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Operations Management Overview and Insights

Nov 11, 2024

Management 3120: Operations Management Lecture Notes

Introduction

  • Professor: Bill Perkins
  • Textbook: Principles of Operations Management, Sustainability and Supply Chain Management, 10th edition by Heiser, Render, and Munson.

Chapter Outline

  1. What is Operations Management?
  2. Organizing to Produce Goods and Services
  3. The Supply Chain
  4. Importance of Studying Operations Management
  5. Roles of Operations Managers
  6. Heritage of Operations Management
  7. Operations for Goods and Services
  8. Productivity Challenge
  9. Current Challenges in Operations Management
  10. Ethics, Social Responsibility, and Sustainability

Learning Objectives

  • Define operations management (OM).
  • Distinguish between goods and services.
  • Explain production vs. productivity.
  • Compute single factor and multi-factor productivity.
  • Identify critical variables in enhancing productivity.

What is Operations Management?

  • Definition: OM is a set of activities that create value in the form of goods and services by transforming inputs into outputs.
  • Key Terms: Production = creation of goods and services.

Functions in Organizations

  1. Marketing: Create demand.
  2. Production/Operations: Satisfy demand.
  3. Finance and Accounting: Manage financial flows associated with demand.

Example: Operations in a Bank

  • Teller scheduling, check clearing, transaction processing, facilities design, maintenance, etc.

The Supply Chain

  • Key Point: Competition is now between supply chains, not just companies.
  • Companies outsource functions to specialized providers for competitive advantage.
  • Chapters 2, 11, and supplement cover supply chain in detail.

Importance of Studying Operations Management

  • Operations management accounts for a significant portion of organizational revenue.
  • Efficiency Improvements: Finding efficiencies in operations can improve contribution targets without cutting costs excessively.
  • Operations management enhances productivity.

Basic Management Functions

  • Planning, organizing, staffing, leading, controlling (from Intro to Management course).

10 Strategic Operations Management Decisions

  1. Design of Goods and Services
  2. Managing Quality
  3. Process and Capacity Strategy
  4. Location Strategy
  5. Layout Strategy
  6. Human Resources and Job Design
  7. Supply Chain Management
  8. Inventory Management
  9. Scheduling
  10. Maintenance

In-depth Coverage of Decisions

  • Each decision is linked to specific chapters for further study (Chapters 5-17).

Career in Operations Management

  • Entry-level positions in tech, facility space utilization, response time, quality, etc.
  • Job Market Insight: About 40% of jobs are in operations management.
  • Professional certifications available (e.g., APICS, ASQ, PMI).

History of Operations Management

  • Key Eras: 1776-Present
    • Labor specialization (1776-1880)
    • Scientific management (1880-1910)
    • Mass production (1910-1980)
    • Lean production (1980-1995)
    • Mass customization (1995-2005)
    • Globalization era (2005-2020)

Significant Contributions

  • The Gantt chart, motion and time studies, TQM, just-in-time, lean operations, etc.

Goods vs. Services

  • Economic Activities: Services produce intangible products (education, health, etc.).
  • Manufacturing companies provide services, and service companies provide goods.
  • Service Sector Growth: Services constitute the largest economic sector in post-industrial societies.

Measuring Productivity

  • Basic Formula: Outputs / Inputs
  • Single Factor Productivity (e.g., labor productivity).
  • Multi-Factor Productivity considering all inputs (labor, materials, energy, capital).

Example of Productivity Calculation

  • Collins Title Insurance case study for labor and multi-factor productivity measures.

Challenges in Productivity Improvement

  • Factors Influencing Productivity: Labor, capital, and effective management.
  • Training, employee health, environmental factors, and technological changes are crucial.

Case Study: Taco Bell

  • New kitchen technology saved millions and improved productivity.

Current Challenges in Operations Management

  • Globalization, sustainability, rapid product development, mass customization, and lean operations.
  • Ethical and socially responsible decision-making is essential.

Conclusion

  • Cultivating skills in operations management is key for career success.
  • Check Blackboard for course updates and expectations.

Note: Review textbook figures and paragraphs for further understanding of concepts.

Full transcript