Fundamentals of Management

Sixth Edition

Robbins and DeCenzo

with contributions from Henry Moon
C H AP T E R

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2008 Prentice Hall, Inc.
All rights reserved.

Part V: Controlling

Operations Management
PowerPoint Presentation by Charlie Cook
The University of West Alabama

The Importance Of Operations Management

Operations Management
The study and application of the transformation

process

OM Is Important Because It:

Encompasses processes in all organizations

services as well as manufacturing.

Is important in effectively and efficiently managing
productivity.
Plays a strategic role in an organizations competitive
success.

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Transformation and Organizations

Transformation Process
The process through which an organization creates

value by turning inputs (people, capital, equipment,

materials) into outputs (goods or services).

Manufacturing Organization
Produces physical goods.

Service Organization
Produces nonphysical outputs such as educational,

medical or transportation services.

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Productivity
Productivity Defined
The overall output of goods and services produced

divided by the inputs needed to generate that

output.

Outputs
Inputs
Benefits of High Productivity
Fosters economic growth and development
Increases individual wages without inflation
Lowers costs and makes firms more competitive

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What Is Value Chain Management?

Value
The performance characteristics, features and

attributes, or any other aspects of goods and

services for which customers are willing to give up
resources.

Value Chain
The entire series of organizational work activities that

add value at each step beginning with the processing

or raw materials and ending with a finished product
in the hands of end users.

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Value Chain Management versus Supply

Chain Management
Value Chain Management
Improves the process of creating and transferring

documents by automating the flow of information.

Supply Chain Management

Is the management of facilities, functions, and

activities involved in producing and delivering a

product or service, from suppliers to customers.

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The Goals Of Value Chain Management

Creating customer-defined value by:
Providing a unique combination that meets customer

needs and at a price that cant be matched by

competitors.
Having a sequence of participants work together as
a team, each adding a component of value to the
overall process.

Its all about providing value, not

bargains, to the customer

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Value Chain Management Requirements

Business Model
A strategic design for how a company intends to

profit from its broad array of strategies, processes,

and activities.

Value Chain Management Requirements

Coordination and collaboration
Technology investment
Organizational processes
Leadership
Employees/human resources management
Strong culture and attitudes

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Effect of Value Chain Management on

Organizational Processes
Better demand forecasting is necessary and
possible because of closer ties with customers
and suppliers.
Selected functions may need to be done
collaboratively with partners in the value chain.
New measures are needed for evaluating the
performance of activities along the value chain.

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Implementing Value Chain Management

Benefits
Improved customer

service
Cost savings
Accelerated delivery times

Obstacles
Organizational barriers
Cultural attitudes
Required capabilities
People

Improved quality
Inventory reduction
Improved logistics

management
Increased sales
Increased market share

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Contemporary Operations
Management Issues
Technology Role in E-Manufacturing
How an organization will transform its inputs into

outputs.

Just-in-time (JIT) Inventory Systems

How to develop systems in which inventory items

arrive when needed in the production process

instead of being stored in stock.

Kanban

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Quality and Operations Management

Quality Control
Monitoring qualityweight, strength, consistency,

color, taste, reliability, finish, or any one of myriad

characteristicsto ensure that it meets some
preestablished standard.

Continuous Improvement
A comprehensive, customer-focused program to

continuously improve the quality of the organizations

processes, products and services.

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Managing Projects
Project
One-time-only set of activities with a definite

beginning and ending point in time.

Project Management
Task of getting the activities done on time, within

budget, and according to specifications.

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Popular Scheduling Tools

Gantt Chart
Shows in bar graph form when tasks are supposed

to be done and compares that with the actual

progress on each task.

Load Chart
Is a modified version of a Gantt Chart; it lists either

whole departments or specific resources.

This information allows managers to plan and control for

capacity utilization in the scheduling of individual work
stations.

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PERT Network Analysis

Program Evaluation and Review Technique
(PERT) Network Analysis
A flowchart-like diagram that depicts the sequence of

activities needed to complete a project and the time

or costs associated with each activity.

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PERT Components
Events
End points represent the completion of activities

Activities
Actions that take place

Slack Time
The time difference between the critical path and all

other paths

Critical Path
The longest or most time-consuming sequence of

events and activities required to complete a project

in the shortest amount of time
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