Unit 1: Introduction – Consumer Needs, Motives and Values Operation Management (OM) is the science and art of ensuring that goods and services are created and delivered successfully to customers. Applying the principles of OM entails a solid understanding of people, processes, and technology and how they are integrated within business systems to create value.
Nature of Operations Management
The traditional management paradigm revolves around four basic functions – Planning, Organizing, Directing, and Controlling. A significant amount of planning is involved in selecting the goods and services that an organisation offers and designing these goods and services to meet the needs of potential customers. Organizing is a function in which the synchronization and combination of human, physical and financial resources takes place. Directing initiates action and it is from here actual work starts. Finally, Controlling measures the deviation of actual performance from the standard performance, discovers the causes of such deviations and helps in taking corrective actions. Some of the key activities that comprise the discipline of operations management include: Understanding the needs of customers;
Using information about customers to make better decisions;
Exploiting technology to improve productivity;
Building quality into goods, services, and processes to improve business performance; Ensuring that material flows and associated operational activities are coordinated from supplier to customer; Creating a high-performance workplace through developing and motivating staff; Continually learning from co-workers, competitors, customers, etc.
Operations Management in the Workplace
Every job entails some aspects of operations management. The ideas and methods of operations management will help you get things done successfully regardless of your functional area of business. As you manage accounting, human resources, or legal, financial, operations, supply chain, environment, service, or marketing processes, you create value for your internal and external customers. Here are some examples of how OM may be applied in other functional areas of business: Quality and customer service issues
Performance measurement and evaluation
Planning and budgeting
Scheduling and capacity
Understanding Goods and Services
A good is a physical product that you can see, touch or possibly consume. Examples of goods include chocolates, cellphones, televisions, components, airplanes and glass. Two classifications of goods:
1. Durable goods: products that typically last at least 3 years, E.g. bicycles, furniture, & microwaves 2. Non-durable goods: ideally perishable products and generally last for less than 3 years, E.g. softwares, fruits, and shoes
On the other hand, a Service is an activity that does not directly produce a physical product, E.g. post offices, advice agencies, law firms, theatres and cinemas Similarities and Differences Between Goods and Services
1. Goods are tangible whereas services are intangible
2. Customers participate in many service processes, activities and transactions 3. The demand for services is more difficult to predict than the demand for goods 4. Services cannot be stored as physical inventory
5. Service management skills are paramount to a successful service encounter 6. Service facilities typically needs to be in close proximity to the customer 7. Patents do not protect services
Customer Benefit Packages (CBP)
They are some combination of goods and services configured in a certain way to provide value to customers and to fulfill customer wants and needs. A CBP consists of a primary good or service, coupled with peripheral goods and/or services and sometimes a variant.
The CBP framework is a way to think broadly about how goods and services are bundled and configured together. Processes and Value Chains
Processes are the building blocks for the creation...
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