunities

Management

Cross-Functional
Applications

©The McGraw-Hill Companies, Inc., 2004

 6

What is a Production System?

Defined

A production system is defined as a

user of resources to transform inputs
into some desired outputs

©The McGraw-Hill Companies, Inc., 2004

 7

Transformations
• Physical--manufacturing

• Locational--transportation

• Exchange--retailing

• Storage--warehousing

• Physiological--health care

• Informational--telecommunications

©The McGraw-Hill Companies, Inc., 2004

 8

What is a Service and What is a

Good?
• “If you drop it on your foot, it won’t hurt
you.” (Good or service?)

• “Services never include goods and

goods never include services.” (True or
false?)

©The McGraw-Hill Companies, Inc., 2004

 9

OM in the Organization Chart

Finance Operations Marketing

Plant Operations Director

Manager Manager

Manufacturing, Production control,

Quality assurance, Engineering,
Purchasing, Maintenance, etc

©The McGraw-Hill Companies, Inc., 2004

 10

Core Services
Defined

Core services are basic things that

customers want from products
they purchase

©The McGraw-Hill Companies, Inc., 2004

 11

Core Services Performance Objectives

Quality

Operations
Flexibility Speed
Management

Price (or cost

Reduction)

©The McGraw-Hill Companies, Inc., 2004

 12

Value-Added Services
Defined

Value-added services differentiate

the organization from competitors
and build relationships that bind
customers to the firm in a positive
way

©The McGraw-Hill Companies, Inc., 2004

 13

Value-Added Service Categories

Problem Solving

Operations Sales Support

Information
Management

Field Support

©The McGraw-Hill Companies, Inc., 2004

 14

I. Operations Strategy 1. Introduction

and Managing Change to the Field

2. Operations Strategy 3. Project

and Competitiveness Management
II. Product Design
and Process III. Supply 9. Supply
Selection Chain Design Chain Strategy

10. Strategic 11. Just-in-Time

4. Process Capacity and Lean
Analysis Management Systems

5. Product 6. Product
Design and Design and IV. Planning and 12. Forecasting
Process Selection Process Selection Controlling the and Demand
-Manufacturing -Services Supply Chain Management

13. Aggregate Sales and

7. Quality Operations Planning
Management

14. Inventory 15. Materials

8. Operations Consulting Control Requirements Planning
and Reengineering

16. Operations Scheduling

17. Synchronous Manufacturing

and Theory of Constraints

©The McGraw-Hill Companies, Inc., 2004

 15

Historical Development of OM

• JIT and TQC

• Manufacturing Strategy Paradigm

• Service Quality and Productivity

• Total Quality Management and

Quality Certification

©The McGraw-Hill Companies, Inc., 2004

 16

Historical Development of OM (cont’d)

• Business Process Reengineering

• Supply Chain Management

• Electronic Commerce

©The McGraw-Hill Companies, Inc., 2004

 17

Current Issues in OM
• Effectively consolidating the operations
resulting from mergers
• Developing flexible supply chains to
enable mass customization of products
and services
• Managing global supplier, production and
distribution networks
• Increased “commoditization” of suppliers

©The McGraw-Hill Companies, Inc., 2004

 18

Current Issues in OM (cont’d)

• Achieving the “Service Factory”
• Enhancing value added services

• Making efficient use of Internet

technology

• Achieving good service from service

firms

©The McGraw-Hill Companies, Inc., 2004

 19

End of Chapter 1

©The McGraw-Hill Companies, Inc., 2004