A Bird view of Production System
Marketing department Engineering Department Research & Development Plant Engineering Department
Customer In Target Market Vendor/ Suppliers
Materials Management Division Raw Materials Stores Factory Management & Liasioning
Production Department (shop floor)
Quality Assurance Department Management Information SystemDepartment
Customer Support Department
Human Resource Department
management of an organization’s production system.
A production system takes inputs and converts them into outputs. The conversion process is the predominant activity of a production system. The primaryconcern of an operations manager is the activities of the conversion process.
Today's Factors Affecting POM • Global Competition • U.S. Quality, Customer Service, and Cost Challenges • Computers and Advanced Production Technology • Growth of U.S. Service Sector • Scarcity of Production Resources • Issues of Social Responsibility Different Ways to Study POM • Production as a System •Production as an Organization Function • Decision Making in POM
Production as a System
Production System Inputs Conversion Subsystem
Inputs of a Production System • External – Legal, Economic, Social, Technological • Market – Competition, Customer Desires, Product Info. • Primary Resources – Materials, Personnel, Capital, Utilities Conversion Subsystem • Physical(Manufacturing) • Location Services (Transportation) • Exchange Services (Retailing) • Storage Services (Warehousing) • Other Private Services (Insurance) • Government Services (Federal, State, Local)
Outputs of a Production System • Direct – Products – Services • Indirect – Waste – Pollution – Technological Advances Production as an Organization Function
•U.S. companies cannot competeusing marketing, finance,
accounting, and engineering alone.
•We focus on POM as we think of global competitiveness, because
that is where the vast majority of a firm’s workers, capital assets, and expenses reside.
•To succeed, a firm must have a strong operations function teaming
with the other organization functions. Decision Making in POM
•Strategic Decisions •Operating Decisions•Control Decisions
•These decisions are of strategic importance and have long-term
significance for the organization.
•Examples include deciding:
–the design for a new product’s production process –where to locate a new factory –whether to launch a new-product development plan
•These decisions are necessary if the ongoing production of goods
andservices is to satisfy market demands and provide profits. •Examples include deciding: –how much finished-goods inventory to carry –the amount of overtime to use next week –the details for purchasing raw material next month Control Decisions
•These decisions concern the day-to-day activities of workers, quality
of products and services, production and overhead costs, and machine maintenance.•Examples include deciding: –labor cost standards for a new product –frequency of preventive maintenance –new quality control acceptance criteria What Controls the Operations System?
•Information about the outputs, the conversions, and the inputs is fed
back to management. •This information is matched with management’s expectations •When there is a difference, management must take correctiveaction to maintain control of the system
What is Operations Management? Defined Operations management (OM) is defined as the design, operation, and improvement of the systems that create and deliver the firm’s primary products and services
Why Study Operations Management?
Systematic Approach to Org. Processes