Chapter 19' Operations

1
Chapter 19. Operations Value Chain Management

• Learning Objectives
• Define the role and importance of operations
  management
• Understand the differences in operations
  management between manufacturing and service
  industries
• Identify and understand the strategic decisions
  in OM
• Identify and understand the tactical decisions in
  OM
• Understand the dimensions of quality and total
  quality management
• Identify and understand the operational decisions
  in OM

19-1
2
The Role of Operations Management

• The Operations System
• Inputs
• Transformation Process
• Outputs
• Operations management refers to the design,
  operation, and control of the transformation
  process that converts inputs into finished
  products or services
• Three levels of OM decisions
• Strategic level
• Tactical level
• Operational level

19-2
3
OM in Service Business vs. Manufacturing Business

• Manufacturing
• Tangible outputs
• Separable production and consumption
• Outputs can be stored in inventory

• Service
• Intangible outputs
• Simultaneous production and consumption
• Outputs cannot be stored in inventory

19-3
4
Strategic Decisions in OM

• New product and service development
• Locations of new facilities
• The procedures to produce new products or
  services
• CAD/CAM
• Automation
• Facility layout planning
• Process layout
• Product layout

19-4
5
Tactical Decisions in OM

• Quality Control
• Total Quality Management
• Customer-driven
• Focus on quality, with emphasis on continuous
  improvement
• Concentrating on improving work process
• Get it right the first time!
• Emphasize teamwork
• Demings 14 points for quality management

19-5
6
Tactical Decisions in OM (II)

• Productivity Control
• Participative management
• Profit sharing
• Improving work environment
• Inventory Control
• Fixed-point inventory system
• Fixed-interval inventory system
• Materials requirement planning
• Just-in-time inventory system
• Advantages?
• Challenges?

19-6
7
Value Chain and Value Chain Management

• Value chain
• The entire series of organizational work
  activities that add value to the end product
• Primary activities
• Support activities
• Value chain management
• The process of managing the entire sequence of
  integrated activities and information about
  product flows along the value chain

8
Current Issues in OM

• Outsourcing and supplier partnership
• Flexible manufacturing systems

19-8