Learning Objectives (1 of 2) By the end of this chapter you should be able to: Explain the concept and importance of operations management. Explain the differences between goods and services. Illustrate differences and similarities between manufacturing and service activities Define the concept of value and explain how the value of goods and services can be enhanced. Explain how organizations seek to gain competitive advantage and the five key competitive priorities. Summarize the historical development of OM. Describe key challenges facing the operations and supply chain management industry. Science and art of ensuring that goods and services are created and delivered successfully to customers? Includes:? Design of goods, services, and the processes that create them? Day-to-day management of processes? Continual improvement of goods, services, and processes Depends on: Efficiency Cost of operations Quality of goods Forecasting Supply Chain Management Facility Layout and Design Technology Selection Quality Management Purchasing Resource and Capacity Management Process Design Job Design Service Encounter Design Scheduling Sustainability Transactions between Buyers and Sellers, Part 1 Types Good: Physical product that a person sees, touches, or consumes Durable good: Product that does not quickly wear out and lasts at least three years Non-durable good: Product that perishes and lasts for less than three years Service: Primary or complementary activity that does not directly produce a physical product Transactions between Buyers and Sellers, Part 2 Driven by customers and provide value and satisfaction to customers who purchase and use them Standardized or customized to individual wants and needs Goods versus Services, Part 1 Goods versus Services, Part 2 Value Perception of the benefits associated with a good, service, or bundle of goods and services in relation to what a buyer pays Goods or services are perceived favourably by customers if the ratio of perceived benefits to price to the customer is high Customer Benefit Packages (CBP), Part 1 Clearly defined set of tangible and intangible features that a customer recognizes, pays for, uses, or experiences Customer Benefit Packages (CBP), Part 2 Value Chain Network of facilities and processes Describes the flow of materials, finished goods, services, information, and financial transactions from suppliers Through the facilities and processes that create goods and services, and those that deliver them to the customer Supply Chain Portion of value chain that focuses on: Physical movement of goods and materials Supporting flow of information and financial transactions through the supply, production, and distribution processes Types of Business Processes How Primary, Support, Supplier and Management Processes are Related Input-Output Framework of a Value Chain Pre- and Postservice View of the Value Chain Typical Goods-Producing Supply Chain Structure Goods-Producing Supply Chain Activities include shipping finished goods to distribution centers (DCs) Distribution centers Warehouses that act as intermediaries between factories and customers and ship directly to customers or to retail stores Inventory: Raw materials, work-in-process, or finished goods that are maintained to support production or satisfy customer demand Seven Eras of Operations Management Exhibit 1.11 Sustainability Organizations ability to strategically address current business needs and develop a long-term strategy to: Embrace opportunities and manage risks for products, systems, supply chains, and processes Preserve resources for future generations Perspectives of Sustainability, Part 1 Environmental sustainability Organizations commitment to the long-term quality of the environment Social sustainability Organizations commitment to maintain healthy communities and a society that improves the quality of life Perspectives of Sustainability, Part 2 Economic sustainability: Organizations commitment to: Address current business needs and economic vitality Have the agility and strategic management to prepare successfully for future business, markets, and operating environments Analytics and Big Data Used to evaluate: Operations performance, quality, order accuracy, customer satisfaction, delivery, cost, environmental compliance, etc. Helps make decisions using business analytics Business analytics: Process of transforming data into actions through analysis and insights in the context of decision making and problem solving Current Challenges in OM KEY TERMS, Part 1 Operations management Goods Durable good Nondurable good Service Service encounter Moments of truth Service management Value Customer benefit packages (CBP) Primary good or service Peripheral goods or services Variant Biztainment Value chain Supply chain Process KEY TERMS, Part 2 Distribution centers (DCs) Inventory Sustainability Environmental sustainability Social sustainability Economic sustainability Business analytics Principles of OM are used in goods manufacturing and production activities Goods and services are two major transactions between buyers and sellers Evaluating the value of products and customer benefit packages are a part of OM activities OM should focus on developing sustainable business operations Summary Reference # Collier, D. A., & Evans, J. R. (2021). Operations and Supply Chain Management. Cengage.

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