MAN3504 Study guide Exam 1 CHAPTER 1 SERVICE OPERATIONS MANAGEMENT Operations a function or system that transforms inputs into outputs of greater value The central Activity of the Firm Customers pay us for our operations product that we make is the service we provide the transformation process Operations Management Designing Planning Controlling and improving these transformation systems Designs operate and improve productive systems systems for getting work done found in banks hospitals factories and government try to ensure that the transformation process is performed efficiently and that the output is of greater value that the sum of its inputs value chain a series of activities from supplier to customer that add value to a product or service activities in operations management included organizing work selecting processes arranging layouts locating facilities designing jobs measuring performance controlling quality scheduling work managing inventory and planning production What is operations management Important Globally the better you are with resources less inefficiency Nationally Corporately manage operation better than others you will make more money Personally employability will be enhanced Transformation Process Physical as in manufacturing operations Locational as in transportation or warehouse operations Exchange as in retail operations Physiological as in health care Psychological as in entertainment Informational as in communications The four primary functional areas of a firm are marketing finance operations and human resources an operation is the technical core of the organization COOs chief operating officers run major corporations Operations as a transformation Process Input Transformation Process Output input material machines labor management capital customers Output goods services customers Requirement from output to input feedback from output to transformation process from transformation process to input The evolution of operations and supply chain management operation management did not begin until the industrial revolution in 1700s Craft production every piece was unique hand fitted and made entirely by one person Machines have revolutionized craft production Division of labor in which a production process was broken down into a series of small tasks each performed by a different worker workers became very proficient in their tasks Interchangeable parts allowed the manufacture of goods to shift from customized one at a time production to volume production of standardized parts This meant for standards of quality and supervisors Scientific Management the systematic analysis of work methods Henry ford applied this to the model T car This eventually led to mass production the high volume production of a standardized product for a mass market The quality revolution an emphasis on quality and the strategic role of operations brought realization that production should be tied to consumer demand Lean production a system that prizes flexibility rather than efficiency and quality rather than quantity Supply chain management managing the flow of information products and services across a network of customers enterprises and suppliers supply chain management focuses on the input and output sides of transformation process Globalization Services Good 2 3 of today s business operate globally through global markets global operations global financing and global supply chains Companies go global to take advantage of favorable costs Falling trade barriers and the internet paved the way for globalization Activity that does not directly produce a physical product A physical product Can hold it in your hand Operations management approaches often differ To keep in the marketplace 1 Do the right things Making products that customers want 2 Do things right Measure by productivity using your resources well Productivity and competitiveness a global marketplace for product and services means more customers and more intense competition our competitiveness in reference to other counties rather than to other companies competitiveness in the global market affects the economic success of the nation and the quality of life for its citizens Competitiveness degree to which a nation of company can produce goods and services that meet the test of relevant markets Productivity Output Input the degree to which a nation can produce goods and services that meet the test of international markets while simultaneously maintain or expanding the real incomes of its citizens The most common measure of competitiveness is productivity increase in productivity increase n wages without inflation increase in standard of living productivity growth also represents how quickly an economy can expand its capacity to supply goods and services Ratio of output to input Productivity output input Sales made products produced customers served meals delivered or calls answered how many units you make labor hours investment in equipment material usage or square footage The most common input in productivity is labor hours productivity is relative measure If more input were available output would increase at the same rate there may be limits to output other than those on which productivity calculations are based productivity emphasizes output produced NOT output sold Measure of Productivity Single Factor productivity Output labor output materials output capital Just one input Individual inputs Multifactor productivity output labor materials overhead Combining inputs Total factor productivity Goods and services produced all inputs used to produce them combining all of your inputs compares the total quality of goods and services produced with all the inputs used to produce them Want numerator higher and denominator lower higher productivity Balanced Scorecard Measuring more than financial performance product way to measure how well we are doing 1 Finances how should we look to our shareholders 2 Customers what they think of us 3 Processes included productivity measures productivity snapshot at which business process must we excel 4 Learning and growing how will we sustain our ability to change and improve more than financial measures are used to assess performance operational excellence is important in all four areas Key performance indicators a set of measures that help managers evaluate performance n critical areas Key performance indicators Strategy and Operations set of measures to help mangers evaluate performance in