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Philosophy You are not just learning OperationsManagement - but you should be- in the sense that

without a product or service a company is not goingto exist.

Operations

Management

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What is an organization?

A group of people working together in a structured and coordinated

fashion to achieve a set of goals which they could not achieve

working on their own.

Successful organizations do not achieve their goals by chance but

by following a deliberate process called MANAGEMENT .

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Management: Science or Art?

Science of Management

Assumes that problems can be

approached using rational, logical,

objective, and systematic ways.

Art of Management

D ecisions are made and problems

solved using a blend of intuition,

experience, instinct, and personalinsights.

You will get good wife in thismarriage season

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What is Management?

A set of activitiesplanning and decision making, organizing, leading, andcontrolling

directed at an organizations resourceshuman, financial, physical, and information

with the aim of achieving organizational goals in anefficient and effective manner.

A set of activitiesplanning and decision making, organizing, leading, andcontrolling

directed at an organizations resourceshuman, financial, physical, and information

with the aim of achieving organizational goals in anefficient and effective manner.

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ManagementProcess?????

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Feedback and Control

Measurements taken at various points in the transformation processfor control purposes are called feedback .

The process of comparing outputs to previously established standards

to determine if corrective action is needed is called controlling

P hysical Flow Information Flow

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Basic Purpose of Management

EFFICIENTLY

EFF

ECTIV

ELYEFF

ECTIV

ELY

AndAnd

Making the right decisions and Making the right decisions and successfully implementing themsuccessfully implementing them

Using resources wisely and in a cost-effective way

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Why Study Operations Management???

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Why study OM: follow the CASHMarketing Operations

Current Increase Sales50%

DecreaseProductionCosts 20%

Sales 100,000 150,000 100,000C.O.G.S. -80,000 -120,000 -64,000

Gross Margin 20,000 30,000 36,000Finance Costs -6000 -6000 -6000

14,000 24,000 30,000Taxes (25%) -3500 -6000 -7550Contribution 10,500 18,000 22,500

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O rganizational Model

POMPOM

Ma r tiMa r ti

MIMIE i riE i ri

HR MHR M

QAQA

Accoun tingAccoun ting

Sa lSa linanceFinance

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Cross-Functional Linkages

Operations

FinanceBudgeting.Analysis.

Funds.

MarketingWhat products?What volumes?Costs? Quality?Delivery?

HumanResourcesSkills? Training?# of Employees?

AccountingPerformance measurement systems.Planning and control.

MISWhat IT solutionsto make it all work together?

DesignSustainability.Quality.

Manufacturability.

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SJSU Bus 140 - D avid Bentley 13Rev. 01/22/02

D efinition: O perations

Conversion of Inputs into Outputs

Transformationof

Resources into Products

Changing Labor, capital,material, etc.into

Goods andservices

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W hat is O perations???

W hat is O perations?

a function or system that transforms inputs intooutputs of greater value

W hat is a T ransformation P rocess?a series of activities along a value chain extendingfrom supplier to customer

activities that do not add value are superfluous(morethan needed) and should be eliminated.

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T he O perations S ystem

T he operations system transforms inputs intodesired goods and services.

OUTPUTSINPUTS PROCESS

EXTERNALFACTORS

FEED BACK

Material flow

Information Flow

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ValueValue- -Added ProcessAdded Process

T he operations function involves theconversion of inputs into outputs

Inputs(Land,Labor,

Capital)

Transformation/Conversion

process

Outputs(Goods,

Services)

Control

Feedback

Feedback Feedback

Value added

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P hysical: as in manufacturing operationsL ocational: as in transportation operationsEx change: as in retail operations

P hysiological: as in health careP sychological: as in entertainmentI nformational: as in communication

Storage, as in warehousing

T ypes of

T ransformation

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W hat is O perations Mgt?

O perations Management is the systematic design, direction andcontrol of the processes that transform inputs into products andservices.It is a set of decisions

W hat Is a P rocess?

P rocess is any activity or group of activities that takes one or more inputs,transforms and adds value to them and provides one or more outputs for itscustomers, internal or external

Internal Customer

one or more employees of the same organization

External Customer

end users or intermediaries

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W hat is O perations Management?

The b usiness function responsible for planning,

coordinating, and controlling the resources needed

to produce a companys products and services.R. Dan Reid & Nada R. Sanders

C reate operational systems.

Manage (plan, organize, staff, direct and control) the activities

relating to the production of goods and/or services with maximum

efficiency (at the lowest cost) and effectiveness (in the eyes of thecustomer).

I mprove those processes continuously to create competitive

advantage.

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Impact of E -Business onO perations Management

Comparison shopping bycustomers

Direct contact withcustomers

Business processesconducted online

Customer expectations escalate;quality must be maintained and costslowered

No more guessing about demand isnecessary; inventory costs go down;product and service design improves;build to-order products and services ismade possible

Transaction costs are lower; customer support costs decrease; e-procurement saves big bucks

Benefits of E-Business Impact on Operations

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Impact of E -Business onO perations Management(cont.)

Access to customersworldwide

Middlemen areeliminated

Access to suppliersworldwide

Demand increases; order fulfillment and

logistics become major issues; productionmoves overseas

Logistics change from delivering to a store

or distribution center to delivering to

individual homes;

Outsourcing increases; more alliances andpartnerships among firms are formed; global

supply chain issues arise

Benefits of E-Business Impact on Operations

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Impact of E -Business onO perations Management(cont.)

O nline auctions and e-

marketplaces

Better and faster decision

making

C ompetitive bidding lowers cost of

materials; supply needs can be foundin one location

More timely information is availablewith immediate access by allstakeholders in decision-makingprocess; customer orders andproduct designs can be clarifiedelectronically; electronic meetingscan be held;

Benefits of E-Business Impact on Operations