1. If the organization has made mostly good operating decisions in designing and executing its transformation system to meet the needs of customers, its prospects for long-term survival are greatly enhanced. Involvement – Consumers are often directly involved in the service delivery. Operations management transforms inputs (labor, capital) into outputs (goods and services) that provide added value to customers. See our User Agreement and Privacy Policy. how much long-term capacity the organization will provide to meet customer demand. Managing operations is just as critical on the service side as it is on the product side. Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. Which costs affect the revenue? Operations is one of the three strategic functions of any organization. Consider a car mechanic opening a garage. Without a tangible good to ship, handle and produce, operational managers are instead focused on the execution of an activity to fill a consumer need. As of this date, Scribd will manage your SlideShare account and any content you may have on SlideShare, and Scribd's General Terms of Use and Privacy Policy will apply. Each teacher will deliver this topic somewhat differently. In other words, 3M enjoys a commanding competitive advantage by controlling the transformation processes that turn raw material inputs into the high value-added Magic Tape product. Cost cutting. Toshiba needs to provide a repair service to its laptop computer customers. Then they came up with an innovative idea for Toshiba to provide better service to its customers. Most Toshiba customers think that Toshiba is doing a great job of repairing their computers, when in fact Toshiba never touches the computers! The other two areas of strategic importance to the organization are marketing and finance. Just as a product manufacturing facility will know when a product will be where, so too do service operators need to know when a given service should start and what duration of time is required to complete it. Mac vs. pc: the stereotypes may be true cnn.com, Customer Code: Creating a Company Customers Love, Be A Great Product Leader (Amplify, Oct 2019), Trillion Dollar Coach Book (Bill Campbell). An easy way to remember what a service is (compared to a product) is through using the ‘5 I’s of Services’: This definition offers a great deal of insight when applied to the concept of operational management. The new repair process is much more efficient: The total time to get a computer repaired is now about two days. Introduction to Operations Management Notes OM = Operations Management Management of ANY activities/process that creates goods and provides services Exemplary Activities: Forecasting Scheduling, Quality management Why to study OM Cost and profit breakdown at a typical manufacturing company How to make more profit? In this unit production system and its objectives are explained along with the components of a system. The two 3M examples of Magic Tape and VHS tape show how important the transformation process and operations management can be to providing and protecting an organization’s competitive advantage. Inconsistency – Services tend to be unique. The old approach of providing this service was cumbersome and time-consuming: Under this traditional approach, the total time to get a laptop computer repaired was two weeks—a long time for people to be without their laptop! Depending upon how many jobs she anticipates having within a given period of time, and how many employees she expects to be able to manage simultaneously, she may want to open a facility with three garages or five garages. Global Text Project, Business Fundamentals. Countless operating decisions must be made that have both long- and short-term impacts on the organization’s ability to produce goods and services that provide added value to customers. You can change your ad preferences anytime. An adhesive that is sticky enough to hold items in place (but not too sticky that it can not be removed and readjusted if necessary! Figure 1 summarizes the transformation process. Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. Now customize the name of a clipboard to store your clips. The consumer is the center of the service, and thus each instance of the service is unique based on the individual involved. DBA 1651 PRODUCTION MANAGEMENT 2 NOTES Anna University Chennai INTRODUCTION TO PRODUCTION AND OPERATION MANAGEMENT 1.1 INTRODUCTION This unit starts with a definition of a system. Lecture note no. If you continue browsing the site, you agree to the use of cookies on this website. UPS hired, trained, and certified its own employees to repair Toshiba laptop computers. Following these ratings, operational specialists must consider the comments received and work to find a way to integrate this feedback into future services. If you wish to opt out, please close your SlideShare account. It does not matter whether the organization is a for-profit company, a non-profit organization (religious organizations, hospitals, etc. The goal of operations management is to maximize efficiency while producing goods and services that effectively fulfill customer needs. See our Privacy Policy and User Agreement for details. Learn more. utdallas.edu/~metin 4 Operations Management Operations management: The management of the efficient transformation of inputs into outputs to effectively satisfy customers. Operations decisions include decisions that are strategic in nature, meaning that they have long-term consequences and often involve a great deal of expense and resource commitments. Many companies prepare a 5-year pro-forma to assist in their operation planning. The following are some tactical decisions: Strategic and tactical operations decisions determine how well the organization can accomplish its goals. Magic Tape is used for everyday taping applications, but it offers attractive features that most other tapes do not, including: For several decades, 3M has enjoyed a substantial profit margin on its Magic Tape product because 3M engineers make the manufacturing equipment and design the manufacturing processes that produce Magic Tape. establishing quality assurance procedures. The history of operations management is portrayed. Take a doctor’s office. They also provide opportunities for the organization to achieve unique competitive advantages that attract and keep customers. If you continue browsing the site, you agree to the use of cookies on this website. Controlling the transformation process makes it difficult for competitors to manufacture products of the same quality as the original producer. All organizations must strive to maximize the quality of their transformation processes to meet customer needs.