Operations management

Report
GOODS, SERVICES, AND
OPERATIONS MANAGEMENT
CHAPTER 1
DAVID A. COLLIER AND JAMES R. EVANS
©2013 OM4 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated,
or posted to a publicly accessible website, in whole or in part.
1
CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
1-1 Explain the concept and importance of operations
management.
1-2
1-3
1-4
1-5
Describe what operations managers do.
Explain the differences between goods and services.
Describe a customer benefit package.
Explain the role of processes in OM and identify
three general types of processes.
1-6 Summarize the historical development of OM.
1-7 Describe current challenges facing OM.
©2013 OM4 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated,
or posted to a publicly accessible website, in whole or in part.
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
• Operations management (OM) is the
science and art of ensuring that goods and
services are created and delivered
successfully to customers.
− Design of goods, services, and the processes
that create them.
− Day-to-day management of those
processes.
− Continual improvement of these goods,
services, and processes.
©2013 OM4 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated,
or posted to a publicly accessible website, in whole or in part.
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
Three Issues at the Core of Operations Management
• Efficiency
• Cost
• Quality
©2013 OM4 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated,
or posted to a publicly accessible website, in whole or in part.
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
What Do Operations Managers Do?
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Forecasting
Supply chain management
Facility layout and design
Technology selection
Quality management
Purchasing
Resource and capacity management
Process design
Job design
Service encounter design
Scheduling
©2013 OM4 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated,
or posted to a publicly accessible website, in whole or in part.
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
OM in the Workplace
Operations Managers have such titles as:
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Chief Operating Officer
Hotel or Restaurant Manager
Vice President of Manufacturing
Customer Service Manager
Plant Manager
Field Services Manager
Supply Chain Manager
©2013 OM4 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated,
or posted to a publicly accessible website, in whole or in part.
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
OM in the Workplace
Shelly Decker, an accounting and information
systems major in college, and her sister created
an entrepreneurial venture to manufacture and
sell natural soaps and body products.
©2013 OM4 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated,
or posted to a publicly accessible website, in whole or in part.
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
OM in the Workplace
Shelly uses OM skills every day:
• Process design – When a new product is to be
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introduced, the best way to produce it must be
determined. This involves charting the detailed
steps needed to make the product.
Inventory management – Inventory is tightly
controlled to keep cost down and to avoid
production that isn't needed. Inventory is taken
every four weeks and adjusted in the inventory
management system accordingly.
©2013 OM4 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated,
or posted to a publicly accessible website, in whole or in part.
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
OM in the Workplace
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Scheduling – Production schedules
are created to ensure that enough product is available
for both retail and wholesale customers, taking into
account such factors as current inventory and soap
production capacity.
Quality management – Each product is inspected and
must conform to the highest quality standards. If a
product does not conform to standard (for example,
wrong color, improper packaging, improper labeling,
improper weight, size, or shape), then it is removed from
inventory to determine where the process broke down
and to initiate corrective action.
©2013 OM4 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated,
or posted to a publicly accessible website, in whole or in part.
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
OM in the Workplace
Brooke Wilson is a Process Manager for J.P. Morgan Chase in
the Credit Card Division. He was an accounting major in
college. Among his OM-related activities are:
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Planning and budgeting: Representing the plastic
card production area in all meetings, developing annual
budgets and staffing plans, and watching technology that
might affect the production of plastic credit cards.
Inventory management: Overseeing the
management of inventory for items such as plastic blank
cards, inserts such as advertisements, envelopes,
postage, and credit card rules and disclosure inserts.
©2013 OM4 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated,
or posted to a publicly accessible website, in whole or in part.
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
OM in the Workplace
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Scheduling and capacity: Daily to annual scheduling of
all resources (equipment, people, inventory) necessary to
issue new credit cards and reissue cards that are up for
renewal, replace old or damaged cards, and one's that are
stolen.
• Quality: Embossing the card with accurate customer
information and quickly getting the card in the hands of
the customer.
©2013 OM4 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated,
or posted to a publicly accessible website, in whole or in part.
11
CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
Understanding Goods and Services
• A good is a physical product that you can see,
touch, or possibly consume. Examples of goods
include: oranges, flowers, televisions, soap,
airplanes, fish, furniture, coal, lumber, personal
computers, paper, and industrial machines.
