Why Is Operations Management Important? Encompasses Services and Manufacturing manufucturing organization-produces physical goods service organization-produces nonphysical outputs in the form of services U.S.economy currently dominated by the creation and sale of services Managing Productivity prodcv-overall output of goods or services divided by the inputs needed to generate that output increasing productivity is key to global competitiveness productivity is a composite of people and operations variables ©Prentice Hall,2002 19-6
Why Is Operations Management Important? Encompasses Services and Manufacturing – manufacturing organization - produces physical goods – service organization - produces nonphysical outputs in the form of services • U.S. economy currently dominated by the creation and sale of services Managing Productivity – productivity - overall output of goods or services divided by the inputs needed to generate that output – increasing productivity is key to global competitiveness – productivity is a composite of people and operations variables © Prentice Hall, 2002 19-6
Deming's 14 Points for Improving Management's Productivity 1.Plan for the long-term future. 2.Never be complacent concerning the quality of your product. 3.Establish statistical control over your production processes and require your suppliers to do so as well. 4.Deal with the best and fewest number of suppliers. 5.Find out whether your problems are confined to particular parts of the production process or stem from the overall process itself. 6.Train workers for the job that you are asking them to perform. 7.Raise the quality of your line supervisors. 8.Drive out fear. 9.Encourage departments to work closely together rather than to concentrate on departmental or divisional distinctions. 10.Do not adopt strictly numerical goals. 11.Require your workers to do quality work. 12.Train your employees to understand statistical methods. 13.Train your employees in new skills as the need arises. 14.Make top managers responsible for implementing these principles. Source:W.E.Deming."Improvement of Quality and Productivity through Action by Management,"National Productivity Review.Winter 1981-1982.pp.12-22.With permission.Copyright 1981 by Executive Enterprises. Inc.22 West 21st St.New York.NY 10010-6904.All rights reserved. ©Prentice Hall,2002 19-7
Deming’s 14 Points for Improving Management’s Productivity © Prentice Hall, 2002 19-7
Importance Of Operations Management (cont. Strategic Role of Operations Management manufacturing operations taken for granted prior to1970 -in 1970s U.S.executives recognized that they were facing a crisis began incorporating existing and future production requirements into the organization's overall strategic plan ©Prentice Hall,2002 19-8
Importance Of Operations Management (cont.) Strategic Role of Operations Management – manufacturing operations taken for granted prior to 1970 – in 1970s U.S. executives recognized that they were facing a crisis • began incorporating existing and future production requirements into the organization’s overall strategic plan © Prentice Hall, 2002 19-8
Value Chain Management What is Value Chain Management? -vale-performance characteristics,features,and attributes,and any other aspects of goods and services for which customers are willing to give up resources organizations must provide value to attract and keep customers value provided through the transformation of raw materials into some product or service that end-users need where,when,and how they want it ©Prentice Hall,2002 19-9
Value Chain Management What is Value Chain Management? – value - performance characteristics, features, and attributes, and any other aspects of goods and services for which customers are willing to give up resources • organizations must provide value to attract and keep customers • value provided through the transformation of raw materials into some product or service that end-users need where, when, and how they want it © Prentice Hall, 2002 19-9