Operations Management

The planning, scheduling, and control

of the activities that transform inputs
into finished goods and services

Viewing Operations as a
Transformation Process
Transformation
Process
Manufacturing operations

Inputs
Materials
People
Equipment
Intangible needs
Information

Outputs
Service operations

Tangible goods
Fulfilled requests
Information
Satisfied Customers

Operations Interfaces
Finance
Budgeting.
Analysis.
Funds.

Manufacturin MIS
What IT solutions
g
to make it all work
Process
together?
Human
Infrastructure
Resources

Design
Sustainability.
Quality.
Manufacturability.

Operations

Accounting
Performance measurement systems.
Planning and control.

Skills? Training?
# of Employees?

Marketing
What products?
What volumes?
Costs? Quality?
Delivery?
3

Supply Chain Management

Active management of supply chain
activities and relationships to maximize
customer value and achieve a sustainable
competitive advantage

Material Flows
Upstream

Second Tier
Supplier

First Tier
Supplier

Alcoa

Ball Corp

Downstream
Focal
Company
Anheuser-Busch

Distributo
r
M&M

Retailer
Meijer

Final
customers

Transportation companies

Important Trends
Electronic commerce
Reduce the costs and time associated with
supply chain relationships

Increasing competition & globalization

Fewer industries protected by geography

Relationship management
Competition between chains, not individual firms
Trust and coordination

A Top-Down Model of Strategy

Goals
Mission
Statement

Marketing
Strategy

Business
Strategy

Manufacturing
Strategy

Financial
Strategy

Operations Decisions ...

7

Order Winners and Qualifiers

Winners:
Differentiators performance not yet
duplicated by competitors
Competitive advantage performance better
than all or most of the competitors

Qualifiers
Minimum acceptable level of performance
With time, Winners become Qualifiers
8

The Terry Hill Model

Corporate
Objectives
Growth
Survival
Profit
ROI
Other
financial
measures

Marketing
Strategy
Product markets
and segments
Range
Mix
Volumes
Standardization
vs customization
Level of innovation
Leader vs follower

Order
Winners
Price
Quality
Delivery
speed
reliability
Demand
increases
Color range
Product range
Design
Brand image
Technical
support
After-sales
support

Manufacturing Strategy
Process
Choice of alternative
processes
Trade-offs in
processes
Role of inventory
Make or buy
Capacity
size
timing
location

Infrastructure
Function support
Manufacturing
planning & control
systems
Quality assurance
and control
Manufacturing systems
engineering
Clerical procedures
Compensation
agreements
Work structuring
Organizational
structure