Operation Management Fundamentals

Operation Management

• Encompasses activities that create value by transforming inputs into outputs.
• Applicable across various productive enterprises, including offices, hospitals, and factories.
• Efficiency in producing goods/services relies on effective OM techniques.

Production

• Involves creation of Goods (tangible products) and Services (intangible products).
• Production activities for goods are evident, while those for services may not be visible to customers.
• Often referred to in organizations as operations management.

Organizing to Produce Goods and Services

• Three essential functions for creating goods/services:
  • Marketing: Generates demand and takes orders.
  • Production/Operations: Creates the products.
  • Finance/Accounting: Monitors organizational performance and manages funds.

The Supply Chain

• A global network supplying firms with goods/services, relying on various suppliers.
• Value is created through collaboration between marketing, operations, and finance.
• Efficient collaboration within the supply chain leads to customer satisfaction and competitive advantage.

Importance of Studying OM

• Understanding how organizations achieve productivity.
• Learning production processes of goods and services.
• Gaining insights into the role of operation managers.
• Recognizing OM as a significant cost factor within organizations.

Functions of Operations Managers

• Core management functions include:
  • Planning
  • Organizing
  • Staffing
  • Leading
  • Controlling
• Focuses on strategic design elements in OM, including quality management and supply chain management.

Total Quality Management (TQM)

• Customer-oriented philosophy emphasizing quality to achieve customer satisfaction.
• Involves all organizational members in continuous improvement efforts.
• Concerns product quality, process control, and quality assurance/enhancement.

Quality Definition

• Described as "Fitness for use," encompassing the attributes that influence a product's ability to meet specified needs.
• Governed by standards such as ISO 9000, established by the International Organization for Standardization.

Chain Reaction in Quality Improvement

• Enhancing quality leads to increased productivity by reducing defects and non-value-adding activities.

Dimensions of Quality

• Product Quality Attributes: Functionality refers to the presence of certain attributes that fulfill specified functions.