BUS300: Operations Management

Read this chapter for a brief introduction to operations management and how to think about it. Be sure to answer the discussion questions in Activities 1 through 3.

Operations management is the management of the processes that transforms inputs into the goods and services that add value for the customer. After you read this page, you should be able to explain the role of operations management within an organization and differentiate between strategy and tactics.

Service and manufacturing operations share many similarities. However, there are some important differences. This section provides an overview of those differences.

This section discusses the role of an operations manager in a manufacturing company. After reading the section, take time to think about and answer the two exercises.

This section talks about how the elements of operations management for service providers differ from manufacturing operations management. Complete the exercise provided at the end of this section. As you do it, consider how each element is important to the successful operations of a service business.

Simply put, operations management is the process of transforming inputs into outputs. This article gives you a foundation for understanding an underlying model that supports this process. This is important because the types of inputs are discussed, and there are opportunities for you to consider how different types of organizations combine inputs to create unique products and services. Be sure to complete each activity.

Operations management does not exist in a vacuum within an organization. Operations management is a functional area that interacts with and is supported by other functional parts of the organization. This section discusses the suppliers and customers as areas outside the organization's control. Be sure to complete each activity.

This section covers the functional structure that is common in many organizations. Operations is a function within the organization. It is important to understand the other functional units and how operations fit within the overall structure.

For this activity, you will apply the concepts of operations management to real world situations. You will use this unit to begin developing an operation management plan by writing a 2–3 page paper on a business concept of your choosing.

Read this article, and pay particular attention to the section on the strategy hierarchy.

The strategy pursued by an organization has a distinct impact on the way that the organization chooses to operate. The five steps of strategy are crucial in the design of the operations.

There are many discussions surrounding the importance of the Board of Directors taking a guiding role in strategy development. Consider the challenges boards face in carving out a significant role in the strategy process.

This chapter explains the connection between operations and strategy. There is, or should be, a direct connection between this functional area and the organizational plan. The strategy provides the foundation for the operational decisions made daily. In other words, as an operations manager, you choose tactics based on the developed organization's corporate, business, and functional level strategy. Take time to complete the action checklist activity at the end of the chapter.

This chapter explains the nature of planning and the importance of analysis in creating differentiated products or services or higher levels of efficiency. Understanding the nature of strategic planning and the types of analysis used during the strategic planning process are important for operation managers.

This section defines Porter's Five Forces and the importance of defining an industry's competitive advantage. This step is important in deciding what drives the competitiveness of an industry. When this is understood, an organization can choose how to make appropriate trade-offs in the operations based on competitive priorities. Be sure to complete the exercises.

This section helps explore the importance of the value chain in creating operational competitive advantage. Competitive advantage can be created in a variety of ways within an organization. The value chain provides key areas where this advantage can be created. Be sure to complete the exercises.

For this activity, you will write a 2–3 page paper on developing an operation management plan that focuses on the business concept you developed for the Unit 1 Activity.

Read this section on the importance of innovation to the design process. Often, we think of innovation as what happens when a creative person has a stroke of genius. In reality, innovation is a process that any individual within any type of organization can engage in as a normal part of the daily work. It’s all about making something better, whether that’s an actual product or a process used in the organization.

Watch this video to learn how design is defined and what makes good design. Good design is often difficult. Once you understand user needs, the creative process requires that those needs be met in the most pleasing and useful way possible. Brainstorming is a method used to help facilitate a good design process.

Watch this video on the importance of developing a culture of creativity to drive business success. Culture is the foundation of what and how we do things within an organization. The culture must support a creative approach to solving problems, designing products/services, and testing new ideas. Consider how you would apply this information to the operations landscape.

Read this article and consider the importance of following the four-part process to determine a product or service worth a company investment. Every new idea has the potential to be useful for a customer. However, the product/service is only useful to the company if a good return on investment (ROI) exists. The financial importance of resource investment must be considered during the screening process.

Read this article to explore the challenges of choosing a successful product design. A new product strategy is important for successful screening. This provides you with another way that screening a new product can be approached. As you can see, there is a variety in the types of approaches available.

Watch this video to see the movement of a preliminary idea to a final design that is ready for a market. This is important because not every idea should or can move forward to a final design phase. There are many different considerations when looking at preliminary designs. This is not only a creative process but also an analytical evaluation. 

Product/service feasibility analysis is crucial to a successful design. This type of analysis is used to analyze the market and product feasibility of the product or service. An organization can develop a wonderful product or service but fail to gain market share. This is often directly related to gaps in the feasibility analysis.

