Lecture 1

Introduction to
Operations
Management
 Course Structure

Module 1:
Introduction & Module 2: Capacity Module 3: Product & Module 4: Control &
Operational Planning Service Delivery Sustainability
Planning

Introduction Process Flow Service Operations

to OM Analysis Delivery Strategy

Product & Lean & Six Distribution &

Supply Chain
Service Sigma Inventory
Strategy
Design Management

Facility Demand & Globalization

Process Location Revenue &
Structures Planning Management Sustainability

2
 Learning Objectives

• Identify what products and services are

and their characteristics.
• Explain what operations management is
and why it is important.
• Describe the common challenges that
operations managers have faced.

3
 Operations Management at its best:
Apple’s Success Story
PRODUCT
DESIGN/MIX

LOW
VOLUME COST
SUPPLY

DEMAND
SUPPLIERS VISIBILITY

“Operations expertise is as big an asset for Apple as

product innovation or marketing.”

4
 Operations Management (OM)
is everywhere – Part I

PRODUCTS: Everything you wear, eat, sit on or in,

use, read, or knock about on a sports field comes
to you courtesy of operations.

SERVICES: Every book you borrow from the

library, every medical treatment you receive, every
lecture you attend at a university, every service you
receive comes to you courtesy of operations.

5
 Characteristics of Products & Services

Product / Services
Goods

Core Goods Core Services

• Tangible • Intangible
• Can be inventoried • Cannot be inventoried
• Little customer contact • Extensive customer contact
• Long lead time • Short lead time
• Often capital-intensive • Often labor intensive
• Quality easily assured • Quality harder to assess
• Material is transformed • Information or customer is
transformed 6
Manufacturing and Services
Continuum of Characteristics

Service
Orientation
Mining (coal)

Automobiles

Fast Food

Banking

Consulting
Manufacturing
Orientation
7
 Service-Product Bundle
Element Core Goods Core Service
Example Example
Business Automobile (e.g. Toyota) Hair Salon
Core Motor cars Hair treatment

Non-core Car accessories Shampoo &

Goods conditioner

Non-core Warranty / Manicure

Service Maintenance
service

Goal: Add value to customers 8

 Goods vs. Services:
Total Product Experience

• Total product experience refers to all the

outputs of an operation, both goods and
services, that are combined to define a
customer’s complete consumption
experience.
• The experience includes all aspects of
purchasing, consuming, and disposing of
the product.

9
 Operations Management (OM)
is everywhere – Part II

Schools Construction
Restaurants
Hospitality Banks

Military

Agriculture Transportation
Health Sport Teams
Care Municipalities

Government
Manufacturers Services Not-for-Profit Entertainment
Retail
Organizations
10
Operations Management (OM):
A Basic Definition

Operations
Management (OM):
is the management of
processes used to
design, supply,
produce, and deliver
valuable goods and
services to customers

11
 What is Operations?
Inputs Transformation Outputs

A process is a system of activities that transforms

inputs into valuable outputs. 12
 What is Operations? (Cont’d)

INPUTS OUTPUTS
Materials
Goods
Labor
Transformation
Processes
Capital
Services

Knowledge

13
 Operations Management (OM):
Common Challenges

• Lowering costs
• Improving quality
• Enhancing product
desirability
• Aligning OM with the
company’s competitive
strategy
• Evolving with the needs of
customers, competition, and
technology
14
 Why study OM?

• OM involves using resources and managing

organizational relationships
• When done well, effective OM can:
–Use resources more efficiently
–Improve business processes effectiveness
–Improve relationships between business entities
–Help meet strategic goals
–Increase customer service

15
 Key Take-away

• Characteristics of Products & Services

• Service-Product Bundle

• OM definition and challenges

16
Appendix
Careers in Operations
Management
 Careers in Operations Management

Chief Operating Business

Branch manager Project manager
Officer Consultant

Call center Supply chain Hotel Front Quality control

manager manager Office Manager manager

Lean Business
process Production
Plant manager improvement
improvement control analyst
manager
analyst

Facilities Purchasing Hospital Department

manager manager administrator store manager