UNIT I: INTRODUCTION TO OPERATIONS

MANAGEMENT
Joycelyn P. Ituriaga, MBA
TOPIC LEARNING OBJECTIVES
At the end of the unit, student can:
▪ define the term operations management,
▪ identify the major functional areas of
organizations and describe how they
interrelate,
▪ identify similarities and differences
between production and service
operations,
▪ briefly describe the historical evolution of
operations management, and
▪ characterize current trends in business
that impact operations management.
TOPIC OUTLINE
Unit I. Introduction to Operations Management
1. Why Learn About Operations
Management?
2. Overview of the Scope of Operations
Management
3. Production of Goods versus Delivery of
Services
4. The Historical Evolution of Operations
Management
5. Key Issues for Today’s Business Operations
WHY LEARN ABOUT
OPERATIONS MANAGEMENT?
Topic 1
WHAT IS OPERATIONS
MANAGEMENT?
▪ What is Operations?
▪ The part of a business organization that is
responsible for producing goods or services.

▪ How can we define Operations Management?

▪ The management of systems or processes that
create goods and/or services.

▪ Operations Management Affects:

▪ Companies’ ability to compete and
▪ Nation’s ability to compete internationally
BUSINESS FUNCTIONS OVERLAP

Producing the
goods or providing
the services
Securing
financial
resources at
favorable
Assessing prices and
consumer allocating those
wants and resources
needs and
selling and
promoting
DEFINITION OF OPERATIONS
MANAGEMENT (OM)
▪ is the business function that plans, organizes,
coordinates, and controls the resources
needed to produce a company’s goods and
services.
▪ is a management function. It involves
managing people, equipment, technology,
information, and many other resources.
▪ is the central core function of every company.
The role of operations management is to
transform a company’s inputs into the finished
goods or services.
SUPPLY CHAIN
▪ Operations and supply chains are
intrinsically linked, and no business
organization could exist without both.
▪ A supply chain is the sequence of
organizations—their facilities, functions, and
activities—that are involved in producing and
delivering a product or service.
▪ A chain that begins with wheat growing on
a farm and ends with a customer buying a
loaf of bread in a supermarket. Notice that
the value of the product increases as it
moves through the supply chain.
SUPPLY CHAIN
 TRANSFORMATION PROCESS (VALUE-ADDED
PROCESS) Value-Added
Inputs Transformatio Outputs
• Land n/Conversion • Goods
• Labor Process • Services
• Capital
• Information

Feedback
Feedback Feedback
Control

Feedback = measurements taken at various points in the transformation process

Control = The comparison of feedback against previously established standards to determine if corrective action
The operations function involves the conversion of inputs into outputs
GOODS – SERVICE CONTINUUM
▪ Products are typically neither purely service – or purely goods – based.

Goods Services
Surgery, Teaching
Songwriting, Software Development
Computer Repair, Restaurant Meal
Home Remodeling, Retail Sales
Automobile Assembly, Steelmaking
EXAMPLE: HOSPITAL
Inputs Processing Outputs
Doctors, Nurses Examination Treated Patients

Hospital Surgery

Medical Supplies Monitoring

Equipment Medication

Laboratories Therapy
PROCESS
MANAGEMENT
A key aspect of operations
management is process
management.
▪ A process consists of one or
more actions that transform
inputs into outputs.
▪ In essence, the central role of
all management is process
management.
MANUFACTURING VS.
SERVICE?
▪ Manufacturing and Service
Organizations differ clearly
because manufacturing is
goods-oriented, and service is
act-oriented
 Production of Goods – tangible output

