BU385 Lecture Notes - Lecture 1: Total Quality Management, Supply Chain, William Ouchi

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8 Sep 2016
BU385 Lecture #1- Chapter 1
What is Operations Management?
OM is the management of activities and resources that create goods and/or provide services
Companies use OM to improve:
oEfficiency – minimize cost and time
oEffectiveness achieving intended goals: quality & timeliness
OM activities incl.: forecasting, capacity planning, scheduling, managing inventories, assuring
quality, motivating employees, and where to locate facilities
Why Study Operations Management?
oA large % of a company’s expenses occur in OM area (improvements=profits)
oA large # of all jobs are in the OM area (purchasing quality, planning, scheduling,
inventory, etc.)
oActivities in all other areas (finance, marketing) are interrelated with OM activities
Three Basic Functions
1. Operations: create goods and services
2. Finance: provide funds and the economic analysis of investment proposals
3. Marketing: assess customer wants and needs and communicate them to others
Ask: is the OM function adding value during the transformations process?
Is there any overlapping between the main functions?
What is the added value? The difference between the cost inputs and the price of outputs
oMaking it accessible, improving design, etc. all add value
oAdded whenever you gain something by doing work valued by customers or
Operations Function
Inputs: buildings, labour, machines, materials, information ->
oTransformation/conversion process ->
Outputs: Goods and services
Value is added between inputs and outputs
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