1 Introduction to Operations Management Slides prepared by Laurel Donaldson Douglas College
Define the term operations management and identify operations management jobs. Identify the three major functional areas of organizations and describe how they interrelate. Describe the scope of operations management, and differentiate between design and operations decisions. Compare goods versus services. Discuss the operations manager’s job. Describe key aspects of operations mgmt decision making. Briefly describe the historical evolution of operations mgmt Identify current trends that affect operations management LO 1 LO 2 LO 3 LO 4 LO 5 LO 6 LO 7 LO 8
What is Operations Management (OM)? • Three basic functions within organizations • The scope of Operations Management • Differentiating goods and services • Operations Manager’s job • Operations Manager and decision making • The historical evolution of Operations Management • Major trends
What is Operations Management? OM is the management of processes or systems that create goods and/or provide services. • Companies use OM to improve: • efficiency (minimize cost and time) and • effectiveness (achieving intended goals)
What is Operations Management? Detail the following OM activities for each company
Why study Operations Management? • A large percentage of a company’s expenses occur in OM area (improvements = more profits) • A large number of all jobs are in OM area (purchasing, quality, planning, scheduling, inventory, etc) • Activities in all other areas( finance, marketing) are interrelated with OM activities Opportunity!
Airline Company Finance/ Marketing Operations Accounting Flight Ground Facility Catering Operations Support Maintenance Three Basic Functions • Operations: create goods and services • Finance: provide funds and the economic analysis of investment proposals • Marketing: assess customer wants and needs and communicate them to others
Operations Marketing Finance Three Basic Functions • Is OM function adding value during the transformations process? • Is there any overlapping between the main functions?
Operations function Value Added Inputs: Land Labour Capital Outputs: Goods Services Transformation Process Feedback Control Feedback Feedback
Operations Examples Goods Producing Farming, mining, construction , manufacturing, power generation Storage/Transportation Warehousing, trucking, mail service, moving, taxis, buses, hotels, airlines Exchange Retailing, wholesaling, banking, renting, leasing, library, loans Entertainment Films, radio and television, concerts, recording Communication Newspapers, radio and television newscasts, telephone, satellites Types of Operations
Maintenance Product Design MIS Manufacturing Engineering Logistics Operations Purchasing Personnel Accounting Operations Interfaces
The Scope of Operations Management Which decision is design type and which is operation type?
Act Tangible Goods or Service? Most systems are a blend of both good & service. Service sector accounts for > 70% of jobs in Canada.
Models A model is an abstraction of reality.
Quantitative Approaches • Linear programming • Queuing techniques • Inventory techniques • Project techniques • Statistical techniques
Analysis of Trade-Offs • Decision on amount of inventory to stock • Increased cost of holding inventory vs. • Level of customer service
Establishing Priorities • Pareto Phenomenon • A few factors account for a high percentage of the occurrence of some event(s). • 80/20 Rule - 80% of problems are caused by 20% of the activities. How do we identify the vital few?
Supply Chain • Supply Chain: A sequence of activities and organizations involved in producing and delivering a good or service
Define the term operations management and describe what an operation manager might do. • Identify the three major functional areas of organizations and describe how they interrelate. • Differentiate between design and operations decisions. • Compare goods versus services. • Describe key aspects of operations management decision making. • Briefly describe the historical evolution of operations management. • Identify current trends that affect operations management.