introduction to operations management before i speak, i have something important to say… -groucho...

Introduction to Operations Management

Before I speak, I have something important to say…-Groucho Marx

CHAPTER

1

Practical Operations Management

Tasks ahead:

• Defining Operations Management

• Classifying Operations

• Finding Operations Managers

CHAPTER

1

Practical Operations Management

operationsA 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• People• Materials• Equipment• Knowledge• Infrastructure

Operations• Assembly• Transportation• Extraction• Cultivation• Fabrication

A MODEL OF ANY KIND OF OPERATION

Inputs Transformation Outputs

Resources• People• Materials• Equipment• Knowledge• Infrastructure

Operations• Assembly• Transportation• Extraction• Cultivation• Fabrication

Outputs• Goods and services• Employment• Pollution

value-addedThe difference between the total value of the outputs and the total value of the inputs associated with anoperation.

VALUE CREATION

THREE ELEMENTS OF VALUE CREATION

VALUE CREATION

Productivity

THREE ELEMENTS OF VALUE CREATION

productivityA measurement of valuecreation, calculated asa ratio of the values ofoutput to input.

Inputs Transformation Outputs

Output

Inputs

Productivity

VALUE CREATION

Productivity

THREE ELEMENTS OF VALUE CREATION

Sustainability

VALUE CREATION

Productivity

THREE ELEMENTS OF VALUE CREATION

sustainabilityThe degree to whichactivity with immediatebenefit does not incurgreater costs in the longterm.

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

greenAssures sustainability.

biomimicryThe imitation of naturalprocesses and systems.

Sustainability

VALUE CREATION

Productivity

THREE ELEMENTS OF VALUE CREATION

Sustainability

VALUE CREATION

Responsibility Productivity

THREE ELEMENTS OF VALUE CREATION

responsibilityAn obligation to perform.

ethicsPrinciples governingconduct, delineating good from bad.

Inputs OutputsTransformation

CLASSIFYING AN OPERATION

TangibilityGood or service?

Inputs OutputsTransformation

CLASSIFYING AN OPERATION

tangibilityThe degree of perceivable, physical essence of a product.

goodsTangible products.

goodsTangible products.

servicesIntangible products.

Finishedgood

Topassembly

Screenassembly

Bottomassembly

Topcasing

Keypad Flatscreen

Backlight frame

CPUcard

Powersupply

Bottomcasing

A Bill of Materials for Manufacture of a Tangible Good

Physical Therapy as a pure service.

Goods operations Service operations

Tangible products Intangible products

COMPARING GOODS AND SERVICES(Generalities…)

Goods operations Service operations

Tangible products Intangible products

Less customer contact

More customer contact

COMPARING GOODS AND SERVICES(Generalities…)

Goods operations Service operations

Tangible products Intangible products

Less customer contact

More customer contact

More reliance on specialized equipment

Less reliance on specialized equipment

COMPARING GOODS AND SERVICES(Generalities…)

Goods operations Service operations

Tangible products Intangible products

More reliance on specialized equipment

Less reliance on skilled labor

Less reliance on specialized equipmentMore reliance on skilled labor

COMPARING GOODS AND SERVICES(Generalities…)

Less customer contact

More customer contact

TangibilityGood or service?

Inputs OutputsTransformation

CLASSIFYING AN OPERATION

TangibilityGood or service?

Inputs OutputsTransformation

Supply ChainsOne organization or many?

CLASSIFYING AN OPERATION

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

CUSTOMER

Retailer

Distributor

Manufacturer

Casingsupplier

Keypadsupplier

Card andmemory supplier

Flat Screensupplier

Supplier’ssupplier

Supplier’ssupplier

Supplier’ssupplier

Supplier’ssupplier

Supplier’ssupplier

Supplier’ssupplier

Supplier’ssupplier

A SUPPLY CHAIN SYSTEM

Goods moving through global supply chains.

TangibilityGood or service?

