Chapter 1 Introduction to Operations Management by R

Chapter 1 - Introduction to Operations Management by R. Dan Reid & Nada R. Sanders 3 rd Edition © Wiley 2007 1

Learning Objectives n n n n Define OM Role of OM in business Decisions that operations managers make OM differences between service and mfg. Major historical developments in OM Identify current trends in OM Define information flow between OM and other business functions © Wiley 2007 2

What is Operations Management? The business function responsible for planning, coordinating, and controlling the resources needed to produce a company’s products and services. n It is a management function. n Organization’s core function. n Every organization has the OM function n n Manufacturing or Service For Profit or Not For Profit © Wiley 2007 3

Typical Organization Chart © Wiley 2007 4

Systems Concept inputs land labor capital • facilities • equipment • tools energy materials data transformations outputs goods services mission goals objectives SYSTEM O I productivity (See SINK , figure 2. 1, p. 24) © Wiley 2007 Physical Locational Exchange Storage Physiological Informational 5

Why OM? n n “In business today, the emphasis is not so much on what you make, but on how you do business. Dell makes computers just like every other PC manufacturer. ” Quote: KT CEO on CNBC 4/99 The resurgence of American business in the 1990’s capitalized on improved operations. © Wiley 2007 6

Differences between Manufacturers and Service Organizations n n n Services: Intangible product Product cannot be inventoried High customer contact Short response time Labor intensive n n n Manufacturers: Tangible product Product can be inventoried Low customer contact Longer response time Capital intensive © Wiley 2007 7

Similarities-Service/Manufacturers n n n All use technology Both have quality, productivity, & response issues All must forecast demand Each will have capacity, layout, and location issues All have customers and suppliers All have scheduling and staffing issues © Wiley 2007 8

Trends in OM n n n Service sector growing to 80% of non-farm jobs. See Figure 1 -4 Global competitiveness Demands for higher quality Huge technology changes Time based competition Work force diversity © Wiley 2007 9

OM Decisions © Wiley 2007 10

Plan of Book-Chapters link to Types of OM Decisions © Wiley 2007 11

Historical Development of OM n n n n Industrial revolution Scientific management Human relations movement Management science Computer age Just-in-Time Systems (JIT) Total quality management (TQM) Reengineering Flexibility Time-Based Competition Supply chain Management Global Competition Environmental Issues Electronic Commerce Late 1700’s Early 1900’s 1930’s to 1960’s Mid-1900’s 1970’s 1980’s 1990’s 1990’s Late 1990’s © Wiley 2007 12

Today’s OM Environment n n Customers demand better quality, faster deliveries, and lower costs Increased cross-functional decision making Recognized need to better manage information using ERP and CRM systems Global competition © Wiley 2007 13

Business Information Flow © Wiley 2007 14

Chapter 1 Highlights n n n n OM is the function that manages the resources that add value Its role is to transform inputs into products or services Decisions are many and vary from daily tactical to long-term strategic Key differences between mfg. and service companies are tangibility of product and degree of customer contact Historical milestones range from 1700 s Industrial Revolution to the modern Electronic Commerce age OM must understand implement major process changes like JIT, TQM, supply chain management, and environmental changes OM works closely with all other business functions © Wiley 2007 15