Operations Management Lecture: Chapter 11

Introduction

• Lecture Scope: Chapter is divided into two parts due to length
• Purpose: To have enough preparation time for tests
• Focus: Introduction to operations management and its functional areas

What is Operations Management?

• Definition: Concerned with the transformative process in businesses
• Objective: Transform input into outputs, create products, and provide services to realize business goals
• Benefits:
  • Reduce Costs: Efficient operations can reduce costs of products/services
  • Increase Revenue: Higher quality services/products attract more customers
  • Reduce Investment Needs: Efficient use of resources reduces investment needs
  • Foster Innovation: Continuous improvement and adaptation
  • Improve Productivity & Satisfaction: Better meet customer/client needs
  • Build Business Reputation: Good operations management builds a positive reputation

Functional Roles in Operations Management

1. Operations Functions: Utilize resources to manufacture products or render services
2. Operations Managers: Personnel responsible for managing operations functions
3. Operations Management: Activities and decisions involved in executing operations functions, including planning, organizing, scheduling, and control

Management Model

General Model Components

• Management Strategies and Objectives: Formulate strategies to maintain/expand competitive position
• Transformation Process: Focus on achieving outputs from inputs
• Inputs: Materials, customers/clients, information
  • Resources: Human, equipment, technology
• Transformation Process: The way inputs are transformed into outputs
• Outputs: Tangible products or intangible services
• Implications: Different inputs/processes have different costs and efficiency implications

Elements of Customer/Client Needs

• Higher quality
• Lower costs
• Shorter timeframes
• Greater adaptability
• Lower variability
• Higher levels of service

Operations Management Guidelines

Key Principles

1. Do Things Right the First Time: Ensures quality advantage, reduces errors
2. Do Things Cost-Effectively: Cost advantage through efficient production
3. Do Things Fast: Speed advantage by quick production
4. Make Changes Quickly: Adaptability advantage to changing customer needs
5. Ensure Low Variability: Consistency in product/service quality
6. Do Things Better: Service advantage by meeting customer needs better

Transformation Model in Operations Management

Basic Transformation Model Components

• Inputs: Materials, customers, information
• Transformation Process: Conversion of inputs to outputs
• Outputs: Products, services

Categories of Inputs in Transformation Model

1. Resources to be Transformed

• Material
• Customers/Clients
• Information/Data

2. Resources Required for Transformation

• Human resources
• Equipment
• Technology

Characteristics of Outputs & Impact on Cost

• Volume
• Variety
• Variations in demand
• Visibility to customers

Types of Manufacturing Processes

1. Project Process: Large-scale, unique tasks (e.g., construction projects)
2. Jobbing Process: Small-scale, low volume (e.g., custom jewelry)
3. Batch Process: Limited range, produced in batches (e.g., furniture manufacturing)
4. Mass Process: High volume, low variability (e.g., mass production of consumer products)
5. Continuous Process: Non-stop production (e.g., power generation)

Types of Service Processes

1. Professional Services: Unique skills, high client contact (e.g., doctors, consultants)
2. Service Shops: Blend of professional and mass services (e.g., banks, hotels)
3. Mass Services: High volume, limited client contact (e.g., telecommunications, retail)

Operations Design

Elements in Operations Design

1. Supply Network Design: Involves intermediaries, final customers, etc.
2. Layouts: Fiscal arrangement of resources, influencing material, information, and customer flow
3. Process Technology: Equipment and technology used in transforming inputs
4. Job Design and Work Organization: How workers perform tasks and their involvement
5. Work Study:

• Method Study: Easier, more effective work methods
• Work Measurement: Time taken to train qualified workers for specific tasks

Importance of Good Operations Design

• Ensures competitive advantage
• Aligns products/services with customer needs
• Focuses on innovative, efficient production processes

Steps in Product Design

1. Concept Generation: Develop new product ideas
2. Screening: Evaluate feasibility, acceptability, and risk of ideas
3. Preliminary Design: Outline product components and packaging
4. Evaluation and Improvement: Refine designs to reduce costs and improve efficiency
5. Prototype/Final Design: Test in market, refine based on feedback

Conclusion

• End of the first part of the lecture
• Second part to continue exploring operations management