PRODUCTION Delivery of Services – an act

OF GOODS VS. Service Categories

DELIVERY OF
• Government
• Wholesale/Retail
• Financial Services

SERVICES •
•
•
Healthcare
Personal Services
Business Services
• Education
GOODS VS. SERVICES
Characteristics Goods Service
Customer Contact Low High
Uniformity of Input High Low
Labor Content Low High
Uniformity of Output High Low
Output Tangible Intangible
Measurement of Productivity Easy Difficult
Opportunity to Correct Problems Before
High Low
Delivery
Inventory Much Little
Evaluation Easier Difficult
Patentable Usually Not Usual
Wages Narrow Range Wider Range
BUSINESSES ARE COMPOSED OF MANY
INTERRELATED PROCESSES
Three categories of business processes:
1. Upper-management processes. These govern
the operation of the entire organization.
▪ Examples include organizational governance
and organizational strategy.
2. Operational processes. These are the core
processes that make up the value stream.
▪ Examples include purchasing, production
and/or service, marketing, and sales.
3. Supporting processes. These support the core
processes. Examples include accounting, human
resources, and IT (information technology).
 The relationship between strategic and tactical decisions
▪ Strategic decisions
PROCESS ▪ Decisions that set the direction for the entire company; they are
broad in scope and long-term in nature.
MANAGEMENT ▪ Tactical decisions
▪ Decisions that are specific and short-term in nature and are
bound by strategic decisions.
 ▪ Jobs in service are often less structured than in
manufacturing
▪ Customer contact is generally much higher in
services compared to manufacturing
▪ In many services, worker skill levels are low

MANAGING compared to those of manufacturing employees

▪ Services are adding many new workers in low-
SERVICES IS skill, entry- level positions
▪ Employee turnover is high in services,
CHALLENGING especially in low-skill jobs
▪ Input variability tends to be higher in many
service environments than in manufacturing
▪ Service performance can be adversely affected
by many factors outside of the manager’s control
(e.g., employee and customer attitudes)
IN SUMMARY:

Try to answer the questions on the following slides.

 KINDLY ANSWER
▪ The part of a business organization that is responsible for producing goods or services
refers to _____.
▪ The management of systems or processes that create goods and/or services refers to _____.
▪ Business Functions Overlap
▪ _____ is responsible for securing financial resources at favorable prices and allocating
those resources throughout the organization- budgeting, analyzing investment proposals,
and providing funds for operations.
▪ _____ is responsible for assessing consumer wants and needs and selling and promoting
the organization’s goods or services, and
▪ _____ is responsible for producing the goods or providing the services offered by the
organization.
▪ _____ is responsible for producing the goods or providing the services offered by the
organization.
▪ _____ responsible for managing that core.
 KINDLY ANSWER
▪ A __________ is the sequence of organizations—their facilities, functions, and
activities—that are involved in producing and delivering a product or service.
▪ The __________ provide raw materials, parts, equipment, supplies, and/or other inputs
to the organization, and they deliver outputs that are goods to the organization’s
customers.
▪ The internal parts of a supply chain are part of the operations function itself, supplying
operations with parts and materials, performing work on products and/or services, and
passing the work on to the next step in the process refers to _____.
▪ The operations function involves the conversion of inputs into outputs refers to _____.
▪ The net increase created during the transformation of inputs into final outputs to _____.
▪ A key aspect of operations management is _____
▪ A _____ consists of one or more actions that transform inputs into outputs.
 KINDLY ANSWER
▪ _____ is the central role of all management.

▪ Organizations that primarily produce a tangible product and typically have low customer contact refers to _____.

▪ Organizations that primarily produce an intangible product, such as ideas, assistance, or information, and typically have high
customer contact refers to _____.
▪ Production of Goods vs. Delivery of Services
▪ Tangible outputs are _____.
▪ An act of _____.

▪ Three categories of business processes:

▪ _____ govern the operation of the entire organization.
▪ _____ are the core processes that make up the value stream.
▪ _____ support the core processes.

▪ The relationship between strategic and tactical decisions

▪ _____ decisions that set the direction for the entire company; they are broad in scope and long-term in nature.
▪ ____ decisions that are specific and short-term in nature and are bound by strategic decisions.
END OF PRESENTATION
UNIT I: INTRODUCTION TO End of Presentation

OPERATIONS MANAGEMENT Thank You.