Watch this surprisingly interesting video about how the aluminum can came to be designed and perfected. It demonstrates the careful attention given to even the simplest of items that we use every day.

Predicting future sales, volume levels, and market conditions can be challenging. However, many tools can help organizations forecast more accurately and effectively. One of these tools is the cost-volume-profit analysis. Companies can begin this process by evaluating their break-even point. From there, they will set profit goals, consider their fixed and variable costs, and determine the volume needed to achieve their goals. The cost volume profit analysis also enables an organization to consider how changes in each factor within the equation might impact the overall outcome. At the end of the section, you will be able to identify the factors that enable companies to estimate volume.

The profit equation can be expressed as:

Profit = total revenues – (total variable costs + total fixed costs)

Companies can use this equation to determine their break-even points and volume levels and evaluate how changes in any one factor can impact the overall outcome. Additionally, companies need to identify the contribution margin, which is the amount each unit sold contributes to fixed costs and profit increases. It is particularly interesting to note that airlines measure their break-even points as load factors, which is the percentage of seats filled. Because of this, airlines must operate efficiently to lower their break-even points and fill as many seats as possible on all of their flights. At the end of this section, you should be able to recognize the relationship between costs, profits, and volume levels and how small changes in any one element can result in big differences in the outcome.

Read this chapter, which explores the consumer decision-making process and the factors that impact our buying behavior. Consider the implications of this information to companies launching new products or seeking to update and refresh current products. At the end of the chapter, think about the questions asked and how they might apply to companies with which you are familiar.

Product development is risky. There are many different ways that an organization can fail to do this well and gain a competitive advantage. After you read, complete the exercise at the end of the section.

Different types of production can be used within a manufacturing organization. As you read, pay particular attention to batch and flow production.

Read this article to explore how continuous production works in a manufacturing environment. Though the article deals with the pharmaceutical industry, consider how the points discussed apply to other industries. As you read, think about how operations managers must choose what method is appropriate given the business' requirements.

Read this article for an analysis of batch processing and cycle time efficiency. The article is quite technical but gives insight into how batch processing can be evaluated in business processes and manufacturing environments.

In this activity, you will continue working on your operations management plan by addressing how the current state of the economy will affect your business, and applying the Transformation Model that you learned about in this unit.

Review this introduction to supply chain management to explore the elements of the process, including suppliers, manufacturers, distributors, and retailers. Each of these is involved in getting goods to consumers when they want them and at a cost that is agreeable to all parties.

Read these sections for an in-depth look at the supply chain management factors that affect a business' operations. These sections explore environmental factors, internal company issues, governmental factors, the role of IT, logistics, suppliers, and more.

The bullwhip effect relates to supply chain inefficiencies and changes in inventory levels as they relate to changes in consumer demand. Factors include demand forecasting, order batching, price fluctuations, rationing, and gaming.

Read this real-world study to determine if a company could have lean supply chain management while having the agility needed for a small business to flourish. The relationship between a company and its suppliers is explored and considered an essential factor in the supply chain management process.

Read this section to explore the importance of managing materials from vendors to the process of manufacturing. This section is important because it focuses on the activities of an operations manager while managing the production process. Consider the questions you must answer when choosing the best supplier.

This presentation discusses the procurement of pharmaceuticals. Pay particular attention to good procurement practices, the effect of hidden procurement costs, the models of regional/country collaboration, and the common procurement challenges.

Read this section to explore supply chain optimization. Supply chains must be fast, cheap, and reliable for a good return on investment. This section is important because it focuses on how to focus on designing a supply chain that allows for the manufacturing and distribution of products and a low cost and high profit.

In this activity, you will continue working on your operations management plan. As part of the continuing development of your operations management plan, discuss the goal of supply chain management and its application within your business.

In this article, you will explore the 5S method of workplace organization and how it enables workers to focus on eliminating waste. It also discusses the Kaizen approach, which focuses on continuous improvement. A lean strategy enables companies to respond to consumer demand, take a long-term view, and eliminate mistakes, all while valuing employee input.

Watch this video to review the use of Lean methods in manufacturing to reduce waste and increase continuous quality improvement. Waste can be placed in eight different categories. This video is useful because of the guidance it provides in avoiding pitfalls that have hindered organizations from successfully using Lean methods to increase CQI.

Read this section to better understand the application of Lean. Pay particular attention to the five core principles of Lean. This starts by defining value from the customer's perspective. Lean methods are not hard but require that you truly understand what waste is within your organization. This provides the foundation for choices that improve efficiency and effectiveness. Complete exercise five at the end of the section.

