Understanding Services and Goods Production

Operations Management Introduction

• Operations is the management of the inner workings of a business to ensure smooth operation.
• It is responsible for producing goods and/or providing services in every type of business organization.

Operations in Business

• Operations take place in every business organization, including restaurants, retail stores, supermarkets, factories, hospitals, and colleges.
• Operations function can be seen everywhere, from reading a book to receiving medical treatment.

Three Basic Functional Areas of a Business

• Operations: responsible for producing goods and/or providing services.
• Finance: securing financial resources.
• Marketing: selling and promoting.

Operations Management Responsibilities

• Managing systems or processes that create goods and/or provide services.
• Involves decisions related to product and service design, capacity planning, process selection, and more.

Importance of Operations Management

• Essential for all businesses to function.
• Affects cost, revenue, innovation, and future expansion plans.
• Operations management can make or break a business.

Production of Goods and Service Operations

• Production of goods results in tangible output (e.g., automobiles, eyeglasses).
• Service operations produce intangible products (e.g., ideas, assistance, information).

Comparing Goods and Service Operations

• Degree of customer contact: services often involve high customer contact.
• Labor content of jobs: services often have a higher degree of labor content.
• Uniformity of inputs: service operations often have high variability of inputs.

Similarities of Goods and Service Operations

• Forecasting and capacity planning to match supply and demand.
• Process management and controlling costs and productivity.
• Managing variations, supply chain, location planning, inventory management, quality control, and scheduling.

Importance of Learning Operations Management

• Essential skills for any career, regardless of field or industry.
• Applies to every aspect of business, including sales, finance, and marketing.
• Helps understand global dependencies, company successes and failures, and the importance of teamwork.