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In this chapter we will discuss: Why study operations management? definitions of operations management and supply chains, decisions at pizza U.S.A, operations decisions - a framework, cross-functional decision making, operations as a process, contemporary operations themes.
Operations Management Contemporary Concepts and Cases Chapter One The Operations Function McGrawHill/Irwin Copyright © 2011 by The McGrawHill Companies, Inc. All rights reserved Chapter Outline Why Study Operations Management? Definitions of Operations Management and Supply Chains Decisions at Pizza U.S.A Operations Decisions A Framework CrossFunctional Decision Making Operations as a Process Contemporary Operations Themes 12 Why Study Operations Management? Crossfunctional nature of decisions Operations is a major function in every organization Principles of process thinking can be applied across the business Operations Management is an interesting and challenging field of study 13 Definition of Operations Management The operations function of an organization is responsible for producing and delivering goods or services of value to customers of the organization. Operations managers make decisions to manage the transformation process that converts inputs into desired finished goods or services 14 Key Points in OM Definition Decisions: The operations manager must decide: • Process, quality, capacity, inventory Function: Major functional areas in organizations: • Operations, marketing, finance Process: planning and controlling the transformation process and its interfaces 15 Major Decisions at Pizza USA A Framework for OM Process – How to produce & deliver? Quality – Criteria, measurement & process for achieving? Capacity – Physical facilities & labor? Inventory – What, when & how much? 16 Definition of Supply Chain Network of manufacturing and service operations that supply one another From raw materials through manufacturing to the end consumer Flows of materials, money, and information Links operations across organizations 17 Cross-Functional Decision Making Operations as the primary function Other primary functions: – Marketing – Finance Supporting functions: all others Major crossfunctional decision making relationships (See Table 1.2) 18 Operations as a Process Input Transformation (Conversion) Process Output 19 Operations as a Process Input Transformation Fabrication Transformation Assembly Output Fabrication: makingtheparts Assembly: puttingthepartstogether 110 Operations as a Process (Figure 1.1) Energy Materials Labor Capital Transformation (Conversion) Process Goodsor Services Information Feedback information for control of process inputs and process technology 111 Relation of Operations to its Environment (Figure 1.2) SOCIETY Human Resources Suppliers Engineering Marketing Operationstransformation system Accounting Finance External Environment CUSTOMERS MIS COMPETITORS GOVERNMENT 112 Contemporary Operations Themes Service and Manufacturing (differences and implications) CustomerDirected Operations Lean Operations Integration of Operations withOther Functions Environmental Concerns and Sustainability Supply Chain Management Globalization of Operations 113 Environmental Concerns “Volkswagen, Germany’s biggest car maker, was reported to be setting aside DM1 billion ($470m) to pay for compliance with a European directive that will come into force in 2007 forcing car makers to pay for recycling their vehicles. New cars will be required to be 85% recyclable.” The Economist, 15 February 2001 See: www.arn.nl/english to learn what the Netherlands has done to implement this directive 114 Globalization: Who took my job? Early 1990s Small town near Charlotte, NC Aluminum smelter closed after 50 years Only significant industry in town In many families, several generations had worked there; now all out of work Who caused plant to close? 115 Miklós Németh WHO!? 116 • U.S. production of aluminum dropped dramatically in the early 1990s because Russia dumped aluminum on the world market. • Why? The opening of the Hungarian border on May 2, 1989 led to the fall of the Berlin Wall in November 1989… • …which led to the breakup of the Soviet Union in 1991… 117 • …which caused Russia to downsize their military… • …which gave Russia overcapacity in aluminum production… • …which caused Russia to dump aluminum in the world markets… • …which led to the closing of U.S. smelters such as the one near Charlotte, NC 118 Miklós Németh The Hungarian Prime Minister who opened the Hungarian border on May 2, 1989 119 Moral of the Story In an age of globalization, you never know who will be the competition or who is doing something that will affect your job or your life The aluminum workers in North Carolina had never heard of Miklós Németh, but he ultimately cost them their jobs 120 Summary Why Study Operations Management? Definition of Operations Management and Supply Chains Decisions at Pizza U.S.A Operations Decisions A Framework CrossFunctional Decision Making Operations as a System Contemporary Operations Themes 121 End of Chapter One 122 ... Links? ?operations? ?across organizations 17 Cross-Functional Decision Making Operations? ?as? ?the? ?primary? ?function Other primary functions: – Marketing – Finance Supporting functions: all others Major crossfunctional decision making ... Principles of process thinking can be applied across? ?the? ?business Operations? ?Management? ?is an interesting and challenging field of study 13 Definition of Operations Management The? ?operations? ?function? ?of an organization is responsible for producing ... CrossFunctional Decision Making Operations? ?as a Process Contemporary? ?Operations? ?Themes 12 Why Study Operations Management? Crossfunctional nature of decisions Operations? ?is a major? ?function? ?in every organization