Operation Management

Physical: as in manufacturing operations Locational: as in transportation operations Exchange: as in retail operations Physiological: as in health care Psychological: as in entertainment Informational: as in communication

Transformation Process
Physical: as in manufacturing operations Locational: as in transportation operations Exchange: as in retail operations Physiological: as in health care Psychological: as in entertainment Informational: as in communication

Operations as a Transformation Process

INPUT Material Machines Labor Management Capital

TRANSFORMATION PROCESS

OUTPUT Goods Services

Feedback

Operations Function
Operations Marketing Finance and accounting Human resources Outside suppliers

How is operations relevant to my major?

Accounting Information Technology Management
As an auditor you must understand the fundamentals of operations management. IT is a tool, and theres no better place to apply it than in operations. We use so many things you learn in an operations class scheduling, lean production, theory of constraints, and tons of quality tools.

How is operations relevant to my major?

Economics Its all about processes. I live by flowcharts and Pareto analysis. How can you do a good job marketing a product if youre unsure of its quality or delivery status? Most of our capital budgeting requests are from operations, and most of our cost savings, too.

Marketing

Finance

Evolution of Operations Management

Craft production

process of handcrafting products or services for individual customers

Division of labor

dividing a job into a series of small tasks each performed by a different worker standardization of parts initially as replacement parts; enabled mass production

Interchangeable parts

Evolution of Operations Management (cont.)

Scientific management

systematic analysis of work methods

Mass production

high-volume production of a standardized product for a mass market

adaptation of mass production that prizes quality and flexibility

Lean production

An Integrated Value Chain

Value chain: set of activities that create and deliver products to customer

Customer

Manufacturer

Supplier

Flow of information (customer order) Flow of product (order fulfillment)

Competitiveness and Productivity (cont.)

Measures of Productivity

Productivity Increase
Become efficient

output increases with little or no increase in input both output and input grow with output growing more rapidly output increases while input decreases output remains the same and input is reduced both output and input decrease, with input decreasing at a faster rate

Expand

Achieve breakthroughs

Downsize

Retrench

OperationsOriented Barriers to Entry

Economies of Scale Capital Investment Access to Supply and Distribution Channels Learning Curve

Primary Topics in Operations Management

Primary Topics in Operations Management (cont.)

Operations Strategy
Strategy: Chapter 2

Maintaining an operations strategy to support firms competitive advantage

Focusing on quality in operational decision making Designing quality products and services

Quality: Chapters 3 and 4

Product and Services: Chapter 5

Processes, Technologies, and Capacity: Chapter 6

Setting up process so that it works smoothly and efficiently

Operations Strategy (cont.)

Facilities: Chapter 7

Setting up facility so that it works smoothly and efficiently Designing jobs and work to produce quality products Managing complex projects

Human Resources: Chapter 8

Project Management: Chapter 9

Supply Chain Management

Supply Chain: Chapter 10

Managing supply chain Predicting customer demand How much to produce and when to produce it How much to order and when to order

Forecasting: Chapter 11

Aggregate Planning: Chapter 12

Inventory Management: Chapter 13