INTRODUCTION TO OPERATIONS

MANAGEMENT

1. Definition

2. OM’s Transformation Role

3. OM Across the Organization

4. Responsibilities of Operations Management

5. Recent Trends
Definition of operations management
(OM)

 Operations Management deals with the design and

management of products, processes, services and supply
chains. It considers the acquisition, development, and
utilization of resources that firms need to deliver the
goods and services their clients want.

 The business function responsible for planning,

coordinating, and controlling the resources needed to
produce products and services for a company
Operations…
Operations transform resource or data inputs into
desired goods, services, or results, and create and
deliver value to the customers. Two or more
connected operations constitute a process. Examples
of operations are:
 Purchasing
 Accounting
 Distribution
 Etc.
Historical Development of OM
OM’s Transformation Process
OM’s Transformation Role

 To add value
 Increase product value at each stage
 Value added is the net increase between output product value and
input material value

 Provide an efficient transformation

 Efficiency – means performing activities well for least possible cost
 Rationality is the quality or state of being reasonable, based on facts
or reason
 Goods & Services
Manufacturing Services
 Tangible product  Intangible product

 Product can be  Product cannot be

inventoried inventoried

 Low customer contact  High customer contact

 Longer response time  Short response time

 Capital intensive  Labor intensive

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Operations example in Manufacturing:
Food Processing

INPUTS PROCESS OUTPUTS

Raw vegetables Cleaning Clean vegetables

Metal sheets Cutting/Rolling/Welding Cans

Energy, Vegetables Cutting Cut vegetables

Energy, Water, Cooking Boiled

Vegetables vegetables
Energy, Cans, Boiled Placing Can food
vegetables
Operations example in service:
Health care

Inputs Processing Outputs

Doctors, nurses Examination Healthy

Hospital Surgery patients
Medical Supplies Monitoring
Equipment Medication
Laboratories Therapy
 OM Across the Organization
 Most
businesses are
supported by
the functions
of operations,
marketing,
and finance

 The major
functional
areas must
interact to
achieve the
organization
goals
OM in Practice

 OM has the most diverse organizational function

 Manages the transformation process
 OM has many faces and names such as;
 V. P. operations, Director of supply chains,
Manufacturing manager
 Plant manger, Quality specialists, etc.

 All business functions need information from OM

in order to perform their tasks

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Responsibilities of Operations
Management
 Planning  Controlling
 Projects  Inventory
 Scheduling  Quality
 Market share  Costs
 Plan for risk reduction,  Motivating
plan B?
 Financial
 Forecasting
 Psychological
 Organizing
 Degree of standardization
 Subcontracting
 Process selection
 Recent Trends
 Worker involvement

 Environmental issues, emission reductions are popular after

Central European floods

 Service economy in US, foreign production

 E-business – information technology

 Supply chain management

 Total Quality Management

 Globalization, emerging markets, NAFTA

 Lean Production – see the next page