Topic 1 and 2 Operations Management PDF

TOPIC ONE : INTRODUCTIONS TO OPERATIONS MANAGEMENT What Is Operations Management? Production is the creation of goods and services. Operations management (OM) is the set of activities that creates value in the form of goods and services by transforming inputs into outputs Organizing to Produce G...

TOPIC ONE : INTRODUCTIONS TO OPERATIONS MANAGEMENT What Is Operations Management? Production is the creation of goods and services. Operations management (OM) is the set of activities that creates value in the form of goods and services by transforming inputs into outputs Organizing to Produce Goods and Services Marketing , which generates the demand, or at least takes the order for a product or service (nothing happens until there is a sale). Production/operations , which creates, produces, and delivers the product. Finance/accounting , which tracks how well the organization is doing, pays the bills, and collects the money. The Supply Chain A supply chain is a global network of organizations and activities that supply a firm with goods and services. Why Study OM? We study OM for four reasons: OM is one of the three major functions of any organization, and it is integrally related to all the other business functions. All organizations market (sell), finance (account), and produce (operate), and it is important to know how the OM activity functions. Therefore, we study how people organize themselves for productive enterprise. We study OM because we want to know how goods and services are produced. The production function is the segment of our society that creates the products and services we use. We study OM to understand what operations managers do. Regardless of your job in an organization, you can perform better if you understand what operations managers do. In addition, understanding OM will help you explore the numerous and lucrative career opportunities in the field. We study OM because it is such a costly part of an organization. A large percentage of the revenue of most firms is spent in the OM function. Indeed, OM provides a major opportunity for an organization to improve its profitability and enhance its service to society. 10 Strategic OM Decision Design of Goods and Services Managing Quality Process and Quality Strategy Layout Strategy Location Strategy Human Resource and Job Designs Supply Chain Management Inventory Management Scheduling Maintenance 5 OM Positions Plant Manager Operations Analyst Quality Manager Supply Chain Manager and Planner Process Improvement Consultant TOPIC TWO : OPERATIONS OF GOOD AND SERVICES Productivity Challenge Productivity is the ratio of outputs (goods and services) divided by the inputs (resources, such as labor and capital)The operations manager’s job is to enhance (improve) this ratio of outputs to inputs. Improving productivity means improving efficiency. This improvement can be achieved in two ways: reducing inputs while keeping output constant increasing output while keeping inputs constant. Both represent an improvement in productivity Production is the making of goods and services Productivity Measurement Productivity = Units produced/Input used Single Factor Productivity = Units produced/ One specific input used Multifactor Productivity = Units produced/ All the inputs used Some of these measurement problems are: 1. Quality may change while the quantity of inputs and outputs remains constant. 2. External elements may cause an increase or a decrease in productivity for which the system under study may not be directly responsible. 3. Precise units of measure may be lacking. Productivity Variables Labor - Improvement in the contribution of labor to productivity is the result of a healthier, bettereducated, and better-nourished labor force. They must have: Basic education appropriate for an effective labor force Diet of the labor force Social overhead that makes labor available, such as transportation and sanitation Capital - Capital investment variable for improved labor productivity are increasingly expensive due to inflation and taxes. Management - Management is responsible for ensuring that labor and capital are effectively used to increase productivity. Knowledge Societies are the societies in which much of the labor force migrated from manual work to work based on knowledge. Current Challenges in Operations Management Globalization: The rapid decline in the cost of communication and transportation has made markets global. Similarly, resources in the form of capital, materials, talent, and labor are also now global. As a result, countries throughout the world are contributing to globalization as they vie for economic growth. Operations managers are rapidly seeking creative designs, efficient production, and high-quality goods via international collaboration. Supply-chain partnering: Shorter product life cycles, demanding customers, and fast changes in technology, materials, and processes require supply-chain partners to be in tune with the needs of end users. And because suppliers may be able to contribute unique expertise, operations managers are outsourcing and building long-term partnerships with critical players in the supply chain. Sustainability: Operations managers’ continuing battle to improve productivity is concerned with designing products and processes that are ecologically sustainable. This means designing green products and packaging that minimize resource use, can be recycled or reused, and are generally environmentally friendly. Rapid product development: Technology combined with rapid international communication of news, entertainment, and lifestyles is dramatically chopping away at the life span of products. OM is answering with new management structures, enhanced collaboration, digital technology, and creative alliances that are more responsive and effective.  Mass customization: Once managers recognize the world as the marketplace, the cultural and individual differences become quite obvious. In a world where consumers are increasingly aware of innovation and options, substantial pressure is placed on firms to respond in a creative way. And OM must rapidly respond with product designs and flexible production processes that cater to the individual whims of consumers. The goal is to produce customized products, whenever and wherever needed. Lean operations: Lean is the management model sweeping the world and providing the standard against which operations managers must compete. Lean can be thought of as the driving force in a well-run operation, where the customer is satisfied, employees are respected, and waste does not exist. The theme of this text is to build organizations that are more efficient, where management creates enriched jobs that help employees engage in continuous improvement, and where goods and services are produced and delivered when and where the customer desires them. These ideas are also captured in the phrase Lean Ethics, Social Responsibility, and Sustainability Stakeholders - Those with a vented interest in an organization, including customers, distributors, suppliers, owners, lenders, employees, and community members. Managers are also challenged to: ◆ Develop and produce safe, high-quality green products ◆ Train, retain, and motivate employees in a safe workplace ◆ Honor stakeholder commitments