OM 300 1st Edition Lecture 1 Outline of Last Lecture I N A Outline of Current Lecture II Why OM III Strategy and Productivity IV Measurement V Service Sector VI Challenges for OM Current Lecture Hard Rock Caf creates value in form of good food and entertainment Production creating the goods and services OM the set of activities that create value in the form of G S by transforming inputs into outputs Planning coordinating and controlling the resources needed to produce a company s products and services Essential Functions Producing G S use these for Organizational Charts Marketing generates Demand Production operations creates the product Finance Accounting tracks money Supply Chain A global network of organizations and activities that supply a firm with goods and services Members of the supply chain collaborate to achieve high levels of customer satisfaction efficiency and competitive advantage These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute Why study OM OM is one of 3 major functions of any org we want to study how people organize themselves for productive enterprise We want to know how G S are produced We want to understand what operations mgt does OM is such a costly part of an org What do OM managers do Planning Organizing Staffing Leading Controlling The Strategic Decisions Design of G S o Defies what is required of operations o Product design determines quality sustainability and human resources Managing Quality o Determine customer s needs and meet them Process and Capacity Design o How Is a good or service produced o Commits mgt to specific technology quality etc Location Strategy o Nearness to customers suppliers and talent Layout Strategy o Integrate capacity needs personnel levels Human resources and job design o Recruit motivate and retain Supply chain mgt o Integrate supply chain into firm s strategy Inventory mgt o Inventory ordering and holding decisions Scheduling Maintenance The Economic System Inputs Transformation Outputs o Feedback then adjust Services are becoming much higher than manufacturing in all developed countries except China Productivity units produced Input used Measure of process improvement Represents output relative to input Only through productivity increases can our standard of living improve Multi factor Productivity Output Labor Material Energy Capital Also known as multi factor productivity Output and inputs are often expressed in dollars Measurement Problems 1 Quality may change while the quantity of inputs and outputs remains constant 2 External elements may cause an increase or decrease in productivity 3 Precise units of measure may be lacking Productivity Variables 1 Labor contributes about 10 of the annual increase 2 Capital contributes about 38 of the annual increase 3 Management contributes about 52 of the annual increase Key Variables for Improves Labor Productivity 1 Basic education appropriate for the labor force 2 Diet of the labor force 3 Social overhead that makes labor available Challenge is in maintaining and enhancing skills in the midst of rapidly changing technology and knowledge Management Ensures labor and capital are effectively used to increase productivity Use of knowledge Application of technologies Knowledge societies Difficult challenge Productivity and the Service Sector 1 Typically labor intensive 2 Frequently focused on unique individual attributes or desires 3 Often an intellectual task performed by professionals 4 Often difficult to mechanize and automate 5 Often difficult to evaluate for quality New Challenges in OM Global focus Supply chain partnering Sustainability Rapid product development Mass customization Just in time performance Empowered employees
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