OPERATIONS MANAGEMENT (WITH TQM)

APDS; BSA
MODULE 1: INTRODUCTION TO OPERATIONS MANAGEMENT
Introduction to Operations Management 3 BASIC FUNCTIONS IN ORGANIZATION
OPERATIONS – Responsible for producing
OPERATIONS goods and/or delivering the services. The
• A function in an organization that is responsible operations function is the core of the
for creating goods and/or services. GOODS are organization for without its products and
tangible items produced by the organization while services, there would be no need for other
SERVICES are activities that they render to the functions.
customers. FINANCE – Responsible for allocating the
resources of the organization and securing
OPERATIONS MANAGEMENT their financial resources. They are also
• is the management of processes that involved in budgeting, preparing, and
transform an organization's inputs into analyzing investment proposals and
goods and services that add value for the ensuring that necessary funds are available
customer. for operations.
• The goal is to maximize efficiency by MARKETING – The function which is
producing products at a lower cost while responsible for assessing the needs and
being able to fulfill and satisfy their wants of the consumers and in selling and
customer needs. promoting the organization’s goods and
services.
Production of goods and delivery of services are obviously different.
GOODS Support functions' (marketing, finance, human resource, etc.)
• Manufacturing produces a tangible output, in the form of responsibility is to ensure that they are able to provide for the
a good. Production may occur in the factory or needs of the operations. In the same manner, operations should
elsewhere, like farms, restaurants, etc. also ensure smooth coordination with other departments .
SERVICE
• Deals with performance of an act. Professional services Operations and supply chain are intrinsically linked,
of doctors, lawyer, professors, and other repair services with the survival of an organization depending on the
are just among some examples of services.
existence of both.
MANUFACTURING GOODS SERVICES
Deals with performance of an
act. Professional services of SUPPLY CHAIN
Manufacturing produces a
tangible output, in the form of a
doctors, lawyer, professors and • the sequence of how the organization
other repair services are just
good.
among some examples of produces and delivers these products and
services. services.
The degree of customer contact
Production may occur in the is higher for services, except for • involves the facilities, functions and all
factory or elsewhere, like farms, other services like internet and activities related to sourcing the raw
restaurants, etc. utilities, where there is less
contact. materials until the products and services
The degree of customer is reach the final customers.
Inputs and outputs are higher, except for other
standard. services like internet and • illustrates the sequential nature and the
utilities. interconnection of the different processes
Has more control of both their
inputs and desired outputs.
Labor content is higher. producing the products and services.
You could easily compute for
Inputs and outputs vary in
• Understanding supply chain is necessary in
productivity by dividing outputs
over inputs.
services. determining how one problem in one link
Productivity cannot be judged
Subject to variability depending could disrupt or affect the flow of the next
on the case or need of the
on the basis of output alone.
client.
one in the chain.
Patents apply more in Quality assurance is more
manufacturing. difficult.
Productivity is difficult to
Has more opportunity to measure in service because of
correct mistakes. the variation in inputs and
outputs.
More inventory since services
cannot be stored.
Wage or pay is more variable in
service and would depend on
the knowledge or skill of the
provider.

Philippians 4:6-7; Do not be anxious about anything, but in every situation, by prayer and
petition, with thanksgiving, present your requests to God.
 OPERATIONS MANAGEMENT (WITH TQM)
APDS; BSA
TRANSFORMATION PROCESS 4. ENVIRONMENTAL CONCERNS
• generally, the basis of all organizations, ⎯ Sustainability measures of the firm include
carefully selecting resources that do not
whether manufacturing or service, in their
harm the environment. Further,
operations. organizations have been carefully
• They only differ in terms of the specific considering how their operational decisions
inputs they use and the outputs they intend would impact the environment.
to produce.
5. ETHICAL ISSUES
⎯ Organizations are compelled to practice
Inputs (capital, labor, information, etc.) are
ethical conduct in doing their business.
transformed through different processes in order Managers’ decisions must not only sway
to create outputs (goods or services) that provide towards gaining profits but also on how
value to customers (value-added). these would significantly affect their
Measurements (feedback) are likewise taken at stakeholders.
various points of the process and are compared 6. CYBER-SECURITY
to standards to determine necessary corrective ⎯ Ensuring the organization’s cyber-security is
action (control). another important concern for operations
managers as this would significantly affect
their business when threatened.
Trends and Challenges Facing Operations
Management History of Operations Management

