Discussion
Chapter 1
Niccole Hyatt, PhD
objectives
Define operations management.
Describe difference between manufacturing and service organizations.
Describe decisions that operations managers make.
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?
Operations management manages the resources and the transformation processes needed to produce the company’s products and services.
It involves managing people, machines, and information.
Operational excellence is the optimization of these mechanisms.
What decisions do operations managers make?
Operations managers must plan the production schedule. This entails deciding how much to produce and in what order. This information would be used to make purchasing and staffing decisions.
Operations managers must manage inventory. They must arrange the inventory in the warehouse. They also facilitate the movement of inventory from the warehouse to the retail facilities or customers.
Operations managers must also manage quality levels. This may include inspection of materials and the use of quality tools, such as control charts.
What is the transformation process?
The transformation process involves taking the various inputs and transforming them into outputs.
An advertising agency would transform the time of its staff into an advertising campaign.
A bank may use the time of a teller, an input computer, and a bank branch to accept a deposit.
A TV station could use the time of its production crew, the video equipment, and the studio to produce a news story.
What are the three major business functions?
The three major business functions are finance, marketing, and operations.
Finance manages the assets—the building used for production, investments, and cash flows related to production, such as providing the required machines.
Marketing generates sales of the product or service, such as finding customers for the proposed airplanes.
Operations entail the production of a product or service and must manage the inputs to production such as workers' time, materials, and machine time to create airplane parts.
Difference between strategic and tactical?
Strategic decisions are decisions that set the direction for the entire company; they are broad in scope and long-term in nature.
Tactical decisions are decisions that are specific and short-term in nature and are bound by strategic decisions.
Difference between service and manufacturing?
Service organizations involve the customers in their operations to some degree, while manufacturing organizations do not. Service organizations cannot create an inventory of the service since it is intangible.
Manufacturing organizations produce a physical product that can be stored in inventory.
For example, Ford Motors is a manufacturer. It makes automobiles, customers have minimal contact with the operation, and they can create an inventory of vehicles. McDonalds is an example of a service organization. Customers go directly to the restaurant where they are served readily by the staff.
What are some om historical milestones?
Historical milestones that have influenced management are the Industrial Revolution, total quality management (TQM), and global competition.
The Industrial Revolution changed production processes from a labor process to a machine process.
TQM caused managers to be more focused on quality and preventing defects.
Finally, global competition caused managers to further increase their focus on quality in order to compete in the global market.
What are TQM, JIT, and Reengineering?
Total quality management (TQM) is a philosophy that focuses on meeting the needs of the customer. TQM is not the inspection, but the prevention of defects. It involves everyone in the organization.
Just-in-time is a philosophy that focuses on reducing inventory and other wastes, and is focused on producing the right number of items at the right time.
Reengineering focuses on improving business processes in order to improve efficiency.
Each of these techniques strives to allow more responsive and efficient production leading to higher quality and higher customer satisfaction.
Questions?
Niccole Hyatt, PhD