Read this brief description of Kanban, a visual method of controlling production processes.

Watch this video to explore how organizations use Kanban to increase IT project effectiveness. Kanban is a less complex method to apply Lean within the organization. This is also designed to be agile and easily adapted to the organization's needs. Pay attention to how you might adapt this method to improve quality and reduce waste in a way that does not relate to an IT project.

Read this article. Pay particular attention to the examples of the eight wastes. These eight types of waste should be understood and evaluated. Take time to consider your workplace. Identify each type of waste within your organization. Where does it occur? Why does it occur? Is it required waste (regulatory or quality assurance step)? Answers to these questions are a precursor to making sound decisions related to eliminating waste and making changes in the process. 

Watch this slideshow to explore how waste can be found throughout the work done in the office processes. Often, Lean methods are considered only applicable in a manufacturing context. Sometimes, Lean methods are applied in a service industry when there is direct contact with customers. However, this slide show provides some examples of how waste (as identified by Lean) can be found throughout all parts of an organization.

Watch this slideshow to explore the eight wastes defined in Lean. Pay close attention to the differences between value-added activities and non-value-added activities. Value-added activities create value for the customer/client/patient. Non-value-added activities are often pure waste within the system.

Read this overview of continuous improvement in the context of education. Education is a service. Therefore, operations management concepts apply in the education industry. Keep in mind; some would argue that students are a product manufactured by the education system. This can create a different perspective when reviewing the process of education.

Watch this video about using Kaizen events to increase the quality of your process. Kaizen is one tool that is used when practicing Lean methods. This provides you with background information on the development of this tool.

Consider the importance of creating a culture focused on continuous improvement within service and manufacturing organizations. This is important because the culture either supports or hinders any initiative started within an organization. If the culture does not support continuous quality improvement, then the CQI process will fail or the culture must be shifted.

Read this page and explore the just-in-time manufacturing systems. The just-in-time inventory principle is designed to reduce waste associated with maintaining inventory or inputs. Consider the impact of a just-in-time approach to reducing waste in your inventory system.

Review these brief comments about the origins of the JIT strategy. Consider how companies in different industries can apply this method to improve operations.

In this activity, you will continue working on your operations management plan. As part of the continuing development of your operations management plan, you will discuss the goal of supply chain management and its application within your business.

Read this section for a general overview of forecasting and the various methods organizations use. Pay attention to the approaches used to improve the accuracy of a forecast, and consider the different methods that could be applied to various industries. Take the time to answer the questions at the end of the chapter to apply your new knowledge.

Forecasting is difficult in the best of circumstances. However, there are standard questions you can ask that can help you make good forecasting decisions. Pay close attention to the discussion surrounding published industry data. Look for sources that provide industry data specific to your current workplace. Complete the exercise at the end of the section.

Read this summary. Pay attention to the inputs to capacity planning and the determinants and steps in the capacity planning process. This is important for understanding how to use this information to increase the quality of your forecasts. In addition, this helps you understand your organization's capability to meet the forecast needs.

Many factors can determine where an organization will locate its facilities. Why is choosing a location to match an organization's requirements important?

Managers can choose from three workflow layouts, each of which approaches office and factory facilities differently. What are the criteria for creating an effective and efficient workflow and building a high standard of production?

Review this brief overview, which should help you to understand the financial aspects of choosing a location. Consider the factors that influence the location of a new facility. This is important because a poor choice can make it difficult to meet demand effectively and manage costs.

Review this study about line balancing and how to minimize workstations and cycle time while maximizing a smooth operation. Pay attention to the sections about the different types of assembly lines and the benefits of assembly line balancing.

In this activity, you will continue working on your operations management plan. In this section of your business plan, you will discuss facility design and layout.

Read this section and pay attention to the approaches to job design and the importance of the key elements of good design. This is important because efficiency and effectiveness are directly related to how a job is designed. Good job design takes attention to detail and alignment with the process.

The core dimensions and techniques of job design are important because different combinations of these core dimensions motivate different types of employees. Each of the core dimensions can be viewed as if on a continuum. You may need a high skill variety and a low task identity for a specific job.

This section discusses the research associated with high-performance work systems from a human resource department's perspective. This is important because high-performance work systems are the holy grail of organizations focused on quality and Lean.

