Introduction to operations management

Introduction to Operations Management

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Operations Management is:

The business function responsible for

planning, coordinating, and controlling

the resources needed to produce products

and services for a company

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Operations Management is:

• A management function

• An organization’s core function

• In every organization whether Service or

Manufacturing, profit or Not for profit

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Typical Organization Chart

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What is Role of OM?

• OM Transforms inputs to outputs

– Inputs are resources such as

• People, Material, and Money

– Outputs are goods and services

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OM’s Transformation Process

Transformation Process of aTransformation Process of a Canned Canned Food ProcessorFood Processor

Inputs Processing Outputs• Cleaning Canned

vegetables• Making cans• Cutting• Cooking• Packing• Labeling

• Raw vegetables• Metal sheets • Water• Energy• Labor• Building• Equipment

Transformation Process of a Transformation Process of a HospitaHospitall

Inputs Processing Outputs

• Doctors, nurses • Examination Healthy patients• Hospital • Surgery

• Medical Supplies • Monitoring• Equipment • Medication• Laboratories • Therapy

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OM’s Transformation Role

• To add value

– Increase product value at each stage

– Value added is the net increase between output product value

and input material value

• Provide an efficient transformation

– Efficiency – means performing activities well for least possible

cost

ExamplesExamples of of Various Various OperationsOperations

Operations ExamplesGoods Producing Farming, mining, construction ,

manufacturing, power generationStorage/Transportation

Warehousing, trucking, mailservice, moving, taxis, buses,hotels, airlines

Exchange Retailing, wholesaling, banking,renting, leasing, library, loans

Entertainment Films, radio and television,concerts, recording

Communication Newspapers, radio and televisionnewscasts, telephone, satellites

Types of Transformation ProcessesPhysical- manufacturingLocational- transportationExchange- retailingStorage- warehousingPhysiological- health careInformational- telecommunicationsPsychological- entertainment

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OM Decisions

The Historical Evolution of Operations Management

Significant Events in Operations Management

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Business Information Flow

Business Business FunctionsFunctions Overlap Overlap

Operations

FinanceMarketing

Business Functions - Bank(1 of 3)

Operations Finance/Accounting

Marketing

CheckClearing

TellerScheduling

Transactions

ProcessingSecurity

Commercial Bank© 1984-1994 T/Maker Co.

Business Functions – Airline(2 of 3)

Operations Finance/Accounting

Marketing

GroundSupport

FlightOperations

FacilityMaintenance

Catering

Airline

Business Functions – Manufacturer(3 of 3)

Operations Finance/Accounting

Marketing

ProductionControl

Manufacturing QualityControl

Purchasing

Manufacturing

New Concepts and Trends in OM

Mass Customization Supply Chain ManagementOutsourcingLean manufacturingAgilityElectronic Commerce

New Concepts and Trends(1 of 6):

Mass Customization

The rapid, low cost production of goods and services that fulfill constantly changing and increasingly unique customer desires.

New Concepts and Trends (2 of 6):

Supply Chain Management The management of the sequence of organizations- their

facilities, functions and activities- that are involved in producing and delivering a product or service

SCM requires the application of a systems approach to managing the flow of information, materials and services from raw material suppliers through factories and warehoses to the end user (customer)

Suppliers’ Suppliers

DirectSuppliers Producer Distributor Final

Consumer

Simple Product Supply ChainSimple Product Supply Chain

New Concepts and Trends (3 of 6) :

Outsourcing

Buying goods or services rather than producing goods or performing services within the organization

New Concepts and Trends (4 of 6): Lean Manufacturing

Systems that use minimal amounts of resources - less space, less inventory, fewer workers, fewer levels of management- to produce a high volume of high-quality goods with some variety

New Concepts and Trends (5 of 6): Agility

The ability of an organization to respond quickly to demands or opportunities.

Involves maintaining a flexible system that can quickly respond to changes in either the volume of demand or changes in product/service offerings

New Concepts and Trends (6 of 6): Electronic Commerce

The use of computer networks, primarily the internet, to buy and sell products, services, and information.

Other Trends

Project Management (PERT, CPM)Management of Technology and

Information Systems (GPS, ERP)Quality and Process Improvements

(Six Sigma)

Social Responsibility & Ethics

Law and Ethics

• Ethics – A set of moral principles or values that governs the conduct of an individual or a group.

• What is lawful conduct is not always ethical conduct.– The law may permit something that would be

ethically wrong.

What is ethical?

• Is it legal?

• Does it cause physical/psychological harm to anyone?

• Is it ok if everyone knows about it?

• Can “I” live with it for my whole life??

Theories of Social Responsibility

Maximizing Maximizing ProfitsProfits

Moral Moral MinimumMinimum

Stakeholder Stakeholder InterestInterest

Corporate Corporate CitizenshipCitizenship

Maximizing Profits

• A theory of social responsibility that says a corporation owes a duty to take actions that maximize profits for shareholders.

• The interests of other constituencies are not important in and of themselves.

Moral Minimum

• A theory of social responsibility that says a corporation’s duty is to make a profit while avoiding harm to others.

• As long as business avoids or corrects the social injury it causes, it has met its duty of social responsibility.

Moral Minimum

• The legislative and judicial branches of government have established laws that enforce the moral minimum of social responsibility on corporations.– e.g., Occupational safety laws– e.g., Consumer protection laws for product

safety

Stakeholder Interest

• A theory of social responsibility that says a corporation must consider the effects its actions have on persons other than its stockholders.

• This theory is criticized because it is difficult to harmonize the conflicting interests of stakeholders.

Corporate Citizenship

• A theory of responsibility that says a business has a responsibility to do good for the society.

• Business is responsible for helping to solve social problems.

Entrepreneurship & Intrapreneurship

Introduction to Entrepreneurship

There is tremendous interest in

entrepreneurship around the world

According to the GEM2005 study, about 330million people, or 14%of the adults in the 35

countries surveyed, areinvolved in forming

new businesses

What is Entrepreneurship?

• Capacity to take risks

• Ability to own and organize

• Desire and capability to innovate and diversify (Stepanek, 1962)

Who is an entrepreneur?

• Person conducting own business (Webster)

• Person who sets up business deals in order to make profits (Collins Cobuild)

• Organizer of an economic venture, one who owns, organizes, manages, and assumes the risks of the business (Chandrashekhar)

Why Become an Entrepreneur?

There are three primary reasons that people become entrepreneurs and start their own firms

Desire to be their own boss

Financial rewards

Desire to pursue theirown ideas

Steps in the Entrepreneurial Process(1 of 2)

Step 1 Step 2

Developing Successful Business Ideas

Steps in the Entrepreneurial Process (2 of 2)

Step 3 Step 4

Intrapreneurship

• Term coined by Pinchot in 1982• Term “corporate entrepreneurship” used

more today• Actually, “corporate entrepreneurship” has

two parts– Intrapreneurship – internal R&D– Corporate venturing – external funding

• Neither method best – need both– This class – some of both

Thank You!Stay in touch:

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