Management and Organizational Studies 3330A/B Lecture Notes - Lecture 1: Operations Management, Material Requirements Planning, Cash Flow
17 Sep 2016
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Intro to Ops
What is Ops Management
- every business is managed through three major functions: finance,
operations management and marketing
o Ops: manages → people, equipment, tech, materials, and info
▪ → to produce: goods and or services
o Finance: manages → cash flow, current assets and capital investments
o Marketing: manages → customer demands
▪ Generates → sales for goods and services
- Operations management (OM): the business function responsible for
planning, coordinating and controlling the resources needed to produce a
company’s goods and services
o plans, organizes, coordinates and controls resources needed to
produce a company’s goods and services
o OM is a management function
o OM is the central core function of every company
- Role of OM: to transform organizational inputs into outputs
- OM is responsible for orchestrating
all the resources needed to produce
the final product
- The internet has given customers
flexibility, but also created one of
the biggest challenges for
companies: delivering exactly what
the customer ordered at the time
promised
- For OM to be successful, must add
value during the transformation
process
- Use the term value added →net increase between the final value of a product
and the value of all the inputs, value created during transformation
o Greater value added more productive a business is
- Efficiency: performing activities at the lowest possible cost
Differences between manufacturing and service organizations
- organizations can be divided into two broad categories: manufacturing
organizations and service org based on product tangibility and degree of
customer contact and have different operational requirements
- Manu org: organizations that primarily produce a tangible product and
typically have low customer contact
- Service org: organizations that primarily produce an intangible product, such
as ideas, assistance or information, and typically have high customer contact
- Distinction:
o manu produces physical, tangible goods stored in inventory before
needed while service produces intangible that can be produced ahead
find more resources at oneclass.com
find more resources at oneclass.com
o in manu, customers have no direct
contact with the organization eg:
buying a car customers buy through
dealerships and don’t come in contact
with automobile factory
- figure to the right shows the differences
between manufacturing and services,
focusing on the dimensions of product
tangibility and degree of customer contact
- quasi-manufacturing organizations: have low
customer contact and are capital intensive,
yet they provide a service
o eg: post office, automated warehouse, mail order catalog business
- managing service operations is of especially high importance
- reason is that service sector constitutes a dominant segment of our economy
Operations Management Decisions
- strategic decisions: long term decisions that set the direction for the entire
organization, are broad in scope and set the tone for other more specific
decisions
- tactical decisions: decisions that are specific and ST and are bound by
strategic decisions
o focus on more day to day issues
- strategic decisions are made first and determine the direction of tactical
decisions, which are made more frequently and routinely
- tactical provide feedback to strategic decisions, and these must be aligned
Strategic decisions:
→ Broad in scope, LT in nature, all-encompassing
Tactical decisions:
→ narrow in scope, ST in nature, concerning a small group of issues
- enterprise resource planning (ERP): integrates info throughout the
organization, manages forecasts, and coordinates factory operations
Why OM?
- during WW OM wasn’t of importance as there wasn’t as much competition
and marketing took a stronger role
- changed in the 70s and 80s, to regain their competitiveness, companies
turned to OM, a function they had overlooked and almost forgotten about
- learned that to achieve long run success, must place more importance on OM
Industrial Revolution
- an industry movement that changed production by substituting machine
power for labour power
- started in the 0’s with the development of a number of inventions that
relied on machine power instead of human power
o most important was the steam engine by James Watt
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Role of om: to transform organizational inputs into outputs. Om is responsible for orchestrating all the resources needed to produce the final product. The internet has given customers flexibility, but also created one of the biggest challenges for companies: delivering exactly what the customer ordered at the time promised. For om to be successful, must add value during the transformation process. Use the term value added net increase between the final value of a product and the value of all the inputs, value created during transformation: greater value added more productive a business is. Efficiency: performing activities at the lowest possible cost. Organizations can be divided into two broad categories: manufacturing organizations and service org based on product tangibility and degree of customer contact and have different operational requirements. Manu org: organizations that primarily produce a tangible product and typically have low customer contact.
