Production and Operations Management: Manufacturing and Services

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CHASE AQUILANO JACOBS
Operations Management
For Competitive Advantage
Chapter 1
Introduction to the Field
ninth edition
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Chapter 1Overview Introduction to the Field

• What is Operations Management?
• Why Study Operations Management?
• Production System Defined
• Operations as a Service
• Core Services
• Value Added Services
• Historical Development of OM
• How OM Relates to other Disciplines
• Current Issues in OM

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What is Operations Management?Defined

• Operations management is defined as the design,
  operation, and improvement of the systems that
  create the firms primary products and services.
  This involves the transformation of inputs to
  outputs and is the core of any business.

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Why Study Operations Management?

• OM Is related to all areas of any business
• There is no business without Operations
• Education on how to produce goods or services
• Most costs are incurred in creating goods or
  services
• Global nature of operations and competition
• Impetus of new technologies

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Why Study Operations Management?
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What is a Production System?Defined

• A production system is defined as a user of
  resources to transform inputs into some desired
  outputs.

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OM Involves Managing Transformations
Transformation is enabled by The 5 Ps of OM

• People
• Plants
• Parts
• Processes
• Planning and Control

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Transformations

• Physical--manufacturing
• Locational--transportation
• Exchange--retailing
• Storage--warehousing
• Physiological--health care
• Informational--telecommunications

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What is a Service and What is a Good?

• If you drop it on your foot, it wont hurt you.
  (Good or service?)
• Services never include goods and goods never
  include services. (True or false?)

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What about McDonalds?

• Service or Manufacturing?
• The company certainly manufactures tangible
  products
• Why then would we consider McDonalds a service
  business?

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Core services are basic things that customers
want from products they purchase.
Core Services Definition
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Core Services Performance Objectives
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Core Factory Services

• Quality (Making Things Better)
• Better design, technology, know-how
• Better manufacturing processes
• Equipment layout
• Small lot production
• Quality circles
• SQC and vendor certification

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Core Factory Services

• Flexibility (Being more agile)
• Able to introduce new products
• Adapt to customer demands
• Integral part of quality and delivery
  capabilities
• By-product of actions to improve quality and
  delivery capabilities
• Product development is in teams not sequential

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Core Factory Services

• Speed To Market (Making things faster)
• Technology
• Robotics, FMS, CIM
• Facility location--globally
• Improved labor/management relations
• Continuous improvement
• Equipment maintenance
• Supervisory training
• Job enrichment and enlargement

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Core Factory Services

• Price or production cost (Making things less
  expensively)
• Cost reduction through technology
• Robotics
• Direct labor reduction
• Product and process improvement
• Value analysis
• Product standardization
• Lead and cycle time reduction

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Value-added services differentiate the
organization from competitors and build
relationships that bind customers to the firm in
a positive way.
Value-Added ServicesDefined
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Value-Added Service Categories
Help internal/external groups solve problems

• Performance data on products
• Use data for improvement

Enhance sales/marketing through equipment demo
Replace defective parts quickly
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Historical Development of OM

• JIT and TQC.
• Manufacturing Strategy Paradigm.
• Service Quality and Productivity.
• Total Quality Management and Quality
  Certification.

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Historical Development of OM (contd)

• Business Process Reengineering.
• Supply Chain Management.
• Electronic Commerce.

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How OM Relates to Other Business Fields

• Accountants
• Basics of inventory management
• Capacity utilization
• Labor standards
• JIT, CIM justification
• Financial Managers
• Inventory and capacity
• Capital equipment justification
• Make-or-buy decisions

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How OM Relates to Other Business Fields

• Marketing
• Order promising
• New products introduction
• Lead times and due dates
• Personnel Managers
• Job design
• Incentive plans
• Job assignment
• Skills required

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How OM Relates to Other Business Fields

• Purchasing Managers
• Vendor relations
• Lead times
• Inventory and quantity discounts
• Transportation costs
• Manufacturing Engineers
• Inventory (WIP)
• Scheduling
• Quality control
• Technology (JIT, CIM, FMS, etc.)

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Current Issues in OM

• Effectively consolidating the operations
  resulting from mergers.
• Developing flexible supply chains to enable mass
  customization of products and services.
• Managing global supplier, production and
  distribution networks.

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Current Issues in OM (contd)

• Increased commoditization of suppliers.
• Achieving the Service Factory.
• Achieving good service from service firms.