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Introduction To Operations Management

Operations management (OM) is responsible for planning, coordinating, and controlling resources to produce products and services for a company. OM transforms inputs like people, materials, and money into outputs of goods and services. OM decisions range from strategic decisions that set long-term direction to tactical decisions that focus on day-to-day resource needs. While manufacturers produce tangible goods and services intangible products, both use technology and face quality, productivity, and other issues. Historical developments like scientific management, total quality management, and just-in-time processes have shaped OM. Today, OM focuses on meeting customer demands for quality, speed, and lower costs through lean systems and information management.

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112 views

Introduction To Operations Management

Operations management (OM) is responsible for planning, coordinating, and controlling resources to produce products and services for a company. OM transforms inputs like people, materials, and money into outputs of goods and services. OM decisions range from strategic decisions that set long-term direction to tactical decisions that focus on day-to-day resource needs. While manufacturers produce tangible goods and services intangible products, both use technology and face quality, productivity, and other issues. Historical developments like scientific management, total quality management, and just-in-time processes have shaped OM. Today, OM focuses on meeting customer demands for quality, speed, and lower costs through lean systems and information management.

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Introduction

to
Dr. T. FEBRY. C. ST., MT
Learning Objectives
• Define and explain OM
• Explain the role of OM in business
• Describe the decisions that operations managers make
• Describe the differences between service and manufacturing
operations
• Identify major historical developments in OM
• Identify current trends in OM
• Describe the flow of information between OM and other business
functions
Operations Management is:

The business function responsible for


planning, coordinating, and controlling
the resources needed to produce
products and services for a company
Operations Management is:

• A management function
• An organization’s core function
• In every organization whether Service or
Manufacturing, profit or Not for profit
Typical Organization Chart
What is Role of OM?

• OM Transforms inputs to outputs


• Inputs are resources such as
• People, Material, Energy, Information, and Money,

• Outputs are goods and services


OM’s Transformation Process
OM’s Transformation Role

• To add value
• Increase product value at each stage

• Value added is the net increase between output product value and input
material value

• Provide an efficient transformation


• Efficiency – means performing activities well for least possible cost
Manufacturers vs Service Organizations
• Services: • Manufacturers:
• Intangible product • Tangible product
• Product cannot be inventoried • Product is inventoried
• High customer contact • Low customer contact
• Short response time • Longer response time
• Labor intensive • Capital intensive
Similarities for Service/Manufacturers
• Both use technology
• Both have quality, productivity, & response issues
• Both must forecast demand
• Both can have capacity, layout, and location issues
• Both have customers, suppliers, scheduling and staffing
issues
Service vs Manufacturing
• Manufacturing often provides services
• Services often provides tangible goods
• Some organizations are a blend of
service/manufacturing/quasi-manufacturing Quasi-
Manufacturing (QM) organizations
• QM characteristics include
• Low customer contact & Capital Intensive
OM Decisions
• All organizations make decisions and follow a similar
path
• First decisions very broad – Strategic decisions
• Strategic Decisions – set the direction for the entire company;
they are broad in scope and long-term in nature
OM Decisions
• Following decisions focus on specifics - Tactical decision
• Tactical decisions: focus on specific day-to-day issues like resource
needs, schedules, & quantities to produce
• are frequent
• Strategic decisions less frequent
• Tactical and Strategic decisions must align
OM Decisions
Historical Development of OM
• Industrial revolution Late 1700s
• Scientific management Early 1900s
• Human relations movement 1930s-60s
• Management science 1940s-60s
• Computer age 1960s
• Environmental Issues 1970s
• JIT & TQM* 1980s

*JIT= Just in Time, TQM= Total Quality Management


Historical Development con’t
• Reengineering 1990s
• Global competition 1980s
• Flexibility 1990s
• Time-Based Competition 1990s
• Supply chain Management 1990s
• Electronic Commerce 2000s
• Outsourcing & flattening of world 2000s

For long-run success, companies must place much importance on their operations
Today’s OM Environment
• Customers demand better quality, greater speed, and lower
costs
• Companies implementing lean system concepts – a total
systems approach to efficient operations
• Recognized need to better manage information using ERP
and CRM systems
• Increased cross-functional decision making
OM in Practice
• OM has the most diverse organizational function
• Manages the transformation process
• OM has many faces and names such as;
• V. P. operations, Director of supply chains, Manufacturing manager
• Plant manger, Quality specialists, etc.
• All business functions need information from OM in order to
perform their tasks
Business Information Flow
OM Across the Organization
• Most businesses are supported by the functions
of operations, marketing, and finance
• The major functional areas must interact to
achieve the organization goals
OM Across the
Organization – con’t
• Marketing is not fully able to meet customer needs if they do not
understand what operations can produce
• Finance cannot judge the need for capital investments if they do not
understand operations concepts and needs
• Information systems enables the information flow throughout the
organization
• Human resources must understand job requirements and worker
skills
• Accounting needs to consider inventory management, capacity
information, and labor standards
Resume
• OM is the business function that is responsible for managing and
coordinating the resources needed to produce a company’s products
and services.
• The role of OM is to transform organizational inputs into company’s
products or services outputs
• OM is responsible for a wide range of decisions, ranging from
strategic to tactical.
• Organizations can be divided into manufacturing and service
organizations, which differ in the tangibility of the product or service
Resume
• Many historical milestones have shaped OM. Some of these are the
Industrial Revolution, scientific management, the human relations
movement, management science, and the computer age
• OM is highly important function in today’s dynamic business
environment. Among the trends with significant impact are just-in-
time, TQM, reengineering, flexibility, time-based competition, SCM,
global marketplace, and environmental issues
• OM works closely with all other business functions
Profile
- Doctor in Operation Research and
Management
- Lecturer International Business
Management Ciputra University
(INA)
THANKS
- Owner Rumah Manajemen
Consultant

Perum Green Eleven B1-08


Jalan Raya Bangil, Kenep, Pasuruan Jawa Timur
67154-Indonesia
Timotius.F.C.W. Sutrisno. ST. +62 811 337 3131
M.T., Dr.
Rumah Manajemen Consultant

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