22-Jan-21
What does the Finance people do in a firm?
What does the HR people do?
P501: Managing Operations & Supply Accountants?
Chain Marketing team?
Lecture - 1
Who deals with the production?
• Operations Management:
• The activity of managing the resources which produce and deliver products and
services.
• The management of systems or processes that create goods and/or provide
services
• Operations Function:
• The part of the organization that is responsible for this activity.
• Operations Managers:
• The people responsible for managing some or all of the resources which compose
the operations function.
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How OPM works
Automobile assembly factory
Physician
Management consultancy
Disaster relief
Advertising agency
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Goods vs Service
Tangibility
Can be inventoried?
Customer contact
Response time
Input intensity
Goods vs Service
Goods Service
• Tangible product • Intangible product
• Product can be • Product cannot be
inventoried inventoried
• Low customer contact • High customer contact
• Longer response time • Short response time
• Capital intensive • Labor intensive
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Characteristic Goods Service
Customer contact Low High
Similarities
Uniformity of input High Low • Both use technology
Labor content Low High • Both have quality, productivity, & response issues
Uniformity of output High Low • Both must forecast demand
Output Tangible Intangible • Both will have capacity, layout, and location issues
Measurement of productivity Easy Difficult • Both have customers, suppliers, scheduling and staffing issues
Opportunity to correct problems High Low • Manufacturing often provides services
Inventory Much Little • Services often provides tangible goods
Evaluation Easier Difficult
Patentable Usually Not usual
Core vs. Value-Added Services Categories of Services
• Professional services (e.g., financial, health care, legal)
• Core services are basic things that customers want • Mass services (e.g., utilities, Internet, communications)
from products they purchase • Service shops (e.g., tailoring, appliance repair, car wash, auto
repair/maintenance)
• Value-added services differentiate the organization • Personal care (e.g., beauty salon, spa, barbershop)
from competitors and build relationships that bind • Government (e.g., Medicare, mail, social services, police, fire)
customers to the firm in a positive way
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Categories of Services Categories of Services
• Education (e.g., schools, universities) • Residential services (e.g., lawn care, painting, general repair,
remodeling, interior design)
• Food service (e.g., restaurants, fast foods, catering, bakeries)
• Transportation (e.g., mass transit, taxi, airlines, ambulance)
• Services within organizations (e.g., payroll, accounting,
• Travel and hospitality (e.g., travel bureaus, hotels, resorts)
maintenance, IT, HR, janitorial)
• Miscellaneous services (e.g., copy service, temporary help)
• Retailing and wholesaling
• Shipping and delivery (e.g., truck, railroad, boat, air)
Challenges of Managing Services
• Service jobs are often less structured than manufacturing
jobs
• Customer contact is higher
• Worker skill levels are lower
• Employee turnover is higher
• Input variability is higher
• Service performance can be affected by worker’s personal
factors