ISSUES IN OPERATIONS MANAGEMENT: 1. INDUSTRIAL REVOLUTION

1. ECONOMIC CONDITIONS
⎯ Economic factors may slowly and even • The concept of operations began even prior to
drastically affect businesses and their industrial revolution and was evident in how
operations. The Covid-19 pandemic is an craftsmen and their apprentices produced their
example of how economic conditions are goods. Production then is just done in a small
greatly affecting businesses, resulting to shop, with one person responsible in the making
slow, and dragging recovery of different of the product. Machines were non-existent yet,
industries. These scenarios have put thus, goods were only produced using simple
pressure for operations managers to tools. Craft production was slow and costly since
strategically plan for the survival of their there was still no concept of economies of scale.
business and their future as well. There was only limited production since goods
were custom-made by skilled craftsmen.
2. INTENSE COMPETITION • The industrial revolution started during the
⎯ Stiff competition has made organizations 1770s, with some innovations on how production
strive to successfully operate in the market. took place. These innovations led to labor being
Because of competition, operations slowly replaced by machines, and the invention of
managers aim to provide the best products steam engine, providing a source of power for
and services to satisfy their customers. factories. The wooden machines were replaced
Competition has made businesses improve by those made of iron, which were more durable
the quality of their products and services by and flexible, providing better help in production of
offering improved features and goods. A major change occurred during the
enhancements. Industrial Revolution in the form of a standard
gauging system, which reduced custom-made
3. TECHNOLOGY/ INNOVATIONS goods. The birth of many factories also provided
⎯ Related to intense competition, businesses jobs to people, including those in the rural ones.
are faced with the need to continously However, despite massive improvements, the era
provide breakthrough innovations, lest they still lacks progressive management theory and
are overrun by the others. Companies have practice.
been trying to find new ways of improving
their products and services in order to 2. SCIENTIFIC MANAGEMENT
create more value for their customers.
Innovations they have been doing can be • One noble personality during this time was
seen in terms of the way they have been Frederick Winslow Taylor, the father of Scientific
doing business, as well as evident management. This era brought remarkable
improvements in their products and changes on factories, relying on the science of
services. management. Taylor improved work methods by

Philippians 4:6-7; Do not be anxious about anything, but in every situation, by prayer and
petition, with thanksgiving, present your requests to God.
 OPERATIONS MANAGEMENT (WITH TQM)
APDS; BSA
scientifically observing, measuring, and analyzing mathematical models and statistics to advance
how a work is done. He improved work processes the manufacturing processes. The World War II
through identifying the best way of doing the job. resulted to the need to use statistical sampling to
He also emphasized the huge role of management improve military tactics and production output.
in all aspects of job performance, including Quantitative tools were developed even after the
selecting and training the workers. On the war has ended. The existence of computers and
downside, workers thought it unfair that they are software further popularized and cemented the
made to increase output without increase in their use of decision models and management science.
compensation. In the end, the scientific
management principles were accepted when
hearings were made in the congress, with Taylor 5. THE INFLUENCE OF JAPANESE MANUFACTURERS
being called to testify.
• Notable personalities during this era include • Japanese manufacturers were able to remarkably
Frank Gilbreth, Henry Gantt, Harrington improve their productivity due to the W. Edwards
Deming and Joseph Juran. Deming and Juran were
Emerson, and Henry Ford, among others.
American citizens who were commissioned to work in
Gibreth, the father of motion study, became
Japan as part of the National Census. There, they
popular through dividing work into small tasks. taught Statistical Quality Control, spurring
Gantt were recognized for his Gantt charts, a improvements among Japanese manufacturers in
system he developed to systematically schedule terms of quality, worker participation and teamwork,
work. Emerson focused on organizational and customer satisfaction. Japan spurred the start
efficiency while Ford utilized scientific of the quality revolution, which occurred among
management techniques in producing cars. industrialized countries.

KEY TAKEAWAYS
• Ford also contributed largely in this era by
introducing mass production, a system where • OPERATIONS MANAGEMENT deals with the
large volumes of standardized goods are creation and management of an organization's
produced by low-skilled workers using specialized goods and services.
equipment. This concept also led to • Production of goods and delivery of services differ
interchangeable parts, decreasing assembly time in terms of customer contact, input and output
and cost. Moreover, Ford used the division of variability, quality assurance, productivity and
labor, where the work is divided in smaller tasks inventory.
and a specific worker/s assigned on those tasks. • The three basic functions in an organization are
MARKETING, FINANCE, AND OPERATIONS.
3. HUMAN RELATIONS MOVEMENT • ORGANIZATIONAL DECISIONS ARE CROSS-
FUNCTIONAL.
• If the era of scientific management dealt with • SUPPLY CHAIN illustrates the sequential nature
heavily improving production efficiency, the and the interconnection of the different
human relations movement considered the processes producing the products and services.
importance of human in the process. Among
the notable personalities were the husband-
and-wife tandem, Frank and Lilian Gilbreth,
who focused in analyzing fatigue experience by
humans. Elton Mayo, likewise, pursued the
best interests of human element through his
Hawthorne studies. The result emphasized that
to improve productivity, motivation among
workers must be done. Meanwhile, Douglas
McGregor, in his Theory X and Theory Y,
discussed the two types of workers. Theory X
assumed that workers have to be controlled
because they do not like to work. However,
theory Y assumed that workers are committed
in their work.

4. DECISION MODELS AND MANAGEMENT SCIENCE

• Quantitative techniques were developed during

the decision models and management science
movement. This includes the use of

Philippians 4:6-7; Do not be anxious about anything, but in every situation, by prayer and
petition, with thanksgiving, present your requests to God.