Introduction to Operations Management PDF

OPERATIONS MANAGEMENT DR. ROWEL E. ANTONIO School of Accountancy & Management Graduate School INTRODUCTION TO OPERATIONS MANAGEMENT INTRODUCTION TO OPERATIONS MANAGEMENT The management of systems or processes that create goods and/or provide services. Operations concepts and techni...

OPERATIONS MANAGEMENT DR. ROWEL E. ANTONIO School of Accountancy & Management Graduate School INTRODUCTION TO OPERATIONS MANAGEMENT INTRODUCTION TO OPERATIONS MANAGEMENT The management of systems or processes that create goods and/or provide services. Operations concepts and techniques are applied to a wide range of activities and situations outside manufacturing. A term that more closely reflects the diverse nature of activities to which its concepts and techniques are applied. INTRODUCTION TO OPERATIONS MANAGEMENT The FUNCTIONS of Operations Management are very much similar to the activities performed by an AIRLINE COMPANY. Most of the activities performed by management and employees fall into the realm of Operations Management. INTRODUCTION TO OPERATIONS MANAGEMENT ACTIVITIES IN OPERATIONS MANAGEMENT: 1. FORECASTING Such thing as weather and landing conditions, seat demand for flights, and the growth in air travel. 2. CAPACITY PLANNING Maintain the cash flow and make reasonable profit. Too few or too many planes or even the right number of planes but in the wrong places will hurt profit. INTRODUCTION TO OPERATIONS MANAGEMENT 3. MANAGING INVENTORY/INVENTORY MANAGEMENT such items as foods and beverages, first-aid equipment, in- flight magazines, pillows and blankets, life preservers. 4. Scheduling 5. ASSURING QUALITY/QUALITY ASSURANCE/QM Essential in flying and maintenance operations, where the emphasis is on safety. Also important in dealing with customers at ticket counters, check-in, telephone reservations, and curb service, where the emphasis is on efficiency and courtesy. (Implied Requirements) INTRODUCTION TO OPERATIONS MANAGEMENT 6. MOTIVATION AND TRAINING Management of people that includes: job organization, acquisition, maintenance, development and research. 7.LOCATION OF FACILITIES/FACILITIES MANAGEMENT According to manager’s decisions on which cities to provide service for, where to locate maintenance facilities, and where to locate major and minor hubs. 8. SUPPLY CHAIN MANAGEMENT 9. LOCATION PLANNING INTRODUCTION TO OPERATIONS MANAGEMENT WHY STUDY OPERATIONS MANAGEMENT? 1. Operations Management activities are at the core of all business organizations. 2. Higher percentage or more jobs are in OM-related areas.(IM, QA, Scheduling etc.) 3. All departments/organizations are interrelated with operations management activities. INTRODUCTION TO OPERATIONS MANAGEMENT But beyond all of this is the reality that Operations Management is about management and all managers need to possess the knowledge and skills you will learn about here. Among them are: Productivity Quality Strategy Inventory Control Forecasting and Scheduling Also you will learn how to use a range of quantitative tools that enhance managerial Decision Making. INTRODUCTION TO OPERATIONS MANAGEMENT FUNCTIONS WITHIN BUSINESS ORGANIZATIONS ORGANIZATIONS are formed to pursue goals that are achieved more efficiently by the concerted efforts of a group of people than by individuals working alone. Business Organizations are devoted to producing goods and/or providing services. applicable to both for Profit for Non-Profit organizations Goals, Products, and Services may be similar or quite different. Nonetheless, their functions and the way they operate are similar. INTRODUCTION TO OPERATIONS MANAGEMENT 3 Basic Functions 1. Finance 2. Marketing 3. Operations  They must interact to achieve the goals of the organization, and each makes important contribution.  The success of an org depends not only on how well each area performs but also on how well each areas interface with each other. INTRODUCTION TO OPERATIONS MANAGEMENT Example: Unless operations and marketing work together, marketing may promote goods or services for which there is no demand. Similarly, unless finance and operations people work closely, funds for expansion or new equipment may not be available. INTRODUCTION TO OPERATIONS MANAGEMENT OPERATIONS The operational function consists of all activities directly related to producing goods or providing services. The core of most business organizations; it is responsible for the creation of goods and services INTRODUCTION TO OPERATIONS MANAGEMENT INPUTS- are used to obtain finished goods or services using one or more…. TRANSFORMATION PROCESSES- (storing, transporting, cutting, etc.) INTRODUCTION TO OPERATIONS MANAGEMENT To ensure that the desired