topic1- introduction to om-140914

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INDUSTRIAL

MANAGEMENT

Top ic 1:

BASIC CONCEPTS IN

OPERATION MANAGEMENTUiTM Shah A lam

Lecturer: Pn. Ah sana Aq i lah Ahmad

T1-A14-2C


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At the end of this lesson students should be able

to :

1. Discuss the nature of production/operations

management2. Recognize the functions of production/operations

manager

3. Compare and contrast the differences between goods

and services operations management4. Identify the current trends and issues in

production/operations management


2

Learning outcomes


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Operations Management (1)


3

Operations Management is:

The management of systems or processes

that create goods and/or provide services

Operations Management affects:

Companies ability to compete Nations ability to compete internationally


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4

Operations Management (2)

Productionis the creation of goods

and servicesOperations management is the set

of activities that creates value in the

form of goods and services bytransforming inputs into outputs


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Why Study OM?

1. OM is one of three major functions

(marketing, finance, and operations) of any

organization2. We want (and need) to know how goods and

services are produced

3. We want to understand what operations

managers do

4. OM is such a costly part of an organization


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The Organization

The Three Basic Functions

Organization

Finance Operations Marketing


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Organization

Essential functions:

Marketinggenerates demand Production/operationscreates the

product

Finance/accountingtracks how well the

organization is doing, pays bills, collects

the money


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Market ing

Salespromot ion

Adver t is ing

Sales

Marketresearch

Example of Organizational Charts

Operat ions

Facil i t iesConstruct ion; m aintenance

Product ion and inventory contro l

Schedul ing; mater ials c ontro lQuali ty assurance and contro l

Supply ch ain m anagement

Manufactur ingTool ing; fabr icat ion; assemb ly

Design

Product development and designDeta iled prod uct speci f ications

Ind us tr ia l engineer ingEff ic ient use of machines, space,and personnel

Process analysisDevelopment and ins tal lat ion ofproduc t ion too ls and equipment

Finance/account ing

Disbursements/credits

ReceivablesPayablesGeneral ledg er

Funds Management

Money m arketInternationalexchange

Capital requirements

Stock issueBond issueand recall

Manufactur ing

Figure 1.1(C)


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Value-Added Process

The operations function involves the conversion ofinputs into outputs

InputsLand

Labor

Capital

Transformation/

Conversion

process

OutputsGoods

Services

Control

Feedback

FeedbackFeedback

Value added

Figure 1.2

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Value-Added and Product Packages

1. Value-added elements make the

difference between the cost of inputs and

the value or price of outputs.

2. Product packages are a combination of

goods and services.

3. Product packages can make a company

more competitive.

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Automobile assembly, steel making

Home remodeling, retail sales

Automobile repair, fast food

The GoodsService ContinuumFigure 1.3

Computer repair, restaurant meal

Song writing, software development

Goods Service

Surgery, teaching

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Food Processor

Inputs Processing Outputs

Raw vegetables Cleaning Canned

vegetablesMetal sheets Making cans

Water CuttingEnergy CookingLabor PackingBuilding Labeling

Equipment

Table 1.2



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Manufacturing or Service?

Tangible Act



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Production of Goodsvs. Delivery of Services

1. Production of goodstangible output2. Delivery of servicesan act

3. Service job categories

Government

Wholesale/retail

Financial services

Healthcare

Personal services

Business services

Education

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Characteristic Goods ServiceCustomer contact Low High

Uniformity of input High Low

Labor content (predictable) Low High

Uniformity of output High Low

Output; production & delivery Tangible Intangible

Measurement of productivity Easy Difficult

Opportunity to correct problems;Quality

Assurance

High Low

Inventory Much Little

Evaluation Easier Difficult

Patentable Usually Not usually

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Key Differences:

Goods vs. ServiceTable 1.3

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Operations Management includes:1. Forecasting

2. Capacity planning

3. Scheduling

4. Managing inventories

5. Assuring quality

6. Motivating and training employees

7. Locating facilities8. Supply chain management

9. And more . . .



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Types of OperationsTable 1.4

Operations Examples

Goods Producing Farming, mining, construction ,

manufacturing, power generation

Storage/Transportation Warehousing, trucking, mail

service, moving, taxis, buses,

hotels, airlines

Exchange Retailing, wholesaling, financial

advising, renting or leasing

Entertainment Films, radio and television,concerts, recording

Communication Newspapers, radio and TV

newscasts, telephone, satellites



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What Operations

Managers Do

Planning

Organizing

Staffing

Leading

Controlling

Basic Management Funct ions


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Ten Critical Decisions

Ten Decision Areas Chapter(s)1. Design of goods and services 5

2. Managing quality 6, Supplement 6

3. Process and capacity 7, Supplement 7design

4. Location strategy 85. Layout strategy 9

6. Human resources and 10, Supplement 10job design

7. Supply chain 11, Supplement 11management

8. Inventory management 12, 14, 16

9. Scheduling 13, 15

10. Maintenance 17 Table 1.2


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The Critical Decisions

3. Process and capacity design

What process and what capacity will

these products require?

What equipment and technology is

necessary for these processes?

4. Location strategy

Where should we put the facility?

On what criteria should we base the

location decision? Table 1.2 (cont.)


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5. Layout strategy How should we arrange the facility?

How large must the facility be to meet

our plan?6. Human resources and job design

How do we provide a reasonable work

environment? How much can we expect our employees

to produce?Table 1.2 (cont.)


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7. Supply chain management

Should we make or buy this component?

Who are our suppliers and who can

integrate into our e-commerce program?

8. Inventory, material requirements

planning, and JIT

How much inventory of each item should

we have?

When do we re-order?Table 1.2 (cont.)


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Where are the OM Jobs?

Figure 1.2


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Ethical Issues

1. Financial statements

2. Worker safety

3. Product safety

4. Quality5. Environment

6. Community

7. Hiring/firing workers

8. Closing facilities

9. Workers rights



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Trends in Business

Major trends1. The Internet, e-commerce, e-business

2. Management technology

3. Globalization

4. Management of supply chains

5. Outsourcing

6. Agility7. Ethical behavior

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Other Important Trends

1. Operations strategy2. Working with fewer resources

3. Revenue management

4. Process analysis and improvement

5. Increased regulation and product liability

6. Lean production



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Lets Recap

1. What is the nature of production/operation

management

2. What are the functions of production/operations

manager; identify and discuss.

3. What are the differences between goods and

services operations management; compare and

contrast

4. What are the current trends and issues in

production/operations management; identify

10/15/2014 NY MEM 575: Courtesy of Mc Graw Hills& P P ti H ll

topic1- introduction to om-140914

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