BUAD 306 Chapter 1 Introduction to Operations Management

BUAD 306 Chapter 1 – Introduction to Operations Management

What kind of OPERATIONS does Starbucks perform?

Operations Process Inputs Transformation Process Outputs GOAL: Satisfying customers GOAL: Profit Value Add – difference of VALUE of inputs and VALUE of outputs Role of Operations is to ADD VALUE.

Evolution of the Process Evolve based on back from where? ? ? Inputs Transformation Process Outputs • Want to add value to transformation process • Continually improve, meet/exceed customer needs • Improve the process: decrease costs, improved efficiencies, etc.

Transformation Process Physical ¢ Logistical ¢ Exchange ¢ Physiological ¢ Psychological ¢ Informational ¢

Related “Stuff” Materials Suppliers Schedules People Inputs Transformation Process Demand Outputs Cost Considerations Design Technology

Related Functions Inventory Mgt Decision-making Capacity Planning Location Selection Transformation Process Inputs Forecasting Project Mgt Outputs Managing Quality Materials/Supppliers

Process Management Processes enable delivery of product and services to customers on a consistent basis ¢ Need to manage these process to ensure: ¢ Efficiency l Cost effectiveness l Fulfillment of demand (ongoing) l Fulfillment of shareholder value l

Product Design Factors Time to Market ¢ Availability of Technology ¢ Skills/Coordination of Design Staff ¢ Design for Operations/Manufacturing ¢ Quality ¢ Customer Service/Support ¢ Environmental Impact ¢ Government Compliance ¢ Costs ¢

Product Design - Peeps Original “Puffy” Peep Dude

Operations Systems ¢ Wide variation is possible depending on the business: Standardized Output Custom Individual Units Customized Output Continuous Output Single, Large-Scale Implementation Tangible Output Intangible Output

Comparison of Mfg vs Svc MANUFACTURING SERVICE Customer Contact (Simultaneous Product & Delivery) LOW (NO) HIGH (YES) Uniformity of Input CONSISTENT VARIABLE Labor Content of Job LOW HIGH Uniformity of Output HIGH LOW Measure of Productivity EASIER MORE DIFFICULT QA EASIER MORE DIFFICULT

Why is Ops Important? ¢ No matter the business function, operations impacts…you will need proven models and techniques to identify best solutions!! l l l Finance – Profit forecasts… Accounting – Cost forecasts… Marketing – New product launches, product development… HR – Staffing, training… MIS – data-driven analysis, CRM…

Are these skills important for business success? ¢ ¢ ¢ Efficiency focus Cost containment Creative/Effective product development ¢ ¢ Supplier relations Problem solving Data Analysis Quality Focus