OM 374 Lecture Notes - Lecture 2: Operations Management, Human Resources, Statistical Process Control
20 May 2018
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4 Advantages of Operations
1 Reduces costs
2 Increases Revenue
3 Reduces amount of investment needed
4 Provide impetus for new innovations
Customer/client needs
1. Higher quality
2. Lower costs
3. Shorter lead time
4. Greater adaptability (flexibility)
5. Lower variability with regard to specifications (reliability)
6. High level of service
Operations - management performance objectives
1. Do things right the first time
2. Do things cost effectively
3. Do things fast
4. Make changes quickly
5. Do things right every time
6. Do things better
Do things right the first time
The operations function should not make mistakes. By providing error-free products/services, the
business will gain a quality advantage. Higher quality = lower cost, improved competitive position which
can lead to higher prices and a greater market share
Do things cost effectively
Products and services should be produced/provided at a cost that will enable the business to place them
on the market at a price that will ensure an acceptable profit. Can provide the business with a cost
advantage.
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Do things fast
The period of time between the demand for a product/service and the delivery thereof should be as
short as possible. This will increase availability and give business a speed advantage.
Make changes quickly
Operations management function should be able to adapt/change activities if unforseen circumstances
make it necessary. The business will have an adaptability advantage
Do things right every time
Error-free products/services that satisfy set specifications should regularly and continuously be
provided. This gives business a high reliability or low variability advantage.
Do things better
A business will endeavor to provide a better total product/service package compared to competitors.
This gives business a service advantage
Transformation process
1. Inputs
2. Transformation Process
3. Outputs
Inputs
Resources to be transformed and resources required to make transformation possible
Resources to be transformed
1. Material
2. Customers/clients
3. Information
Resources required to make transformation possible (Aids)
Human resources
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Equipment and facilities
Technology
Different characteristics of operations outputs
1. Volume of output
2. Variety of output
3. Variation of output
4. Visibility of output
Volume of output
Refers to the number of items produced by the operation over a given period of time
Variety of output
Refers to the range of different items produced by the operation over a given period of time
Variation of output
Refers to the particular demand pattern for the output of the operation, which may be constant or
highly irregular, non-routine and unpredictable
Visibility of output
Refers to how much of the operation's activities the customers/clients experience themselves or are
exposed to
Classification of process types for manufacturers
1. Project processes
2. Jobbing processes
3. Batch processes
4. Mass processes
5. Continuous processes
Project processes
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Document Summary
Customer/client needs: higher quality, lower costs, shorter lead time, greater adaptability (flexibility, lower variability with regard to specifications (reliability, high level of service. Operations - management performance objectives: do things right the first time, do things cost effectively, do things fast, make changes quickly, do things right every time, do things better. By providing error-free products/services, the business will gain a quality advantage. Higher quality = lower cost, improved competitive position which can lead to higher prices and a greater market share. Products and services should be produced/provided at a cost that will enable the business to place them on the market at a price that will ensure an acceptable profit. Can provide the business with a cost advantage. The period of time between the demand for a product/service and the delivery thereof should be as short as possible. This will increase availability and give business a speed advantage.
