Introduction to Operations
Management
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Lecture Outline
What Operations and Supply Chain Managers Do
Operations Function
Evolution of Operations and Supply Chain Management
Globalization and Competitiveness
Operations
Strategy and Organization of the Text
Learning Objectives for This Course
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What is Operations?
a function or system that transforms inputs into outputs of greater value
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Transformation Process
Physical: as in manufacturing operations
Locational: as in transportation or warehouse
operations
Exchange: as in retail operations
Physiological: as in health care
Psychological: as in entertainment
Informational: as in communication
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Operations as a
Transformation Process
INPUT
Material
Machines
Labor
Managemen
t
Capital
TRANSFORMATION
PROCESS
OUTPUT
Goods
Services
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Operations Function
Operations
Marketing
Finance and
Accounting
Human
Resources
Outside
Suppliers
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Information
Technology
Management
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Finance
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Division of labor
dividing a job into a series of small tasks each performed
by a different worker
Interchangeable parts
standardization of parts initially as replacement parts;
enabled mass production
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Mass production
high-volume production of a standardized product for a
mass market
Lean production
adaptation of mass production that prizes quality and
flexibility
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Historical Events in
Operations Management
Era
Industrial
Revolution
Scientific
Management
Events/Concepts
Dates
Originator
Steam engine
Division of labor
Interchangeable parts
Principles of scientific
management
1769
1776
1790
James Watt
1911
Frederick W. Taylor
1912
1913
Adam Smith
Eli Whitney
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Historical Events in
Operations Management
Era
Human
Relations
Operations
Research
Events/Concepts
Dates
Originator
Hawthorne studies
1930
1940s
1950s
1960s
1947
1951
Elton Mayo
Abraham Maslow
Frederick Herzberg
Douglas McGregor
George Dantzig
Remington Rand
1950s
Operations research
groups
1960s,
1970s
Motivation theories
Linear programming
Digital computer
Simulation, waiting
line theory, decision
theory, PERT/CPM
MRP, EDI, EFT, CIM
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Historical Events in
Operations Management
Era
JIT (just-in-time)
TQM (total quality
management)
Strategy and
Quality
Revolution operations
1970s
1980s
1980s
Reengineering
1990s
Six Sigma
1990s
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Historical Events in
Operations Management
Era
Events/Concepts
Internet
Revolution
Globalization
Dates Originator
E-commerce
2000s
1990s
2000s
ARPANET, Tim
Berners-Lee SAP,
i2 Technologies,
ORACLE, Dell
Amazon, Yahoo,
eBay, Google, and
others
China, India,
emerging
economies
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Historical Events in
Operations Management
Era
Events/Concepts
Dates Originator
Green
Revolution
Global warming, An
Today
Inconvenient Truth, Kyoto
Numerous
scientists,
statesmen and
governments
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Globalization
Why go global?
favorable cost
access to international markets
response to changes in demand
reliable sources of supply
latest trends and technologies
Increased globalization
results from the Internet and falling trade barriers
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Hourly Compensation
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Measures of Productivity
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Osborne Industries
C6*C8
C7*C9
C5/C6
C5/C7
C5/C13
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Productivity Growth
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Strategy Formulation
1. Defining a primary task
What is the firm in the business of doing?
2. Assessing core competencies
What does the firm do better than anyone else?
3. Determining order winners and order qualifiers
What qualifies an item to be considered for purchase?
What wins the order?
4. Positioning the firm
How will the firm compete?
5. Deploying the strategy
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Strategic Planning
Mission
and Vision
Voice o
f the
Busines
s
Marketing
Strategy
Corporate
Strategy
Operations
Strategy
the
Voice of
r
Custome
Financial
Strategy
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Order Winners
and Order Qualifiers
Source: Adapted from Nigel Slack, Stuart Chambers, Robert Johnston, and Alan
Betts, Operations and Process Management, Prentice Hall, 2006, p. 47
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Lean production
providing low costs through disciplined operations
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Service organizations
always competed on speed (McDonalds, LensCrafters, and Federal Express)
Manufacturers
time-based competition: build-to-order production and efficient supply chains
Fashion industry
two-week design-to-rack lead time of Spanish retailer, Zara
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Policy Deployment
Policy deployment
translates corporate strategy into measurable
objectives
Hoshins
action plans generated from the policy deployment
process
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Policy Deployment
Balanced Scorecard
Balanced scorecard
measuring more than financial performance
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2.
3.
4.
finances
customers
processes
learning and growing
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Balanced Scorecard
Radar Chart
Dashboard
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Operations Strategy
Services
Products
Capacity
Facilities
Human
Resources
Sourcing
Process
and
Technology
Quality
Operating
Systems
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