INTRODUCTION TO

OPERATIONS MANAGEMENT
CHAPTER - 1

WHAT IS A PRODUCT
Goods
Physical items produced by business organizations.

Services
Activities that provide some combination of time, locations,
form, and psychological value.

Product
Not a single set of tangible features, but bundle of benefits
that satisfy the needs

PROCESS VS. SYSTEM

Process
A series of actions or steps taken in order to achieve a
particular end.

System
A set of principles or procedures according to which
something is done; an organized scheme or method.

BASIC FUNCTIONS OF A BUSINESS

WHAT IS OPERATION

WHAT IS OPERATION

WHAT IS OPERATION

WHAT IS OPERATION

WHAT IS OPERATIONS MANAGEMENT

Operations Management (OM)
The management of systems or processes that create goods
and/or provide services.

WHAT IS OPERATIONS MANAGEMENT

Operations Management (OM)
Refers to the administration of business practices to create
the highest level of efficiency possible within an organization.
Is concerned with converting materials and labor into goods
and services as efficiently as possible to maximize the profit
of an organization.

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WHAT IS SUPPLY CHAIN

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WHAT IS SUPPLY CHAIN

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WHAT IS SUPPLY CHAIN

Supply Chain
A sequence of activities and organizations involved in
producing and delivering a good or service.

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WHAT IS VALUE-ADDED
Value-Added
The difference between the cost of inputs and the value or
price of output

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PRODUCTION OF GOODS VERSUS

PROVIDING SERVICES

Degree of customer contact

Labor content of jobs

Uniformity of inputs

Measurement of productivity

Quality assurance

Inventory

Wages
Ability to patent
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WHY LEARN ABOUT

OPERATIONS MANAGEMENT
Every aspect of business affects or is affected by operations.

Finance <-> Operations <-> Marketing

Budgeting, Economic Analysis of investment proposals, Provision of funds
(done by Finance & Operations together)

Marketing communicates customers/feedback

Lead Time: The time between ordering a good or service and receiving
it.

Other Functional Areas

HR, Accounting, IT, PR, and so on.
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CAREER OPPORTUNITIES AND

PROFESSIONAL SOCIETIES
In this field, people should have both people skill & knowledge
skill (for decision making).
Product/service knowledge, finance/accounting knowledge, process
knowledge, industry knowledge, etc.
Political awareness, mentoring ability, and collaboration, negotiation, and
communication skills,
Operations Manager, Purchasing Manager, Quality Analyst, Supply Chain
Manager, Scheduling Coordinator, Distribution Manager, and so on.
Societies are there (see book)

Your Resume
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PROCESS MANAGEMENT
Process one or more actions that transform inputs
into outputs. Managing it is the central of OM.
1- upper management, 2- operational, 3- supporting
processes.
1- organizational governance, 2- purchasing, 3- accounting

Supplier (s) <-> A Business <-> Customer (s)

BPM activities include process design, execution, and monitoring.

Read the book (2 titles)

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THE SCOPE OF OPERATIONS

MANAGEMENT
Pictures in the Book
It is- Across Organization

Forecasting
Capacity Planning
Locating Facilities
Facilities and Layout
Scheduling
Managing Inventories
Assuring Quality
Motivating and Training Employees

Read the Book (1 title)

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THE SCOPE OF OPERATIONS

MANAGEMENT

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THE SCOPE OF OPERATIONS

MANAGEMENT
Managing the Supply Chain to Achieve Schedule,
Cost, and Quality Goals

Purchasing
Industrial Engineering
Distribution
Maintenance

The Op. Manager is the ultimate responsible

person for the creation of goods/services

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WHY MANUFACTURING MATTERS

SOLVE THE CASE

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OPERATIONS MANAGEMENT AND

DECISION MAKING
Model
An abstraction of reality; a simplified representation of
something.
Physical models- look like abstract
Schematic models- more abstract
Mathematical models- the most abstract

Quantitative Approaches
Performance Metrics
Analysis of Trade-Offs
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OPERATIONS MANAGEMENT AND

DECISION MAKING
Degree of Customization
A System Approach
Establishing Priorities
Pareto Phenomenon- read from book

The Industrial Revolution

Scientific Management

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THE HISTORICAL EVOLUTION OF

OPERATIONS MANAGEMENT
Craft Production
System in which highly skilled workers use simple, flexible
tools to produce small quantities of customized goods.
What is good/bad about it?

Mass Production
Interchangeable Parts
Division of Labor

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OPERATIONS TODAY
E-business
Use of internet to transact business

E-commerce
Consumer-to-business transactions.

Technology
The application of scientific discoveries to the development
and improvement of goods & services

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OPERATIONS TODAY
Product and Service Technology
Process Technology
Information Technology
Six Sigma: A process of reducing costs, improving quality,
and increasing customer satisfaction
Agility: The ability of an organization to respond quickly.
Lean System: System that uses minimal amounts of
resources to produce a high volume of high quality goods
with some variety.
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KEY ISSUES FOR TODAYS BUSINESS

OPERATIONS
Economic Condition
Innovating

(investment& hiring, in recession)

(use of internet/innovative processes)

Quality Problems

(product design & testing)

Risk Management

(identifying risks, assessing vulnerability,

and potential damage, and tale steps to reduce risks)

Competing in a Global Economy-

(reduce cost internally

as cheap labor cost in third-world country)

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KEY ISSUES FOR TODAYS BUSINESS

OPERATIONS
The Need to Manage the Supply Chain
Read the book (page 31)

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WEGMANS FOOD MARKETS

Do the Case Study

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