Practical Operations Management CHAPTER 1 Introduction to Operations

Practical Operations Management CHAPTER 1 Introduction to Operations Management Before I speak, I have something important to say… -Groucho Marx

Practical Operations Management CHAPTER 1 Tasks ahead: • Defining Operations Management • Classifying Operations • Finding Operations Managers

operations A set of activities dedicated to the transformation of inputs into outputs of greater value.

A MODEL OF ANY KIND OF OPERATION Inputs Resources • • • People Materials Equipment Knowledge Infrastructure

A MODEL OF ANY KIND OF OPERATION Inputs Transformation Resources Operations • • • People Materials Equipment Knowledge Infrastructure Assembly Transportation Extraction Cultivation Fabrication

A MODEL OF ANY KIND OF OPERATION Inputs Transformation Outputs Resources Operations Outputs • • • • People Materials Equipment Knowledge Infrastructure Assembly Transportation Extraction Cultivation Fabrication Goods and services Employment Pollution

value-added The difference between the total value of the outputs and the total value of the inputs associated with an operation.

THREE ELEMENTS OF VALUE CREATION

THREE ELEMENTS OF VALUE CREATION Productivity

productivity A measurement of value creation, calculated as a ratio of the values of output to input.

Productivity Inputs Transformation Inputs Outputs

THREE ELEMENTS OF VALUE CREATION Productivity

THREE ELEMENTS OF VALUE CREATION Sustainability VALUE CREATION Productivity

sustainability The degree to which activity with immediate benefit does not incur greater costs in the long term.

Recycling symbol = Input / Output Model twisted into a loop.

green Assures sustainability. biomimicry The imitation of natural processes and systems.

THREE ELEMENTS OF VALUE CREATION Sustainability VALUE CREATION Productivity

THREE ELEMENTS OF VALUE CREATION Sustainability VALUE CREATION Responsibility Productivity

responsibility An obligation to perform. ethics Principles governing conduct, delineating good from bad.

CLASSIFYING AN OPERATION Inputs Transformation Outputs

CLASSIFYING AN OPERATION Tangibility Good or service? Inputs Transformation Outputs

tangibility The degree of perceivable, physical essence of a product.

goods Tangible products.

goods Tangible products. services Intangible products.

A Bill of Materials for Manufacture of a Tangible Good Finished good Top assembly Top casing Keypad Bottom assembly Screen assembly Flat Backlight screen frame CPU card Power supply Bottom casing

Physical Therapy as a pure service.

COMPARING GOODS AND SERVICES (Generalities…) Goods operations Tangible products Service operations Intangible products

COMPARING GOODS AND SERVICES (Generalities…) Goods operations Tangible products Less customer contact Service operations Intangible products More customer contact

COMPARING GOODS AND SERVICES (Generalities…) Goods operations Tangible products Less customer contact More reliance on specialized equipment Service operations Intangible products More customer contact Less reliance on specialized equipment

COMPARING GOODS AND SERVICES (Generalities…) Goods operations Tangible products Less customer contact More reliance on specialized equipment Less reliance on skilled labor Service operations Intangible products More customer contact Less reliance on specialized equipment More reliance on skilled labor

CLASSIFYING AN OPERATION Tangibility Good or service? Inputs Transformation Outputs

CLASSIFYING AN OPERATION Supply Chains One organization or many? Inputs Tangibility Good or service? Transformation Outputs

supply chain A system consisting of all organizations that play some role in supplying a particular product to a customer.

A SUPPLY CHAIN SYSTEM CUSTOMER Supplier’s supplier Casing supplier Supplier’s supplier Keypad supplier Retailer Distributor Manufacturer Card and Flat Screen memory supplier Supplier’s supplier

Goods moving through global supply chains.

CLASSIFYING AN OPERATION Supply Chains One organization or many? Inputs Tangibility Good or service? Transformation Outputs

CLASSIFYING AN OPERATION Supply Chains One organization or many? Inputs Tangibility Good or service? Transformation Uncertainty and Control Governance Commercial or nonprofit? Outputs

VARYING LEVELS OF UNCERTAINTY AND CONTROL IN OPERATIONS Production And Service Management Project Management More control Less uncertainty Event Management Incident Management Less control More uncertainty

scientific management A methodology stressing the use of data collection and analysis to redesign processes and improve efficiency.

