Chapter 1 OM

What are the three Issues at the Core of Operations Management

Efficiency, Cost, Quality

Similarities Between Goods and Services

Goods and services provide value and satisfaction to customers who purchase and use them. They both can be standardized or customized to individual wants and needs.  A process creates and delivers each good or service, and therefore, OM is a critical skill.

customer benefit package (CBP)

a clearly defined set of tangible (goods-content) and intangible (service-content) features that the customer recognizes, pays for, uses, or experiences. In simple terms, a CBP is some combination of goods and services configured in a certain way to provide value to customers. A CBP consists of a primary good or service, coupled with peripheral goods and/or services.

goods

a physical product that you can see, touch, or possibly consume. Examples of goods include: oranges, flowers, televisions, soap, airplanes, fish, furniture, coal, lumber, personal computers, paper, and industrial machines.

durable good

a product that typically lasts at least three years. Vehicles, dishwashers, and furniture are some examples of durable goods.

process

a sequence of activities that is intended to create a certain result

service encounter

an interaction between the customer and the service provider.

Economic sustainability

an organization's commitment to address current business needs and economic vitality, and to have the agility and strategic management to prepare successfully for future business, markets, and operating environments.

Social sustainability

an organization's commitment to maintain healthy communities and a society that improves the quality of life.

Environmental sustainability

an organization's commitment to the long-term quality of our environment.

service

any primary or complementary activity that does not directly produce a physical product.

Value creation processes

focused on producing or delivering an organization's primary goods or services, such as filling and shipping a customer's order, assembling a dishwasher, or providing a home mortgage.

General management processes

including accounting and information systems, human resource management, and marketing.

Service management

integrates marketing, human resources, and operations functions toplan, create, and deliver goods and services, and their associated service encounters.

non-durable good

perishable and generally lasts for less than three years. Examples are toothpaste, software, shoes, and fruit.

Support processes

such as purchasing materials and supplies used in manufacturing, managing inventory, installation, health benefits, technology acquisition, day care on-site services, and research and development.

Operations Management

the science and art of ensuring that goods and services are created and delivered successfully to customers.