OPERATIONS

MANAGEMENT

OMGT 50
T.C. LOPEZ
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 What is
Operations Management?

is that part of the

organization that is
responsible for producing
goods and/or services.

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The ideal situation for a
business organization is to
achieve a match of supply
and demand

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KEY FUNCTIONS

OPERATIONS
SUPPLY
SUPPLY CHAIN

SALES
DEMAND
MARKETING
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The three basic functions of
Business Organization

Organization

Finance Operations Marketing

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Finance – responsible for securing
financial resources at favorable
prices and allocating those
resources throughout the
organization
Marketing – responsible for
assessing consumer wants and
needs, and selling and
promoting the organization’s
good and services.
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Operations – responsible for
producing the goods or
providing the services
offered by the
organization.

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 Supply Chain - a sequence of
activities and organizations
involved in producing and
delivering a good or
service

Suppliers’ Direct Producer Distributor Final

Supplier Supplier Customers

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Value- Added
- The difference between
cost of inputs and the value
or price of inputs

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DIFFERENCES BETWEEN MANUFACTURING
AND SERVICE ORGANIZATIONS:
• Degree of customer contact
• Uniformity of input
• Labor content of jobs
• Uniformity of output
• Measurement of productivity
• Production and delivery
• Quality assurance
• Inventory
• Wages
• Ability to patent
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SIMILARITIES BETWEEN MANUFACTURING
AND SERVICE ORGANIZATIONS:
• Forecasting and capacity
planning to match supply and
demand
• Process management
• Managing variations
• Monitoring and controlling costs
and productivity
• Supply chain management
• Location planning, inventory
management, quality control and
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scheduling
PROCESS MANAGEMENT

3 Categories

1. Upper-management processes
2. Operational processes

3. Supporting processes
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SCOPE OF OPERATIONS
MANAGEMENT
• Forecasting
• Capacity planning
• Facilities and layout
• Scheduling
• Managing Inventories
• Assuring Quality
• Motivating and training employees
• Locating Facilities
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RESPONSIBILITIES OF
OPERATIONS MANAGER
• Planning – (capacity, location,
products services, make or
buy, layout, projects,
scheduling)

• Controlling / Improving –
(inventory, quality, cost,
productivity)
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• Planning – (capacity, location,
products services, make or buy,
layout, projects, scheduling)

• Controlling / Improving –
(inventory, quality, cost,
productivity)

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• Organizing - (degree of
centralization, process
selection)

• Staffing – (hiring/laying off, use

of overtime)

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 Operations

Finance Marketing

The three major functions of business

organizations overlap
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 Legal
L
Public
Relations

Operations Personnel/
Accounting Human
Resources

MIS

Operations interfaces with a number of

supporting functions
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DECISION MAKING:

The chief role of an operations

manager is that of a planner/decision
maker

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HISTORICAL EVOLUTION

Industrial Revolution (1770s)

- Substituting machine power for

human power

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Scientific Management

- Spearheaded by Frederick Winslow

Taylor

- Emphasized maximizing output

- ( Henry Ford ) 20th century

• Mass Production
• Division of Labor
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The Human Relations Movement

- Emphasized the importance of

human element in job design

- Motivation

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Decision Models and Management
Science

- Using of quantitative techniques

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The Influence of Japanese Manufacturers

- Increased the productivity of the

operations and the quality of the product

- influence of Deming and Juran

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Operations Today

- E-business / e-commerce

- Technology
• Product and service technology
• Process technology
• Information technology
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KEY ISSUES FOR TODAY’S
BUSINESS OPERATIONS

- Economic conditions (recession)

- Innovating (finding new or improved

products
- Quality Problems
- Risk management
- Competing in a global economy

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OTHER ISSUES

- Environmental Concerns
- Ethical conduct
- The need to manage the supply chain

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