VARYING LEVELS OF UNCERTAINTY AND CONTROL IN OPERATIONS Production And Service Management Project Management More control Less uncertainty Event Management Incident Management Less control More uncertainty

VARYING LEVELS OF UNCERTAINTY AND CONTROL IN OPERATIONS Production And Service Management Project Management More control Less uncertainty Less control More uncertainty

project A unique collection of activities creating a particular outcome.

VARYING LEVELS OF UNCERTAINTY AND CONTROL IN OPERATIONS Production And Service Management Project Management More control Less uncertainty Less control More uncertainty

VARYING LEVELS OF UNCERTAINTY AND CONTROL IN OPERATIONS Production And Service Management Project Management More control Less uncertainty Event Management Incident Management Less control More uncertainty

incident An unscheduled event requiring immediate resolution.

Scenario 1 a Classifying Operations Regional Disaster Relief Services (RDRS) provides assistance to the victims of natural disasters. RDRS relies on fund-raising to support its permanent network of 15 warehouses, housing its inventory of tents, trailers, tools, portable lighting, water-filtration equipment, and electrical generators. Upon news of a disaster, RDRS activates both its staff and volunteers to deploy and provide assistance in the field Inputs Transformation Outputs until permanent services are restored to the citizens of the disaster area. What kind of operation is RDRS?

Scenario 1 a Classifying Operations Regional Disaster Relief Services (RDRS) provides assistance to the victims of natural disasters. RDRS relies on fund-raising to support its permanent network of 15 warehouses, housing its inventory of tents, trailers, tools, portable lighting, water-filtration equipment, and electrical generators. Upon news of a disaster, RDRS activates both its staff and volunteers to deploy and provide assistance in the field Inputs Transformation Outputs until permanent services are restored to the citizens of the disaster area. What kind of operation is RDRS? INCIDENT MANAGEMENT NON PROFIT

Scenario 1 a Classifying Operations Inputs Transformation Outputs

THE HIERARCHY OF DECISION-MAKING

THE HIERARCHY OF DECISION-MAKING Long-term planning Strategy Identifying goals

strategy A methodology and resulting plan that identifies the long-term goals of an organization.

THE HIERARCHY OF DECISION-MAKING Long-term planning Strategy Identifying goals

THE HIERARCHY OF DECISION-MAKING Long-term planning Medium-term planning Strategy Tactics Identifying goals Developing solutions

tactics Means to pursue strategic goals with available resources.

THE HIERARCHY OF DECISION-MAKING Long-term planning Medium-term planning Strategy Tactics Identifying goals Developing solutions

THE HIERARCHY OF DECISION-MAKING Long-term planning Medium-term planning Short-term planning Strategy Tactics Implementation Identifying goals Developing solutions Taking action

Scenario 1 b Classifying Operational Decisions Regional Disaster Relief Services (RDRS) relies on other agencies for air transport, but recently proposed the purchase of six helicopters. RDRS managers were opposed, arguing that ground operations was the core competency of RDRS and it was more important to resolve disputes over the proper allocation of all-terrain Inputs Transformation Outputs vehicles (ATVs), than to acquire aviation at great expense. Several warehouses located close to wilderness areas have no idle ATVs, keeping their ATVs deployed throughout the wildfire season. Managers there want idle ATVs from urban-area RDRS warehouses to be transferred to their warehouses. Urban managers point out that the wilderness area managers leave ATVs in remote areas, speculating that an additional emergency might occur after the initial rescue or evacuation is completed. The urban warehouse managers suggest that wilderness area should put more effort into promptly retrieving the ATVs already assigned to them.

Scenario 1 b Classifying Operational Decisions How many different decisions have been discussed? At what level in the hierarchy of decision making are these decisions? Inputs Transformation Outputs

Scenario 1 b Classifying Operational Decisions At what level in the hierarchy of decision making are these decisions? Inputs helicopter purchase Transformation Outputs

Scenario 1 b Classifying Operational Decisions At what level in the hierarchy of decision making are these decisions? Inputs helicopter purchase Transformation Outputs ATV Allocation

Scenario 1 b Classifying Operational Decisions At what level in the hierarchy of decision making are these decisions? Inputs helicopter purchase Transformation Outputs ATV Allocation ATV Retrieval Policy

RELATIVE MIX OF THE THREE BUSINESS FUNCTIONS FOR A REGIONAL HOSPITAL Operations Finance Marketing

RELATIVE MIX OF THE THREE BUSINESS FUNCTIONS FOR A SINGLE JEWELRY STORE Operations Finance Marketing

RELATIVE MIX OF THE THREE BUSINESS FUNCTIONS FOR A RESORT HOTEL Operations Finance Marketing