210 likes | 322 Views
Chapter 1. Introduction to Operations Management. Three Functions in a Business. Marketing to “sell” products Operations to “make” products Finance and Accounting to use money effectively and keep track business activities in terms of dollar. Role of “Operation”.
E N D
Chapter 1 Introduction to Operations Management
Three Functions in a Business • Marketing • to “sell” products • Operations • to “make” products • Finance and Accounting • to use money effectively and keep track business activities in terms of dollar.
Role of “Operation” • Role of operation in a business is to transform a company’s input into the finished goods or services. • Value of the product is added in the process of operation.
Value Added by Process Business Operation as a Value Added Process Inputs in $$ Transformation Process Outputs in $$$
Operations Management • The business function responsible for planning, coordinating, and controlling the process and resources needed to produce a company’s products and services.
Essential Pursuit of OM • The essential pursuit of operations management is EFFICIENCY (or productivity, or effectiveness).
Manufacturing vs. Service Manufacturing: • Tangible product • Product can be inventoried • Low customer contact • Capital intensive • Long response time Services: • Intangible product • Product cannot be inventoried • High customer contact • Labor intensive • Short response time
OM Decisions • Strategic decisions: • Decisions that set the direction for the entire company. • Broad in scope & long-term in nature • Tactical decisions: • Short-term & specific in nature • Bound by the strategic decisions
Milestones of OM Development Industrial Revolution Late 1700s Scientific Management Early 1900s Human Relations Movement 1930s to 1960s Management Science Mid-1900s Computer Age 1970s Just-In-Time Systems 1980s Total Quality Management (TQM) 1980s Reengineering 1980s Flexibility 1990s Time-based Competition 1990s Supply Chain Management 1990s Global Competition 1990s Environmental Issues 1990s Electronic Commerce Late 1990s – Early 21st Century
Industrial Revolution(late 1700s) • Replaced traditional craft methods • Substituted machine power for labor (James Watt’s steam engine, …) • Major contributions: • Adam Smith (1776): division of labor • Eli Whitney (1790): interchangeable parts
Scientific Management(early 1900s) • Separated ‘planning’ from ‘doing’ • Management’s job was to discover worker’s physical limits through measurement, analysis & observation • Major contributors: • Fredrick Taylor: stopwatch time studies • Henry Ford: moving assembly line
Human Relations Movement (1930s-1960s) • Recognition that factors other than money contribute to worker productivity • Major contributions: • Understanding of theHawthorn effect: Study of Western Electric plant in Hawthorn, Illinois intended to study impact of environmental factors (light & heat) on productivity, but found workers responded to management’s attention regardless of environmental changes • Job enlargement • Job enrichment
Management Science (mid-1900s) • Developed new quantitative techniques for common OM problems: • Major contributions include: inventory modeling, linear programming, project management, forecasting, statistical sampling, & quality control techniques • Played a large role in supporting American military operations during World War II
Computer Age (1970s) • Computer provided the tool necessary to support the widespread use of Management Science’s quantitative techniques – the ability to process huge amounts of data quickly & relatively cheaply • Major contributions include the development of Material Requirements Planning (MRP) systems for production control
Development in 1980s • Just-In-Time (JIT): • Techniques designed to achieve high-volume production using coordinated material flows, continuous improvement, & elimination of waste. “Lean system” • Total Quality Management (TQM): • Techniques designed to achieve high levels of product quality through shared responsibility & by eliminating the root causes of product defects • Business Process Reengineering: • ‘Clean sheet’ redesign of work processes to increase efficiency, improve quality & reduce costs
Development since 1990s (1) • Flexibility: • Offer a greater variety of product choices on a mass scale (mass customization) • Time-based competition: • Developing new product designs & delivering customer orders more quickly than competitors • Supply Chain Management: • Cooperating with suppliers & customers to reduce overall costs of the supply chain & increase responsiveness to customers
Development since 1990s (2) • Global competition: • International trade agreements open new markets for expansion & lower barriers to the entry of foreign competitors (e.g.: NAFTA & GATT) • Creates the need for decision-making tools for facility location, compliance with local regulations, tailoring product offerings to local tastes, managing distribution networks, … • Environmental issues: • Pressure from consumers & regulators to reduce, reuse & recycle solid wastes & discharges to air & water
Electronic Commerce(since late 1990’s) • Internet & related technologies enable new methods of business transactions: • E-retailing creates a new outlet for selling goods & services with global access and 24-7 availability. B2C. • Internet provides a cheap network for coordinating supply chain management information. B2B • Developing influence of broadband & wireless