Read this page. Pay close attention to the types of time and motion studies and the criticisms associated with this approach. Time motion studies have been used and continue to be used in all types of organizations. This source creates a foundation for applying time-motion studies within the context of operations. 

Review this article about Taylor's Principles of Scientific Management. Explore his observations about time and motion and how efficiency could be improved. Take the quiz at the end of the article to test your understanding of what you have read.

Read this section to help you understand work measurement from an HR department's perspective. Pay close attention to the Balanced Scorecard method and consider the implications for a manufacturing and service organization. Use of this method is useful in getting a picture of the organization's effectiveness beyond the financial statements. As you read, keep Figure 16.10 in mind and consider the balanced scorecard would help your organization make better decisions related to operations.

In addition to measuring employee output, measuring employee experience in the workplace is equally important. Read this article to examine the definition of an employee experience, the best ways to measure that experience, and the levels at which a company is determined to evaluate that experience. Consider your work experiences and whether the company has taken the time to measure employees' attitudes.

This chapter explores different methods for dealing with problems, the value of addressing problems early, and why it is important to have methods in place for problems that are certain to arise. Pay particular attention to the Responsibility Matrix, which plays a key role in how methods are developed and applied. Try the exercises at the end of the chapter to test your knowledge.

Complete this activity to identify your organization's operational processes.

Read this section to look at inventory management's role in the marketing and manufacturing processes. Explore the connections between inventory control and demand planning. Be sure to view each video clip within the reading. Tackle the review questions at the end of the chapter to see how well you can apply these concepts.

Read this chapter on Inventory Management. Be sure to reference the useful glossary terms at the bottom of each section. The language of inventory management can sometimes be confusing. This reading helps you to better understand how to reference inventory principles and use language appropriately.

Read this section, paying close attention to the inventory flow diagram. This diagram is important because it describes how different information from different areas is crucial to developing a sound operations plan. Planning is a primary element of management. As an operations manager, information from other functional areas must be incorporated into the operations plan.

This section will help you understand how companies keep and manage inventory. There are basic reasons for keeping inventory on hand. The important part is that these reasons are evaluated for the needs of each organization, and an inventory management system is created that allows for the highest level of efficiency possible.

Read this paper on EOQ modeling, which is fairly technical but should help you understand the fundamental function of this equation. EOQ is important because it helps minimize the total holding and ordering costs related to inventory. Pay close attention to when this applies in the production process.

Read this summary. Pay close attention to the types of inventory control and the EOQ model. This source is useful because of the detailed information related to inventory function, reasons for inventory management, and types of inventory control.

In this activity, you will continue working on your operations management plan. This final part of your operations management plan requires that you identify the critical factors involved in inventory control systems. After developing this final portion of your plan, compile all the parts you have worked on to create a comprehensive business plan.

This video describes the integrated system necessary to create a quality management system within an organization. Just using the word quality can be confusing for managers. Understanding what quality is and how it should be approached is challenging. Designing a systematic approach to quality management is fundamentally important to successfully controlling quality.

This article explores the nature of total quality management (TQM) and the necessity of use in the operations environment. TQM is one of the bedrock approaches to quality management. You will see many of the components of TQM in other quality management approaches. This approach is important because of the focus on a continuous cycle of improving the quality of a product, service, or process.

Quality principles are important to focusing on and leading an organization toward a culture that embraces continuous quality improvement.

Quality control is focused on identifying issues with quality and initiating corrective action. Quality control processes are vital to a healthy quality control function.

Read this article to better understand the history of quality management and the impact of these three men on the approaches to quality management. You might call these men the founders of the quality process. Their contribution to this organizational focus on quality needs to be understood.

Watch this video to explore the relationship between quality and costs in operations. Ultimately, there is always a tradeoff between the cost of addressing quality and the cost of ignoring quality. Every organization has to determine how it will address the cost factors associated with managing quality.

SPC is a standard method used in many organizations to monitor the quality of processes. Familiarizing yourself with the method is the first step in understanding how processes can be monitored for more effective evaluation.

Pay attention to the key concepts related to developing a process map and workflow charts. Process development is crucial to an efficient and effective organization. Each process contains the workflow (system design with tools used) and the procedures (work instructions for people). Both of these must align and together become the process.

Process design is a tool to improve processes to affect quality. Every time we adjust work, we change the process. This means that as an operations manager, it is important that you understand how each change impacts the whole process. When an adjustment must be made to improve quality, a systematic approach to process design is the best method for a successful change.

In this activity, you will continue working on your operations management plan by explaining techniques and methodologies for managing your organization's productive resources.