what is “operations management”? (and why should you care ?)

What is“Operations Management”?(and why should you care?)

Dr. Ron Lembke, Ph.D.University of Nevada, Reno

Reaching me• Email: ronlembke@unr.edu• Phone: (775) 682-9164• WWW: http://business.unr.edu/faculty/ronlembke• Don’t call my house, and I won’t call yours.When emailing, please include “352” in the subject line.

Who Are You? (This is Homework)

In an email, please tell me the following:• Your name• Email address• Where From• Major• Interests / Hobbies• Musical interests• when you anticipate graduating• any experience you have had that might be relevant to

this course

The Goal What is the goal of a company?

Efficent & Effective• Efficiency: Doing things with the least use of

resources• Effectiveness: Doing the right thing at the right

time.• Value = Quality / $

What is Operations Management?

• Managing the systems or processes that create goods and/or provide services (p.4)

Goods vs. Services• Car• Coffee at Starbucks• Oil Change

Growth of Service Economy

0

10

20

30

40

50

60

70

80

1850 75 1900 25 50 75 2000

Services

Industry

Farming

Why OM is the most important area

•Marketing gets people to buy our product• Finance makes sure we have the money to

operate• Accounting keeps track of what we spend•Management keeps people on task• I/S makes sure systems work to support

everyone else• Operations actually makes the thing we

sell. Without operations, you can’t have a company.

Why Do You Care?

• Satisfying Customers depends on Operations• You must understand and work in or with

Operations:• Finance: Depr, Cash Flow, Make vs. Buy• Acctg: Cost estimates, Overhead, Inv valuation• Mktg: What can be done?• HR: job descr, standards, incentives• MIS: production, shipping, billing, receiving

Operations as Service

Everybody’s in serviceCore services: done correctly, customized to

their needs, delivered on time, priced competitively

Value-added services: make life easier, help do jobs easier:Information on product – data, specsProblem solving – help internal, external customerSales support – demo product trying to sellField support – replace parts quickly

Decisions of OM

1. Quality: what do customers want?2. Goods & Service Design: what to sell?3. Process & Capacity Design: how to make it and how much

capacity to have? When add more? Where? How?4. Location Selection: where to build?5. Layout Design: how to design facilities?

Decisions of OM6. Human Resource & Job Design: what skills and how many

people needed?7. Supply chain management: vendor management, who use as

suppliers?8. Inventory: how much and where?9. Scheduling: HR, facility needs, when?10. Maintenance: how much, when?

Current OM Issues

Flexible supply chains for mass customization of products and services

Global supplier, production, and distribution networksCommoditization of suppliers – “plug compatibility”Enhancing value-added servicesMaximizing use of internet to share information, coordinate

production

Continuous Improvement

• It used to be you had to be “good enough”• Now, you must be looking for ways to make your

customer happy, and meet their future needs • If you aren’t someone else is, and is going to take

your business

IGNORE YOUR TEETH, AND THEY’LL

GO AWAY

Sustainability

• Minimizing the company’s environmental impact• Minimize the impact of operations

• It’s the carbon, stupid• Pollution is bad, too• 97% of climate scientists• As for the 3 percent of scientists who

remain unconvinced, their average expertise is far below that of their colleagues, as measured by publication and citation rates