OPERATIONS AND MANAGEMENT

Second Semester: Midterm Lectures

Lesson 1: introduction to operations & management Supply chain

What is operations? Supply Chain – a sequence of activities and
- The part of a business organization organizations involved in producing and
that is responsible for producing delivering a good or service.
goods. The part of a business
organization that is responsible for
producing goods or services.
- The process consists of one or more
actions that transform inputs into Value-added
outputs The difference between the cost of inputs
How can we define operations and the value or price of outputs.
management?
- The management of systems or
Decision Making
processes that create goods and/or
- What: What resources are needed,
provide services
and in what amounts?
Good or service? - When: When will each resource be
needed? When should the work be
Goods are physical items that include raw scheduled? When should materials
materials, parts, subassemblies, and final and other supplies be ordered?
products. - Where: Where will the work be done?
- Automobile - How: How will the product or service
- Computer be designed? How will the work be
- Oven done? How will resources be
- Shampoo allocated?
Services are activities that provide some - Who: Who will do the work?
combination of time, location, form or
Historical evolution:
psychological value.
- Air travel 1770s – Industrial Revolution
- Education 1911 – Scientific Management
- Haircut 1920-60 – Human Relations Movement
- Legal counsel 1960-1970 – Decision Models
Why Operations Management important?
Operations Management Concepts from Scientific
The success or failure of a company's
operations functions has an impact on the
Management Era by Henry Ford
ability of a nation to compete with other • Mass production - System in which
nations and on the nation’s economy. low-skilled workers use specialized
machinery to produce high volumes
Goal of operations management: of standardized goods.
• Division of labor - The breaking up
The Economic Match
of a production process into small
Supply = Demand tasks, so that each worker performs a
small portion of the overall job.
Excess – Wasteful and Costly
Too Little – Lost Opportunity & Customer The Influence of Japanese Manufacturers
Dissatisfaction Quality Revolution and Lean Production

Hebrews 13:5 R.R.B.S

 OPERATIONS AND MANAGEMENT
Second Semester: Midterm Lectures

Key Trends • Quality can provide an organization

• E-Business & E-Commerce with a competitive edge
• Management of Technology • “No quality, no sales. No sales, no
- Product and Service Technology profit. No profit, no jobs.”
refers to the discovery and
development of new products and Formal Definitions of Quality
services Transcendent Perspective: excellence
- Process Technology refers to Product Perspective: quantities of product
methods, procedures, and equipment attributes
used to produce goods and provide User Perspective: fitness for intended use
services Value Perspective: quality vs. price
- Information Technology refers to Manufacturing Perspective: conformance to
the science and use of computers specifications
and other electronic equipment to Customer Perspective: meeting or
store, process and send information
exceeding customer expectations
- Globalization
- Outsourcing
Customers:
Issues in Business Consumers
• Environmental Concerns: - Ultimate buyers of goods and
- Global warming and pollution services
- Sustainability means using resources External customers
in ways that do not harm ecological - Business-to-business
systems that support human Internal customers
existence - Anyone who receives goods or
- Environmental Compliance services from someone else within an
Certification organization
• Ethical Conduct:
- Code of ethics
• Ethics – standard behavior that
History of Quality Management
guides how one should act in various Ancient History
situations - Zhou Dynasty in China
• Managing the Supply Chain The Age of Craftsmanship
- Skilled workers during the Middle
Ages
Chapter 1: introduction to total quality management - Industrial Revolution
Early 20th Century
Importance of Quality
- Separate quality departments
• Quality is uniquely positioned to
accelerate organizational growth - Ford Motor Company
through better execution and - Statistical methods and quality
alignment assurance
• Quality provides the voice of the - Professional societies and
customer critical to developing publications
innovative products and services. Post World War II
- Evolution of quality management in
Japan

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 OPERATIONS AND MANAGEMENT
Second Semester: Midterm Lectures

- W. Edwards Deming and Joseph Quality in marketing:

Juran Marketing and sales personnel are
U.S. “Quality Revolution” responsible for determining the needs and
- Quality crisis around 1980 expectations of consumers.
- Growth of product quality awareness
in manufacturing industries Quality in product design:
Early Successes Product design and engineering functions
- Malcolm Baldrige National Quality develop technical specifications for products
Award (1987) and production processes to meet the
- Books, consulting, training requirements determined by the marketing
From Product Quality to Total Quality function.
Management
- “Little Q” vs. “Big Q” and TQM Quality in purchasing:
Management Failures A purchasing agent should not simply be
- Cynicism and disinterest responsible for low-cost procurement, but
- “No, TQM isn’t dead. TQM failures should maintain a clear focus on the quality
just prove that bad management is of purchased goods and materials.
still alive and kicking.”
Performance Excellence Quality in production planning & scheduling:
- Focus on customer value, Poor quality often results from time
organizational sustainability, pressures caused by insufficient planning
improvement of effectiveness and and scheduling.
capabilities, and organizational and
personal learning Quality in manufacturing and assembly:
Emergence of Six Sigma Both technology and people are essential to
- a customer-focused, results-oriented high-quality manufacturing.
approach to business improvement
Current and future challenges Quality in process design:
- Continue to apply the principles of Manufacturing processes must be capable of
quality and performance excellence. producing output that meets specifications
- Quality is “a race without a finish line.” consistently.

Contemporary Influences on Quality: Quality in finished goods inspection and testing:

Global Responsibility The purposes of final product inspection are
Consumer Awareness to judge the quality of manufacturing, to
Globalization discover and help to resolve production
Increasing Rate of Change problems that may arise, and to ensure that
Workforce of the Future no defective items reach the customer.
Aging Population
Quality in installation and service:
Twenty-first Century Quality
Innovation Service after the sale is one of the most
important factors in establishing customer
perception of quality and customer loyalty.

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 OPERATIONS AND MANAGEMENT
Second Semester: Midterm Lectures

Quality in services:
Service is defined as “any primary or - Matches organization’s unique
complementary activity that does not directly resources with opportunities
produce a physical product – that is, the non- - Is durable and lasting
goods part of the transaction between buyer - Provides basis for further
(customer) and seller (provider).” improvement
- Provides direction and motivation

Critical differences between service & manufacturing

- Customer needs and performance
standards are more difficult to identify
and measure
- Services requires a higher degree of
customization
- Output is intangible
- Services are produced and
consumed simultaneously
- Customers are often involved in
Quality and Personal Values
actual process
- Services are more labor-intensive - Personal initiative has a positive
impact on business success
than manufacturing
- Quality-focused individuals often
- Services handle large numbers of
exceed customer expectations
transactions - Quality begins with personal attitudes
- Attitudes can be changed through
Components of Service Quality
awareness and effort (e.g., personal
People quality checklists)
- “If we take care of our people, they
will take care of our customers.” Chapter 3: customer focus
Technology
- Computers and information
technology
- E-commerce

Quality in Business Support Functions

Finance and Accounting
- Budgeting, cost of quality
Legal Services
- Liability
Quality Assurance
- Coaching and special studies

Competitive Advantages:
- Is driven by customer wants and
needs
- Makes significant contribution to
business success

Hebrews 13:5 R.R.B.S