• A durable good is a product that typically lasts
at least three years. Vehicles, dishwashers, and
furniture are some examples of durable goods.
©2013 OM4 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated,
or posted to a publicly accessible website, in whole or in part.
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
Understanding Goods and Services
• A non-durable good is perishable and
generally lasts for less than three years.
Examples are toothpaste, software, shoes, and
fruit.
• A service is any primary or complementary
activity that does not directly produce a physical
product.
©2013 OM4 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated,
or posted to a publicly accessible website, in whole or in part.
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
Similarities Between Goods and Services
1. Goods and services provide value and
satisfaction to customers who purchase and use
them.
2. They both can be standardized or customized to
individual wants and needs.
3. A process creates and delivers each good or
service, and therefore, OM is a critical skill.
©2013 OM4 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated,
or posted to a publicly accessible website, in whole or in part.
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
Differences Between Goods and Services
1. Goods are tangible while services are intangible.
2. Customers participate in many service processes,
activities, and transactions.
3. The demand for services is more difficult to predict
than the demand for goods.
4. Services cannot be stored as physical inventory.
5. Service management skills are paramount to a
successful service encounter.
6. Service facilities typically need to be in close
proximity to the customer.
7. Patents do not protect services.
©2013 OM4 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated,
or posted to a publicly accessible website, in whole or in part.
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
Understanding Goods and Services
• Service management integrates marketing,
human resources, and operations functions to
plan, create, and deliver goods and services,
and their associated service encounters.
• A service encounter is an interaction between
the customer and the service provider.
©2013 OM4 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated,
or posted to a publicly accessible website, in whole or in part.
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
Understanding Goods and Services
• Service encounters consist of one or more moments
of truth—any episodes, transactions, or experiences
in which a customer comes into contact with any
aspect of the delivery system, however remote, and
thereby has an opportunity to form an impression.
• Examples:
− A gracious welcome by an employee at a hotel
check-in counter
− A grocery store employee who seems too
impatient to help
− Trying to navigate a confusing Web site
©2013 OM4 Cengage Learning. All Rights Reserved.
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or posted to a publicly accessible website, in whole or in part.
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
Exhibit 1.1
How Goods
and Services
Affect
Operations
Management
Activities
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or posted to a publicly accessible website, in whole or in part.
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
Customer Benefit Packages
• A customer benefit package (CBP) is a clearly
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defined set of tangible (goods-content) and
intangible (service-content) features that the
customer recognizes, pays for, uses, or
experiences.
In simple terms, a CBP is some combination of
goods and services configured in a certain way to
provide value to customers.
A CBP consists of a primary good or service,
coupled with peripheral goods and/or services.
©2013 OM4 Cengage Learning. All Rights Reserved.
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or posted to a publicly accessible website, in whole or in part.
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
Customer Benefit Packages
• A primary good or service is the “core” offering
that attracts customers and responds to their basic
needs. For example, the primary service of a
personal checking account is the capability to do
convenient financial transactions.
• Examples:
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an airline flight
a checking account
a brief case
a football game
tax preparation advice
©2013 OM4 Cengage Learning. All Rights Reserved.
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or posted to a publicly accessible website, in whole or in part.
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
Customer Benefit Packages
• Peripheral goods or services are those that
are not essential to the primary good or service,
but enhance it.
•
Examples for a personal checking account:
− online access and bill payment
− debit card
− designer checks
− paper or electronic account statement
©2013 OM4 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated,
or posted to a publicly accessible website, in whole or in part.
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
Customer Benefit Packages
• A variant is a CBP attribute that departs from
the standard CBP and is normally location- or
firm-specific.
•
Example:
− a fishing pond or pool at an automobile
dealership where kids can fish while the
parents shop for vehicles
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
Exhibit 1.2 A CBP Example for Purchasing a Vehicle
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
Exhibit Extra Another Example of a Consumer Benefit Package
©2013 OM4 Cengage Learning. All Rights Reserved.
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or posted to a publicly accessible website, in whole or in part.
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
Customer Benefit Packages
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Many “goods” and “services” have a mixture of both
goods and service content.
Exhibit 1.3
Examples of
Goods and
Service
Content
©2013 OM4 Cengage Learning. All Rights Reserved.
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or posted to a publicly accessible website, in whole or in part.
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
Processes
• A process is a sequence of activities that is
intended to create a certain result.
