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Operations: A function or system that transforms inputs in to outputs of greater value.
Material Machines Labor Management Capital Feed Back Requirements Transformation Process OUTPUT Goods Services

Feed Back

Transformation Process can be

Physical Locational

as in manufacturing process as in transportation or warehouse operations Exchange as in retail operations Physiological as in health care Psychological as in entertainment Informational as in communication

Brief History Of Operations

Era Industrial Revolution Event/Concepts Steam engine Division of labor Interchangeable parts Principles of scientific management Time and Motion study Activity scheduling chart Moving assembly lines Dates 1769 1776 1790 1911 1911 1912 1913 James watt Adam Smith Eli Whitney F.W. Taylor Frank and Lillian Gilbreth Henry Gantt Henry Ford Originator

Scientific Management

Human Relations

Hawthorne Studies Motivation Theories

1930 1940s 1950s 1960s 1947 1951 1950s 1960s 1970s

Elton Mayo Abraham Maslow Frederick Herzberg Douglas McGregor George Dantzig Remington Rand Operations Research group Joseph Orlicky, IBM and others

Operations Research

Linear programming Digital computer Simulation, waiting line theory, decision theory, PERT/CPM MRP, EDI, EFT, CIM

Quality Revolution

JIT ( Just In Time) TQM (Total Quality Management ) Strategy and Operations Business Process Reengineering ( BPR )

1970s 1980s

Taiichi Ohno (Toyota) W. Edwards Deming, Joseph Juran Wickham Skinner, Robert Hayes Michael Hammer, James Champy


World Trade Organization, European Union and other Trade Agreements Internet, WWW, ERP Supply Chain management, E-commerce


Numerous Countries and companies

Internet Revolution

1990s 1990s 2000s

ARPANET, Tim Berners-Lee SAP, i2 technologies, Oracle, Peoplesoft Amazon, Yahoo, eBay and others

Operations Management in an E-business environment

Business Consumer







Strategy is a common vision that unites an organization, provides consistency in decisions and keeps the organization moving in right direction. Strategy formulation consists of four basic steps; 1. 2. 3. Primary Task: What is the firm in the business of doing?

Core Competencies: What does the firm do better then any one else? Order Qualifiers and Order Winners: Order qualifier: What qualifies an item to be considered for purchase? Order winners: What wins the order? Positioning: How will the firm compete?


Competitive Priority
Competing Competing Competing Competing

on on on on

Cost quality Flexibility Speed

Strategic Decisions in Operations

Products and Services a) Make To Order ( MTO ) b) Make To Stock ( MTS ) c) Assemble To Order ( ATO ) Process and Technology a) Projects eg; Ship/ Aircraft b) Batch production c) Mass production d) Continuous production


a) Professional services eg; Doctor, C/A b) Service shop eg; Beauty parlor c) Mass services eg; Retail stores d) Service factories eg; Electricity supply

Strategic Planning
Mission and Vision

Voice of the Business

Corporate Strategy

Voice of the Customer

Marketing Strategy

Operating Strategy

Financial Strategy

Changing Corporation
Characteristics 20th century corporation 21st century corporation

Organization Focus Style Source of strength Structure Resources Operations Products Reach Financials Inventories Strategy Leadership Workers Job expectations Motivations Improvements Quality

The Pyramid Internal Structure Stability Self-sufficiency Physical assets Vertical integration Mass production Domestic Quarterly Months Top-down Dogmatic Employees Security To compete Incremental Affordable best

The web External Flexible Change Interdependencies Information Virtual integration Mass customization Global Real-time Hours Bottom-up Inspirational Employees, free agents Personal growth To build Revolutionary No compromise

Trends in Operations
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Global market, global sourcing, global operations. Virtual companies Greater choice, more individualism Emphasis on service Speed and Flexibility Supply chains Collaborative commerce (c-commerce) Technological advances Knowledge Environmental and social responsibilities