outputs are obtained, measurements are taken at various points in the transformation process (FEEDBACK) and then compared with previously established standards to determine whether corrective action is needed. (CONTROL) OUTPUTS- Refer specifically to any particular services, results, and or products that are generated as a result of a particular project related process. INTRODUCTION TO OPERATIONS MANAGEMENT The essence of the operations function is to ADD VALUE during the transformation process. VALUE ADDED is the term used to describe the difference between the cost of inputs and the value or price of outputs. INTRODUCTION TO OPERATIONS MANAGEMENT FINANCE The finance function comprises activities related to securing resources at favorable prices and allocating those resources throughout the organization. Finance and Operations personnel cooperate by exchanging info and expertise in such activities as: 1. BUDGETING Budgets must be periodically prepared to plan financial requirements. Budgets must sometimes be adjusted, and performance relative to a budget must be evaluated. INTRODUCTION TO OPERATIONS MANAGEMENT 2. ECONOMIC ANALYSIS OF INVESTMENT PROPOSALS Evaluation of alternative investments in plant and equipment requires inputs from both operations and finance people. 3. PROVISION OF FUNDS The necessary funding of operations and the amount and timing of funding can be important and even critical when funds are tight. Careful planning can help avoid cash-flow problems. Most for-profit firms obtain the majority of their funds through the revenues generated by sales of goods and services. INTRODUCTION TO OPERATIONS MANAGEMENT MARKETING It consists of selling and promoting the goods/services of an organization. Advertising and pricing decisions are made by marketing people. Also responsible for assessing customer wants and needs, and for communicating those to operations and design people. Can provide valuable insight on what competitors are doing. INTRODUCTION TO OPERATIONS MANAGEMENT Marketing can provide and also supply information on consumer preferences so that design will know the kinds of products and features needed. Operations will also have advance warning if new equipment or skills will be needed for new products or services. Finance people should be included in these exchanges in order to provide info on what funds might be available and to learn what funds might be needed for new products or services. INTRODUCTION TO OPERATIONS MANAGEMENT One important piece of information marketing needs from operations is manufacturing or service LEAD TIME in order to give customers realistic estimates of how long it will take to fill their orders. LEAD TIME- the time necessary to deliver an order or perform a service. INTRODUCTION TO OPERATIONS MANAGEMENT Thus, Marketing, Operations Management, and Finance must interface on product and process design, forecasting, setting realistic schedules, quality and Quantity decisions, and keeping each other informed on the other’s strengths and weaknesses. Other Functions: Accounting Purchasing Personnel Public Relations Industrial Engineering Distribution etc. INTRODUCTION TO OPERATIONS MANAGEMENT DESIGNING AND OPERATING PRODUCTION (OPERATIONS) SYSTEM A function of an operations manager is to guide the system by decision making. Certain decisions affect the design of the system and others affect the operation of the system.  INTRODUCTION TO OPERATIONS MANAGEMENT Decisions in Operations Management are classified into two, namely: System Design and System Operation. SYSTEM DESIGN It involves decisions that relate to: - System Capacity - Geographical Location of Facilities - Arrangements of Departments and Placement of Equipment within Physical Structures - Product and service Planning - Acquisition of Equipment Decisions that usually, but not always, require LONG TERM commitments. INTRODUCTION TO OPERATIONS MANAGEMENT SYSTEM OPERATION It involves decisions that relate to: - Management of Personnel - Inventory Planning and Control - Scheduling - Project Management - Quality Assurance (not Quality Management) INTRODUCTION TO OPERATIONS MANAGEMENT In many instances, Operations Manager is more involved in day- to-day operating decisions than relating to system design. However, the Operations Manager has a vital stake in system design because system design essentially determines many of the parameters of system operations. Example: Costs, space, capacities, and quality are directly affected by design decisions. Even though the Operations Manager is not responsible for making all design decisions, he can provide to those decision makers a wide range of information that will have a bearing on their decisions.