Inputs OutputsTransformation

Supply ChainsOne organization or many?

CLASSIFYING AN OPERATION

TangibilityGood or service?

Inputs OutputsTransformation

Supply ChainsOne organization or many?

GovernanceCommercial or nonprofit?

Uncertainty and Control

CLASSIFYING AN OPERATION

VARYING LEVELS OF UNCERTAINTY AND CONTROLIN OPERATIONS

More control Less control

Less uncertainty More uncertainty

Production And Service Management

Project Management

Event Management

Incident Management

scientific management

A methodology stressing the use of data collection and analysis to redesignprocesses and improveefficiency.

VARYING LEVELS OF UNCERTAINTY AND CONTROLIN OPERATIONS

More control Less control

Less uncertainty More uncertainty

Production And Service Management

Project Management

Event Management

Incident Management

VARYING LEVELS OF UNCERTAINTY AND CONTROLIN OPERATIONS

More control Less control

Less uncertainty More uncertainty

Production And Service Management

Project Management

projectA unique collectionof activities creating aparticular outcome.

VARYING LEVELS OF UNCERTAINTY AND CONTROLIN OPERATIONS

More control Less control

Less uncertainty More uncertainty

Production And Service Management

Project Management

VARYING LEVELS OF UNCERTAINTY AND CONTROLIN OPERATIONS

More control Less control

Less uncertainty More uncertainty

Production And Service Management

Project Management

Event Management

Incident Management

incidentAn unscheduled eventrequiring immediateresolution.

Inputs Transformation Outputs

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 until permanent services are restored to the citizens of the disaster area.

What kind of operation is RDRS?

Scenario 1aClassifying Operations

Inputs Transformation Outputs

Scenario 1aClassifying 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 until permanent services are restored to the citizens of the disaster area.

What kind of operation is RDRS?

INCIDENT MANAGEMENTNON PROFIT

Inputs Transformation Outputs

Scenario 1aClassifying Operations

THE HIERARCHY OF DECISION-MAKING

THE HIERARCHY OF DECISION-MAKING

StrategyLong-termplanning

Identifyinggoals

strategyA methodology andresulting plan that identifies the long-term goals of an organization.

THE HIERARCHY OF DECISION-MAKING

StrategyLong-termplanning

Identifyinggoals

THE HIERARCHY OF DECISION-MAKING

Strategy

Tactics

Long-termplanning

Medium-termplanning

Identifyinggoals

Developing solutions

tacticsMeans to pursue strategic goals with available resources.

THE HIERARCHY OF DECISION-MAKING

Strategy

Tactics

Long-termplanning

Medium-termplanning

Identifyinggoals

Developing solutions

THE HIERARCHY OF DECISION-MAKING

Strategy

Tactics

Implementation

Long-termplanning

Medium-termplanning

Short-termplanning

Identifyinggoals

Developing solutions

Takingaction

Inputs Transformation Outputs

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 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 1bClassifying Operational Decisions

Inputs Transformation Outputs

How many different decisions have been discussed?

At what level in the hierarchy of decision making are these decisions?

Scenario 1bClassifying Operational Decisions

Inputs Transformation Outputs

At what level in the hierarchy of decision making are these decisions?

Scenario 1bClassifying Operational Decisions

helicopter purchase

Inputs Transformation Outputs

At what level in the hierarchy of decision making are these decisions?

Scenario 1bClassifying Operational Decisions

helicopter purchase

ATV Allocation

Inputs Transformation Outputs

At what level in the hierarchy of decision making are these decisions?

Scenario 1bClassifying Operational Decisions

helicopter purchase

ATV Allocation

ATV Retrieval Policy

Operations

Finance Marketing

RELATIVE MIX OF THE THREE BUSINESS FUNCTIONS FOR A REGIONAL HOSPITAL

Operations

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

Finance Marketing

Operations

Finance Marketing

RELATIVE MIX OF THE THREE BUSINESS FUNCTIONS FOR A RESORT HOTEL