CHAPTER 1 – Operations and Productivity
Learning objectives
Define operations management
Explain the distinction between goods and services
Explain the difference between production and productivity
Compute single-factor productivity
Compute multifactor productivity
Identify the critical variables in enhancing productivity
What is operations management?
Production – the creation of goods and services
Operations Management – activities that relate to the creation of goods and services through the transformation of inputs to outputs
Organizing to Produce Goods and Services
Marketing – generates the demand, or at least takes the order for a product or service (nothing happens until there is a sale)
Production/Operations – creates the product
Finance/Accounting – tracks how well the organization is doing, pays the bills, and collects the money
Page 5 exhibit
The Supply Chain
A global network of organizations and activities that supplies a firm with goods and services
Members of the supply chain collaborate to achieve customer satisfaction, efficiency and competitive advantage
Big rise in global supply chain recently
1st ripple – stopping work at a plant immediately following disaster (skilled labor layoff)
2nd ripple – try to move production to a new area due to long term impact (try to recover skilled workers
Reasons to globalize
Tangible
Reduce costs
Improve supply chain
Provide better goods and services
Intangible
Better understand markets
Learn to improve operations
Attract and retain global talent
Cost drivers
Cost of cheaper unskilled workers offsets costs associated with remote locations
China
So many people, willing to work for less to have a job
Risks of global logistics
Delays in production
Expensive inventories
Lack of coordination
Poor demand forecast
Interference with production
Poor qualities
Uncertainties in