2. What Is Operations Management?
 Set of activities that creates value in the form of goods
and services by transforming inputs into outputs.
 Manufacturing good - tangible product
 Service – often an unique and intangible product, and
usually produced and consumed simultaneously
 OM activities are often similar for both goods and
services.
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3. Organizing to Produce Goods and Services
 Functions that must be performed in order to create goods
and services:
 Marketing – create demand
 Production/operation – satisfy demand
 Finance/accounting – manage and monitor the
financial flows
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4. Why to Study OM?
 OM is one of the three major functions of any
organization.
 We want to know how goods and services are created.
 To understand how operations managers do.
 It is such a costly part of any organization.
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5. Options for Increasing Contribution
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Marketing
Option
Fin./Actng
Option OMOption
Increase
Sales
Revenue
Reduce
Finance
Costs
Reduce
Production
costs
Current 50% 50% 20%
$100,000 $150,000 $100,000 $100,000
80,000 120,000 80,000 64,000
20,000 30,000 20,000 36,000
6,000 6,000 3,000 6,000
14,000 24,000 17,000 30,000
Taxes at 25% 3,500 6,000 4,250 7,500
Contribution 10,500 18,000 12,750 22,500
Delta 71% 21% 114%
Sales
COGS
Gross margin
Finance costs
Subtotal

6. What Operations Managers Do?
 Perform the basic functions of the management
process:
 Planning
 Organizing
 Staffing
 Leading
 Controlling
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7. Decision areas in OM
 Design of goods and services
 Managing quality
 Process and capacity design
 Location strategy
 Layout strategy
 Human resources and job design
 Supply-chain management
 Inventory, material requirements planning (MRP), and just-in-time (JIT)
 Intermediate and short term scheduling
 Maintenance
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8. Productivity Challenge
 Productivity is the ration of outputs divided by the inputs.
 Outputs - goods and services
 Inputs - resources, such as labor and capital
 OM challenge is to improve productivity
 Reducing inputs while keeping output constant
 Increasing output while keeping inputs constant
 Increasing output while simultaneously reducing inputs
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9. Trends in OM
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Traditional Approach Current Challenges Reasons for Change
Ethics and regulations not at the
forefront
High ethical and social responsibility;
increased legal and professional
standards
Public concern over pollution,
corruption, child labor, etc.
Local, regional, national focus Global focus; international
collaboration
Growth of reliable low-cost
communication and transportation
Lengthy product development Rapid product development; design
collaboration
Shorter life cycles; growth of global
communication; CAD; Internet
Low-cost production with little
concern for environment; free
resources (air, water) ignored
Environmentally sensitive
production; green manufacturing;
sustainability
Public sensitivity to environment; ISO
14000 standard; increasing disposal
costs
Low-cost standard products Mass customization Rise of consumerism; increased
affluence; individualism
Emphasis on specialized, often
manual tasks
Empowered employees; enriched
jobs
Recognizing the importance of the
emplyee's total contribution;
knowledge society
"In-house" production; low-bid
purchasing
Supply-chain partnering; joint
ventures; alliances
Rapid technology change; increasing
competitive forces
Large lot production JIT / Lean Manufactuing; continuous
improvement
Shorter product life; increasing need
to reduce inventory

10. Ingeniería Industrial / Sistemas Gerencia Industrial / Operacional
• Ingeniería:
− Actividad que utiliza el ingenio para
transformar el conocimiento en algo
práctico y de beneficio para la sociedad.
− Diseñar, perfeccionar e implementar
• Ingeniería Industrial:
− Se ocupa del desarrollo, mejora,
implantación y evaluación de sistemas
integrados de gente, dinero,
conocimientos, información, equipos,
energía, materiales y procesos, de forma
tal que el sistema sea eficiente y efectivo
− Conocimientos en ciencias matemáticas,
físicas, sociales, políticas públicas y
técnicas de gerencia
• Gerencia:
− Acto de orquestrar un grupo de personas
para alcanzar las metas y objetivos,
utilizando los recursos de la organización
eficiente y efectivamente.
− Planificar, organizar, reclutar, liderar y
controlar
• Gerencia Industrial:
− Se ocupa en administrar y dirigir las
operaciones de una empresa en la
producción de bienes y servicios, de
forma tal que las mismas sean eficientes
(menor utilización de recursos posible) y
efectivas (alcanzar objetivos).
− Destrezas en relaciones interpersonales,
creatividad, análisis racional y
conocimiento en las tecnologías
Manufactura, servicio y gobierno

11. Questions
?
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