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Introduction To Operations Management: Compiled by

Operations management (OM) deals with managing the transformation of resources into goods and services. It is important because every organization must effectively manage transformation processes to create value for customers and profits. OM relates to other business functions like accounting, marketing, finance, and human resources. Historically, OM has evolved from craft production to mass production to modern approaches like supply chain management and quality initiatives. Models are commonly used in OM to represent complex systems and support decision making.

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11 views

Introduction To Operations Management: Compiled by

Operations management (OM) deals with managing the transformation of resources into goods and services. It is important because every organization must effectively manage transformation processes to create value for customers and profits. OM relates to other business functions like accounting, marketing, finance, and human resources. Historically, OM has evolved from craft production to mass production to modern approaches like supply chain management and quality initiatives. Models are commonly used in OM to represent complex systems and support decision making.

Uploaded by

jorge
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Introduction to

Operations Management
Compiled by:
Alex J. Ruiz-Torres, Ph.D.
From information developed by many.
Outline
• Some definitions for the term operations
management (OM)
• Why is OM an important area of business
education
• How OM relates to other business areas
• Historical perspective of OM
• Models and OM
Definitions of OM
• “Design, execution, and control of a firm's operations
that convert its resources into desired goods and
services, and implement its business strategy”
http://www.businessdictionary.com/definition/operations-management.html

• The business function responsible for the


transformation processes that create the goods and
services required by the organization’s customers. Chase,
Aquilano & Jacobs (2009)

• “the maintenance, control, and improvement of


organizational activities that are required to produce
goods or services for consumers.”
http://www.bnet.com/topics/operations+management
Definitions of OM
• .. deals with the design and management of products, processes,
services and supply chains. It considers the acquisition, development,
and utilization of resources that firms need to deliver the goods and
services their clients want.
• The purvey of OM ranges from strategic to tactical and operational
levels. Representative strategic issues include determining the size and
location of manufacturing plants, deciding the structure of service or
telecommunications networks, and designing technology supply chains.
• Tactical issues include plant layout and structure, project management
methods, and equipment selection and replacement. Operational issues
include production scheduling and control, inventory management,
quality control and inspection, traffic and materials handling, and
equipment maintenance policies.
http://mitsloan.mit.edu/omg/om-definition.php
Definitions of OM
• The network view
http://www.rxresponse.org/Learn/PublishingImages/pharm_supply_chain.jpg
Definitions of OM
• Inputs > Transformation > Outputs
• Transformation is about processes to create value

Plastic Forming

Check Processing
Manufacturing

Transportation
Dinning/ hotel Surgery
Importance of OM
• Every business provides a transformation; and it must
create value to the customer (and typically generate
profits).
• Value > cost (inputs + transformation)
• The value obtained will be directly related to the
planning, management, and execution of the
transformation processes.
• Therefore, every organization needs effective OM
systems
– This applies to government, Not for profit, small businesses,
family owned, …
Importance of OM
• Locally relevant!
– Improve performance of the manufacturing
plants/ distribution centers
– Optimize logistic and transportation systems to
minimize costs, reduce times at ports of entry/
border crossings, improve customer service
– Attract technology ventures through
demonstrated knowledge on quality and resource
management
Importance of OM
• OM systems play a role in your daily life
– All the products and technology you use (toothbrush,
toothpaste, car, )
– Food consumed (coffee, sugar, …)
– Services encountered (bank, university, hospital…)
• Failure of OM systems can affect your daily life
– Poor planning/ systems can causes flight delays,
not having the repair parts for your car, long lines
for services, getting the wrong medicine, …
OM and other business areas
• Accounting: inventory management and costing of
products
• Marketing: product design, product customization,
coordination between sales and operations
planning
• Finance: resource acquisition, outsourcing
• Human resources: capability planning, incentive
plans
• Information systems: planning and managing
platforms
Historical perspective of OM
• Before the industrial revolution, production based on
“craftsman” approach
– Low volume production, often made to order, no standardization
• Industrial revolution > mass production
– A move to standardized ways of production: one best way to do
something (Fedrick Taylor, “Father” of Operations management
and industrial engineering”)
– Ford’s assembly lines
• Operations Research and the application of mathematical
models to business problems
• Quality and JIT revolution of the 80’s: move away from
inspections, quality at the source, reduce inventories
Historical perspective of OM
• Recent trends
– Design for manufacturability and life cycle costs
– Information technology systems allow
collaboration / integration across the SC
– Focus on SCM as to reduce inventories, increase
response time, maximize profits
– Focus on service operations including healthcare,
retail, and financial
Models and OM
• Models are extensively used in OM to characterize and
optimize systems
• OM systems are represented by this model:

Customer

Need (1) Feedback (4) Outputs (3)

Transformation
Process (2)

Inputs (2)
Models and OM
• OM problems can be highly complex
– Thousands of products, resources, locations
– Multiple measures of performance (costs,
responsiveness, quality)
– Models in the form of algorithms are used to
support decision making (scheduling, resource
planning, facility location, …)
• Algorithm - logical step-by-step procedure for solving
problems
Study areas ahead
• Strategy and OM • Production Control
• Product Design • Inventory Management
• Project Management • Supply Chain Management
• Capacity and Productivity • Quality of Goods and
Services

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