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Week 1 Requirements:
 Chapter 1: Introduction to the Field
 Chapter 2: Operations and Supply
Strategy
 Chapter 2A: Linear Programming
 Chapter 3: Project Management
 Term Project Discussion
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Chapter 1

Introduction to the Field

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OBJECTIVES:
 Operations Management (OM)
 Why Study OM?

 Transformation Processes Defined

 Operations as a Service

 The Importance of OM

 Historical Development of OM

 Current Issues in OM
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What is Operations & Supply

Management?
Operations & Supply Management
(OM) is defined as the design,
operation, and improvement of the
systems that create and deliver the
firm’s primary products and
services
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The Scope of Operations and

Supply Management (OSM)
Stakeholders
“n” tier ……. 1st tier
suppliers suppliers Distributors Customers

Operations
Management

Strategic Logistics
Sourcing
Supply Chain Management

McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
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The Importance of
Operations Management
Synergies must exist with other
functional areas of the
organization
Operations account for 60-80% of
the direct expenses that burden
a firm’s profit.
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Why Study Operations

Management?
Systematic Approach
To
Organizational Processes

Business Education Operations Career Opportunities

Management

Cross-Functional
Applications
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OM in the Organization Chart

Finance Operations
Operations Marketing

Plant
Plant Operations
Operations Director
Director
Manager
Manager Manager
Manager

Manufacturing,
Manufacturing, Production
Production control,
control,
Quality
Quality assurance,
assurance, Engineering,
Engineering,
Purchasing,
Purchasing, Maintenance,
Maintenance, etc
etc
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What is a Transformation
Process?

A transformation process is defined

as a use of resources to transform
inputs into some desired outputs
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Transformations
 Physical--manufacturing
 Locational--transportation
 Exchange--retailing
 Storage--warehousing
 Physiological--health care
 Informational--telecommunications
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Operations and Supply Management

Supply Chain Processes

Manufacturing
Processes

Sourcing Distribution
Processes Processes
Logistics Service Logistics
Processes Processes Processes
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What are Goods

and
What is a Service ?

“If you drop it on your foot, it may hurt you.” (Good or Service?)

Goods
“Services never include goods and goods never include
services.” (True or False?)

False
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The Goods-Services Continuum

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What are Value-Added Services?

Value-Added services differentiate

the organization from competitors
and build relationships that bind
customers to the firm in a positive
way
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Value-Added Service Categories

Problem Solving

Information
Operations Sales Support
Management

Field Support
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Historical Summary of OM
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Historical Summary of OM
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Current Issues in OM
 Coordinate the relationships between
mutually supportive but separate
organizations.
 Optimizing global supplier, production,
and distribution networks.
 Increased co-production of goods and
services.
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Current Issues in OM
 Managing customer touch points.
 Raising senior management
awareness of operations as a
significant competitive weapon.
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Assignment
Required Reading: Pages 4 - 18
Questions: Page 19 #1, 5, 10 & 11
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Question Bowl
A major objective of this book is to show how smart
managers can do which of the following?

a. Improve efficiency by lowering costs

b. Improve effectiveness by creating value
c. Increasing value by reducing prices
d. Serving customers well
e. All of the above

Answer: e. All of the above

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Question Bowl
In the Input-Transformation-Output Relationship,
a typical “input” for a Department Store is
which of the following?

a. Displays
b. Stocks of goods
c. Sales clerks
d. All of the above
e. None of the above
Answer: e. None of the above (The above are
considered “Resources” of a department store.
The correct answer is “Shoppers”.)
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Question Bowl
In which of the following decades did the
concept of quality control originate?
a. 1920’s
b. 1930’s
c. 1940’s Answer: b. 1930’s (Tools such
d. 1950’s as sampling inspection and
e. 1970’s
statistical tables where first
developed by Walter
Shewhart, H. F. Dodge, and H.
G. Romig.)
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End of Chapter 1