•
Processes are the means by which goods and
services—the components of a CBP—are
produced and delivered.
©2013 OM4 Cengage Learning. All Rights Reserved.
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or posted to a publicly accessible website, in whole or in part.
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
Processes
Key business processes:
• Value creation processes, focused on producing or
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delivering an organization’s primary goods or services,
such as filling and shipping a customer’s order, assembling
a dishwasher, or providing a home mortgage.
Support processes, such as purchasing materials and
supplies used in manufacturing, managing inventory,
installation, health benefits, technology acquisition, day
care on-site services, and research and development.
General management processes, including accounting
and information systems, human resource management,
and marketing.
©2013 OM4 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated,
or posted to a publicly accessible website, in whole or in part.
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
Processes
•
Nearly every major activity within an
organization involves a process that crosses
traditional organizational boundaries.
•
Networks of processes are called value chains,
which we focus on in Chapter 2.
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or posted to a publicly accessible website, in whole or in part.
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
Pal’s Sudden Service
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Pal’s Sudden Service is a small chain of mostly
drive-through quick service restaurants located
in Northeast Tennessee and Southwest Virginia.
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Pal’s competes against major national chains
and outperforms all of them by focusing on
important customer requirements such as
speed, accuracy, friendly service, correct
ingredients and amounts, proper food
temperature, and safety.
©2013 OM4 Cengage Learning. All Rights Reserved.
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
Pal’s Sudden Service
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Pal’s uses extensive market research to fully
understand customer requirements:
convenience; ease of driving in and out; easyto-read menu, simple, accurate order-system;
fast service; wholesome food; and reasonable
price.
©2013 OM4 Cengage Learning. All Rights Reserved.
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or posted to a publicly accessible website, in whole or in part.
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
Pal’s Sudden Service
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Pal’s value chain begins with raw materials and
suppliers providing items such as meat, lettuce,
tomatoes, buns, and packaging; uses
intermediate processes for order taking, cooking,
and final assembly; and ends with order delivery
and—hopefully—happy customers.
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Every process is flowcharted and analyzed for
opportunities for error, and then mistake-proofed
if at all possible.
©2013 OM4 Cengage Learning. All Rights Reserved.
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
Pal’s Sudden Service
• Entry-level employees—mostly high school students in
their first job—receive 120 hours of training on
precise work procedures and process standards in
unique self-teaching, classroom, and on-the-job
settings, reinforced by a “Caught Doing Good”
program that provides recognition for meeting quality
standards and high performance expectations.
• Pal’s collects performance measures such as
complaints, profitability, employee turnover, safety,
and productivity.
©2013 OM4 Cengage Learning. All Rights Reserved.
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or posted to a publicly accessible website, in whole or in part.
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
Exhibit 1.4 Six Eras of Operations Management
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or posted to a publicly accessible website, in whole or in part.
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
Today, more than 90 percent of the jobs in the
U.S. economy are in service processes (half of the
jobs in goods-producing industries, or about 9%,
plus 81% in service industries). Service involves
designing and managing service-, information-, or
entertainment-intensive processes.
Most people in the United States are working in
the service sector or service processes such as
health care and education, or in service-related
aspects of manufacturing firms such as human
resource management and accounting.
©2013 OM4 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated,
or posted to a publicly accessible website, in whole or in part.
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
Sustainability
Sustainability refers to an organization’s ability
to strategically address current business needs
and successfully develop a long-term strategy that
embraces opportunities and manages risk for all
products, systems, supply chains, and processes
to preserve resources for future generations.
©2013 OM4 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated,
or posted to a publicly accessible website, in whole or in part.
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CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
Sustainability
• Environmental sustainability is an organization’s
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commitment to the long-term quality of our
environment.
Social sustainability is an organization’s commitment
to maintain healthy communities and society that
improve the quality of life.
Economic sustainability is an organization’s
commitment to address current business needs and
economic vitality, and to have the agility and strategic
management to prepare successfully for future
business, markets, and operating environments.
©2013 OM4 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated,
or posted to a publicly accessible website, in whole or in part.
36
CHAPTER 1
GOODS, SERVICES, AND OPERATIONS MANAGEMENT
Current Challenges in OM
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Technology
Globalization
Changing customer expectations
Changing job designs
Quality
Global manufacturing
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or posted to a publicly accessible website, in whole or in part.
37

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