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Chapter 1
Introduction to the Field

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OBJECTIVES









Operations Management
Why Study Operations Management?

Transformation Processes Defined
Operations as a Service
The Importance of Operations
Management
Historical Development of OM
Current Issues in OM

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What is Operations Management?
Defined
Operations management (OM) is
defined as the design, operation,
and improvement of the systems
that create and deliver the firm’s
primary products and services

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Why Study Operations

Management?
Systematic Approach
to Org. Processes

Business Education

Operations
Management

Career Opportunities

Cross-Functional
Applications

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What is a Transformation
Process?
A transformation process is defined
Defined
as a user of resources to transform
inputs into some desired outputs

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Transformations


Physical--manufacturing



Locational--transportation



Exchange--retailing



Storage--warehousing



Physiological--health care



Informational--telecommunications

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What is a Service and What is a
Good?


“If you drop it on your foot, it won’t
hurt you.” (Good or service?)



“Services never include goods and
goods never include services.” (True
or false?)

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OM in the Organization Chart
Finance

Operations
Operations

Marketing

Plant
Plant
Manager
Manager

Operations
Operations
Manager
Manager

Director
Director

Manufacturing,
Manufacturing, Production
Production control,
control,
Quality
Quality assurance,
assurance, Engineering,
Engineering,
Purchasing,
Purchasing, Maintenance,
Maintenance, etc
etc

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Core Services
Defined
Core services are basic things
that customers want from
products they purchase

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Core Services Performance Objectives
Quality

Flexibility

Operations
Managemen
t

Speed

Price (or cost
Reduction)

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Value-Added Services
Defined
Value-added services
differentiate the organization
from competitors and build
relationships that bind
customers to the firm in a
positive way
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Value-Added Service Categories
Problem Solving

Information

Operations
Management

Sales Support

Field Support

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The Impor t ance of
Operations Management
 Synergies

must exist with other
functional areas of the
organization
 Operations account for 60-80%
of the direct expenses that
burden a firms profit.
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Historical Development of OM


JIT and TQC



Manufacturing Strategy Paradigm



Service Quality and Productivity



Total Quality Management and Quality
Certification

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Historical Development of OM
(cont’d)


Business Process Reengineering



Supply Chain Management



Electronic Commerce

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Current Issues in OM


Coordinate the relationships between
mutually supportive but separate
organizations.



Optimizing global supplier, production,
and distribution networks.



Increased co-production of goods and
services

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Current Issues in OM (cont’d)


Managing the customers
experience during the service
encounter



Raising the awareness of
operations as a significant
competitive weapon

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End of Chapter 1

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