Chapter 1 -Chapter 1 -

Operations As a Operations As a Competitive Competitive WeaponWeapon

Processes and Processes and OperationsOperations

Outputs• Services• Goods

Internal andexternal customers

Information on performance

Processes and operations

5

1

2

3

4

Inputs• Workers• Managers• Equipment• Facilities• Materials• Services• Land• Energy

Figure 1.1Figure 1.1

ProductivityProductivity

Productivity = Output

Input

Types of OM DecisionsTypes of OM Decisions Strategic choices Process Quality Capacity,

Location,Layout

Operating Decisions

Operations Management as a Operations Management as a FunctionFunction

Figure 1.3Figure 1.3

Operations Management As a Operations Management As a FunctionFunction

Skill Areas• Quantitative

methods• Organizational

behavior• General management• Information systems• Economics• International

business• Business ethics

and lawFigure 1.3Figure 1.3

Continuum of CharacteristicsContinuum of Characteristics

More like a manufacturing organization

More like a service

organization

• Physical, durable product• Output that can be

inventoried• Low customer contact• Long response time• Regional, national, or

international markets• Large facilities• Capital intensive• Quality easily measured

• Intangible, perishable product

• Output that cannot be inventoried

• High customer contact• Short response time• Local markets• Small facilities• Labor intensive• Quality not easily measuredFigure 1.4Figure 1.4

Service Sector JobsService Sector JobsP

erc

en

tag

e o

f w

ork

forc

e

40 –

30 –

20 –

10 –

0 | | | | |

1959 1969 1979 1989 1999

Manufacturing, mining, and construction Other

services

Wholesaleand retail sales

Government

Figure 1.5Figure 1.5

• Trends in Operations Management– Service Sector Growth– Global Competition – Productivity Changes• Productivity Measures

• Maintaining a Perspective

– Competition Based on Quality, Time, and Technology

– Environmental, Ethical, and Work-Force Diversity Issues

Operations Management Across the Organization

– Cross-functional coordination – Operations management as a competitive

weapon