Operations Management

Kyle Arcilla, MBA, DBA -1

Area Operations Officer/Analyst
 OBJECTIVES
After completing this chapter WE should be able
to
Define operation management
Explain the role of operation management in business
Describe decisions that operations managers make
Describe the difference between service and manufacturing operations
Identify Major historical developments in operations management
Identify Current trends in operations management
Describe the flow of information between operations management and other
business functions.
 What is Operations Management?
Defining the Problem

Developing a Model
The business
function responsible
Acquiring Input Data for planning,
coordinating, and
Developing a Solution controlling resources
needed to produce
companys good or
Testing the Solution services.

Analyzing the Results

Implementing the Results

What is the Role of Operations Management?

To transform
organizational inputs
into outputs
What is the Role of Operations Management?
To transform
organizational inputs
into outputs
Organizational Chart
 Value Added

The net increase

created during the
transformation of
inputs into
outputs.
Commodity Values
 Manufacturing Organizations

Organizations that
primarily produce a
tangible product
and typically have
low customer
contact.
 Service Organizations
Organizations that produce
an intangible product such as 1
Consumption Reading
ideas assistance or
information and typically
Serve Billing Statement
have high customer contact 2

Collection
3

Disconnection
4

Reconnection
5
Difference Between Goods and Service
Acquired
from: page
12,
Operations
Manageme
nt , Reid-
Sanders,
Chapter 1
 Operations Management Decisions

Strategic Decisions Set of

direction for the entire company ;
they are broad in scope and long
term in nature
Tactical Decisions set of directions
that are specific and short term in
nature and bound by strategic
decisions
Amazon Example
Difference Between Strategic and Tactical
 Historical Development

Industrial Revolution
(1700s)- an industry
movement that
changed production
by substituting
machine power for
labor power.
 Historical Development
Scientific
Management (1900s)
approach to
management and
focused on improving
output by redesigning
jobs and determine
acceptable levels of
workers output
 Historical Development

Hawthrone Studies
(1930s) the
studies responsible
for creating human
relations, which
focused on giving
more consideration
to workers needs
 Historical Development

Human Relations Movement a

philosophy based on the recognition
that factors other than money can
contribute to worker productivity
 Historical Development

Factory Workers were overworked and

underpaid

Oversees and skilled workers rose to

lower middle class

Factor owners and merchants formed

upper middle class

Upper class resented those middle class

who became wealthier than they were
 Historical Development

Management Science
(1913) a field study that
focuses on the
development of
quantitative techniques to
solve operation problems
 Historical Development

Computer Age (1960s)

Enabled Processing of data
and allowed widespread
use of quantitative
techniques to solve
problems
 Historical Development

Just in Time or JIT (1980s)

designed to achieve high
volume of production using
minimal amounts of
inventory
 Historical Development

Total Quality Management

(1980s-1990s) philosophy
that seeks to improve
quality by eliminating
causes of product defects
and by making quality the
responsibility of everyone
in the organization
 Six Sigma

Six Sigma(1990s)- The

concept that answers
customers demand for
high quality and defect free
business process.
 Historical Development

Reengineering (1980s
1990s) radical
redesigning of a
companys processes in
order to provide greater
efficiency and cost
reduction.
 Historical Development

Global Competition (1980s -

present)- Designed Operations
to compete in global market
 Historical Development

Time Based Competition (1990s)

an organizational strategy
focusing on efforts to develop
new products and deliver them
to customer faster than
competitors
 Historical Development

Supply Chain Management

(1990s) management of the
flow of materials from suppliers
to customers in order to reduce
the overall cost and increase
responsiveness to customers
 Historical Development

Electronic Commerce
(2000- present) Use of
Internet and world wide
web for conducting
business activity
 Historical Development

Business to Business Electronic commerce between businesses

Business to Customers Electronic commerce between businesses
and their customers
Customers to Customers Electronic commerce between customers
to customers
 Historical Development

Business to Business Electronic commerce between businesses

Business to Customers Electronic commerce between businesses
and their customers
Customers to Customers Electronic commerce between customers
to customers
Current Operations Management Environment

Lean System a concept

that takes a total system
approach to create
efficient operations
 Current Operations Management Environment

Enterprise Resource Planning

Large Sophisticated
Software systems used for
identifying and planning the
enterprise-wide resources
needed to coordinate all
activities used in producing
and delivering products
 Current Operations Management Environment

Customer Relationship
Management Software
Solutions that enable the
firm to collect customer
specific data
Current Operations Management Environment

Cross Functional Decision

Making Coordinated
interaction and decision
making that occur among
the different functions of
the organization
 Reid Sanders, Operations Management, 4th Edition