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OUTLINE • What is Operations Management? • Managing Operations (design, operating, improvement) • Process, Elements of Process • Process Analysis • Performance Measures to Analyze Processes • Key Issues in Operations Management Roy D. Shapiro, Core Reading: Process Analysis, HBP No. 8007 (Boston: Harvard Business School Publishing, 2013). What Is Operations Management? • Management of all OPERATIONS which transform inputs such as raw material and labor into outputs in the form of finished goods and services. Fundamentals of Operations Management © The McGraw-Hill 4e Companies, Inc., 20031–3 Examples of Production Systems (Systems consist of a set of interacting components operating together to achieve a common goal) System Inputs Conversion Output (desired) Hospital Patients Health Care Healthy MDs, Nurses Individuals Medical Supplies Equipment Restaurant Hungry Customers Prepare Food Satisfied Food, Chef Serve Food Customers Servers Atmosphere Automobile Sheet Steel Fabrication High Quality Plant Engine Parts and Assembly Automobiles Tools, Equipment of Cars Workers University High School Grads Transferring Educated Teachers, Books of Knowledge Individuals Classroom and Skills 6 The Economic System Inputs Transformation (Process) Outputs Labor, Examples of Transformation Goods capital, are: and management Storage services Transportation Machining Feedback loop Figure 1.6 Elements of a Process Inputs: labor, material, energy and capital, Outputs: Goods or services (cost, quality, timeliness) Transformation: The essence of operations function is to add value during the transformation process. Value is the difference between the cost of intputs and the value or price of outputs. Typical value-added operations are: manufacturing, transportation, retailing. Many studies have shown that we only add value to a product for less than 5% of the time, the rest of the time is wasted Roy D. Shapiro, Core Reading: Process Analysis, HBP No. 8007 (Boston: Harvard Business School Publishing, 2013).
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