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• Operations


  That part of a business organization that is responsible for producing goods and/or services
• Assets


  Can be either physical or intangible
• Operation


  The work of managing the inner workings of your business so it runs as efficiently as possible
• Goods


  Physical items that include raw materials, parts, subassemblies, and final products
• Services


  Activities that provide some combination of time, location, form, or psychological value
• Supply chain


  The sequence of organizations—their facilities, functions, and activities—that are involved in producing and delivering a product or service

  
• Supply chain management


  The management of the flow of goods and services and includes all processes that transform raw materials into final products

  
• Transformation process


  Any activity or group of activities that takes one or more inputs, transforms and adds value to them, and provides outputs for customers or clients
• Feedback


  Measurements taken at various points in the transformation process to determine whether corrective action is needed
• Control


  Comparing measurements with previously established standards to determine whether corrective action is needed
• Transformed resources


  The materials, information, and customers that are treated, transformed, or converted in the process
• Value-added


  The difference between the cost of inputs and the value or price of outputs
• In for-profit organizations, the value of outputs is measured by the prices that customers are willing to pay for those goods or services
• Value-added


  the term used to describe the difference between the cost of inputs and the value

  or price of outputs.
• Firms use the money generated by value-added for

  • Research and development
  • Investment in new facilities and equipment
  • Worker salaries
  • Profits
• The greater the value-added


  The greater the amount of funds available for these purposes
• Value


  Can also be psychological, as in branding
• Factors affecting the design and management of operations systems

  • Degree of involvement of customers in the process
  • Degree to which technology is used to produce and/or deliver a product or service
• The greater the degree of customer involvement


  The more challenging it can be to design and manage the operation
• Technology choices


  Can have a major impact on productivity, costs, flexibility, and quality and customer satisfaction
• Production of goods


  Results in a tangible output, such as an automobile, eyeglasses, a golf ball, a refrigerator—anything that we can see or touch
• Providing services


  Generally implies an act, such as a physician's examination, TV and auto repair, lawn care, and the projection of a film in a theater
• Most systems involve a blend of goods and services
• Operations interacts with other functional areas of the organization

  • Legal
  • Accounting
  • Management information systems (MIS)
  • Personnel/human resources
  • Public relations
• Legal department


  Must be consulted on contracts with employees, customers, suppliers, and transporters, as well as on liability and environmental issues
• Accounting


  Supplies information to management on costs of labor, materials, and overhead, and may provide reports on items such as scrap, downtime, and inventories
• Management information systems (MIS)


  Concerned with providing management with the information it needs to effectively manage, through designing systems to capture relevant information and designing reports
• Public relations


  Have responsibility for building and maintaining a positive public image of the organization
• Process


  One or more actions that transform inputs into outputs
• Categories of business processes


  • Upper-management processes
  • Operational processes
  • Supporting processes
• Upper-management processes


  • Govern the operation of the entire organization
  • Examples: organizational governance and organizational strategy
• Supporting processes


  • Support the core processes
  • Examples: accounting, human resources, and IT (information technology)
• Business processes, large and small, are composed of a series of supplier–customer relationships, where every business organization, every department, and every individual operation is both a customer of the previous step in the process and a supplier to the next step in the process
• Business process management (BPM)


  Activities include process design, process execution, and process monitoring
• Managing processes to meet demand


  • A basic aspect of operations whereby the organization determine the methods and procedures in producing a product in order to fulfill the needs or wants of the customers
• Dealing with process variability

  • A basic aspect of operations whereby the organizations makes decisions on the process on how they could be able to produce the products
• Sources of variation


  • Variety of goods or services being offered
  • Structural variation in demand
  • Random variation
  • Assignable variation
• Operations management activities


  • Product and service design
  • Process selection
  • Selection and management of technology
  • Design of work systems
  • Location planning
  • Facilities planning
  • Quality improvement
• The production of goods for sale, at least in the modern sense, and the modern factory system had their roots in the Industrial Revolution
• Scientific management


  • Spearheaded by Frederick Winslow Taylor
  • Believed in a "science of management" based on observation, measurement, analysis and improvement of work methods, and economic incentives
  • Studied work methods in great detail to identify the best method for doing each job
  • Believed that management should be responsible for planning, carefully selecting and training workers, finding the best way to perform each job, achieving cooperation between management and workers, and separating management activities from work activities