1 operations management for mbas second edition meredith and shafer
TRANSCRIPT
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OPERATIONS MANAGEMENTfor MBAs Second Edition
Meredith and Shafer
Chapter 1: The Nature of Operations 2
Chapter 1
The Nature of Operations
Chapter 1: The Nature of Operations 3
Introduction
Chapter 1: The Nature of Operations 4
McDonald’s Corp
Facing increased competitionSmarter and more demanding
customersLess brand loyalSwitched to hamburger bun that does
not require toasting.Customers prefer taste of new bunSaves time and money
Chapter 1: The Nature of Operations 5
Olympic Flame
10,000 runners 15,000 miles through 42
states in 84 days Two years of planning Must plan for no-show
runners and rush hour traffic Cost of this operation in the
neighborhood of $20 million
Chapter 1: The Nature of Operations 6
Kmart Versus Wal-Mart
Both chains started in 1962 In 1987, Kmart had 2,223 stores to Wal-
Mart’s 1,198.Kmart’s sales were $25.63 billion to Wal-
Mart’s $15.96 billionBy 1991, Wal-Mart’s sales exceeded
KmartsKmart still had more stores
Chapter 1: The Nature of Operations 7
Kmart Versus Wal-Mart continued
In year ending January 1996, Wal-Mart’s sales were $93.6 billion to Kmart’s $34.6 billion.
During this time Kmart emphasized marketing and merchandising (such as national TV ad campaigns).
Wal-Mart was investing millions in its operations to lower cost.
Chapter 1: The Nature of Operations 8
Kmart Versus Wal-Mart continued
Wal-Mart developed sophisticated distribution system that integrated its computer system with its distribution system.
Kmart’s employees lacked skills needed to plan and control inventory.
Chapter 1: The Nature of Operations 9
Diversity and Importance of Operations
Improvements in operations can simultaneously lower costs and improve customer satisfaction.
Improving operations often dependent on advances in technology.
Can obtain competitive advantage by improving operations.
Diversity of operations
Chapter 1: The Nature of Operations 10
Operations
Heart of every organizationOperations are the tasks that create
value
Chapter 1: The Nature of Operations 11
The Production System
Chapter 1: The Nature of Operations 12
Systems Perspective
InputsTransformation System
Alter Transport Store Inspect
OutputsEnvironment
Chapter 1: The Nature of Operations 13
Characteristics of Products and Services Products
Tangible Minimal customer
contact Minimal customer
participation Delayed consumption Equipment intensive Quality easily measured
Services Intangible Extensive customer
contact Extensive customer
participation Immediate consumption Labor intensive Quality difficult to
measure
Chapter 1: The Nature of Operations 14
“Facilitating Good” Concept
Often confusion in trying to classify organization as manufacturer or service
Facilitating good concept avoids this ambiguity
All organizations defined as serviceThe tangible part of the service is defined as
facilitating goodPure services
Chapter 1: The Nature of Operations 15
The Range from Services to Products
Chapter 1: The Nature of Operations 16
Classification and Evolution of Economic Offerings
Chapter 1: The Nature of Operations 17
Comparison of Alternative Economic Offerings
Economic Offering Commodities Goods Services Experiences
Value added by Extracting Producing Delivering Staging
Form of output Fungible Tangible Intangible Memorable
Key characteristics
Natural Standardized Customized Personalized
Buyer Market User Client Guest
Chapter 1: The Nature of Operations 18
Operations Activities
Strategy Output Planning Capacity Planning Facility Location Facility Layout Aggregate Planning
Inventory Management
Materials Requirements Planning
Scheduling Quality Control
Chapter 1: The Nature of Operations 19
Functional Viewof Organizations Three core functions
Operations Marketing Finance
Other important functional activities Accounting Human resource
management Information systems Engineering
Chapter 1: The Nature of Operations 20
Process View of Organizations
An Evolution
Chapter 1: The Nature of Operations 21
Traditional Functional Organization
Chapter 1: The Nature of Operations 22
Value-Chain Approach