Operations and Operations Management Defined
|Operations: |The production of goods and services; the transformation process that converts inputs to outputs | | | | | | | |Operations management: |The management of systems or processes that transform inputs into finished goods and services | | | |
The purpose of the operations function is to add value during the transformation process. Value-added is the difference between the cost of inputs and the value or price of outputs. Operations can add value by decreasing the cost of inputs or increasing the value of outputs or both.
|Operations design prior to 2007 ... |It took 20 to 30 craftsmen eight days to put together each “Reade” tote bag. | | |Separate workers would do each individual step in the assembly process. | | |Inflexible production process and extensive rework (up to 50% of certain products). | | |When new designs caught on, they often sold out, creating large backlogs and unhappy customers. | | |Fresh collections of products were shipped to its boutiques every 12 weeks. | | |Salespeople advising customers would also retrieve items from the stockroom if they weren’t available on the shop floor. |
|Current operations ... |Clusters of 6 to 12 workers can assemble a LV-logo bag in a single day. | | |Workers are cross-trained to enable them to do several different assembly tasks. | | |Production cells increase operational flexibility and allow flaws to be recognized earlier and fixed more easily. | | |While scarcity of high-end fashion items can create an aura of desirability, Louis Vuitton has taken steps to better understand what customers want and avoid | | |unintended product shortages. | | |Fresh collections of products are shipped to its boutiques every 6 weeks. | | |Separate stockroom employees send items from the stockroom, increasing the productivity of salespeople and customer satisfaction. | Key Operations Principles...
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