Introduction to Management Functions
Session 1: October 14
Session 2: October 16
• What is operations management?
• How is value to the customer impacted by
• What are the attributes of quality?
• How do organizations plan and produce?
• How does the operations manager approach their
• Roles for operations managers
What is Operations Management?
• Operations Management (OM): Efficient and
effective activities that create valuable goods and
services by transforming inputs into outputs
• Foundations of OM
– Customers (external & internal)
– Processes (inputs -> activities -> outputs)
– Capacity (level
• The Value Equation: Customers value goods and
services according to the following equation:
– (Quality + Speed + Flexibility) / cost
What Firms sell?
• The four main companies I’ve worked for all sell both goods
• Build and sell cars
• Finance cars and sell residential mortgages
• Provide OnStar to drivers
• Deliver audits, give tax advice, and consult
• Sell various proprietary software packages
• Build hospitals, deliver food to patients, maintain facilities
• Dig ditches, move earth, pave roads
• Plow snow, patrol highways
• Manage projects
• Pick up, haul & ship garbage, recyclables, and organic waste
• Transfer station services, product destruction, secure shredding
Value-Added Activities of an Operating Manager
Operations managers make decisions related to:
Where to Operate?
– Location of plants, head offices, service sites, cyberspace,
Plant/Facility Layout & Design
– Unique arrangement of activities, equipment, and people
to drive efficiencies, increase safety, reduce bottlenecks,
and maximize flexibility
How to Maximize Quality?
– Monitoring and manipulating the operational processes to
“build-in” quality from the start
How to Produce?
– Production method impact on competitiveness
(attractiveness to customers) of output
• Lofty goals like “zero defects” require an integrated system of
quality control that utilizes some or all of these approaches:
is an approach, made famous by Jack Welsh of GE,
of setting and regularly measuring against near-perfect
performance targets for all key processes
Total Quality Management
is an initiative based on the
tenants of commitment to quality, total involvement
(teamwork), use of statistics, and continuous improvement
– International Organization for Standardization
designations (9000 / 14000) prescribe process and
documentation standards, and enhance compliance through