What is Operations Management?

Core Processes Examples

*Supplier Relations Process* -how do you select suppliers? how do you negotiate? *New Service/Product Development Process* -how do companies create innovative products? *Order Fulfillment Process* -how do you get products to customers? *Customer Relationship Process* -Customer Relationship MGT -identifying and attracting customers

Manufacturing vs. Service Operations

- MANUFACTURING: Physical, Operations can carry lots of inventory, slow response time, capital-intensive (machines, automated), easy quality control (compare to standard) - SERVICE: Intangible, Operations carry little inventory, quick response time, high customer contact, labor-intensive (humans), bad quality control (customers judgment)

Production

- outputs ex. produced 1,000 cars

Productivity

- rate of production ex. =outputs/inputs (how much you produced/ how much went into production)

Supply Chain Process

-business processes with external entities

The Supply Chain

-chain that any product goes through (suppliers to customer) -entire chain is larger than any one company 1. Suppliers 2.Manufactuers 3.Distributers 4.Retailer 5.Customer

Support Processes

-employee training, help desk

Effectiveness

-maximizing customer satisfaction

Efficiency

-only has to do with COST -minimizing cost = efficient

Economies of Scale

-reduces cost as you increase volume -The more you produce the lower the cost per unit (opposite if you produce less) *fixed costs are spread over a large # of units* - each unit gets cheaper so make more units Why? -cost structure - total cost = fixed cost and variable cost

3 Main Functions of an Organization

1. Money (Allocating, Budgeting) 2. Demand (Marketing) 3. Creation (OPERATIONS)

Supply Chain Performance

For any transaction you need the right: -product -place -time -quality -quantity

Goods and Service Continuum

MANUFACTURING GOODS: Steel MIDDLE: auto care (labor+machines) SERVICE GOODS: education

Examples of Operations Decisions

Quality Control -minute by minute production meeting standards -not big picture Product Design Inventory MGT Supply Chain MGT Scheduling Production Staffing

Organizations

Take inputs and transform them into outputs (That transformation is done by operations)

Variable Costs

ex. raw material -increases with more volume

Fixed Costs

ex. rent, utilities -must incur no matter what