Copyright 2012 Pearson Education, Inc.

Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter

Publishing as Prentice 2012
Hall Pearson Education, Inc. publishing as Prentice Hall 19- 1
Explain the role of operations management
Define the nature and purpose of value chain
management
Describe how value chain management is
done
Discuss contemporary issues in managing
operations

Copyright 2012 Pearson Education, Inc.

Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter 2012 Pearson Education, Inc. publishing as Prentice Hall
Publishing as Prentice Hall 19- 2
The Role of Operations Management
Operations management - the transformation
process that converts resources into finished
goods and services.

Copyright 2012 Pearson Education, Inc.

Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice 2012
Hall Pearson Education, Inc. publishing as Prentice Hall 19- 3
Managing Productivity
Productivity
The overall output of goods or services produced divided
by the inputs needed to generate that output
A composite of people and operations variables

Benefits of Increased Productivity

Economic growth and development
Higher wages and profits without inflation
Increased competitive capability due to lower costs

Copyright 2012 Pearson Education, Inc.

Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice 2012
Hall Pearson Education, Inc. publishing as Prentice Hall 19- 4
Services and Manufacturing
Manufacturing organizations - organizations
that produce physical goods.
Service organizations - organizations that
produce nonphysical products in the form of
services.

Copyright 2012 Pearson Education, Inc.

Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice 2012
Hall Pearson Education, Inc. publishing as Prentice Hall 19- 5
Exhibit 19-1: The Operations System

Copyright 2012 Pearson Education, Inc.

Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice 2012
Hall Pearson Education, Inc. publishing as Prentice Hall 19- 6
Strategic Role of
Operations Management
The era of modern manufacturing began in the U.S. over 100
years ago.
After WWII, U.S. manufacturers focused on functional areas
other than manufacturing.
By the 1970s, foreign competitors integrated manufacturing
technologies and were producing quality goods at lower
costs.
U.S manufacturers responded by investing in updated
technology, restructuring organizations, and including
production requirements in their strategic planning.

Copyright 2012 Pearson Education, Inc.

Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice 2012
Hall Pearson Education, Inc. publishing as Prentice Hall 19- 7
Managing Operations Using Value
Chain Management
Value - the performance characteristics,
features, attributes, and any other aspects of
goods and services for which customers are
willing to give up resources.
Value chain - the entire series of
organizational work activities that add value at
each step from raw materials to finished
product.

Copyright 2012 Pearson Education, Inc.

Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice 2012
Hall Pearson Education, Inc. publishing as Prentice Hall 19- 8
Managing Operations Using Value
Chain Management
Value chain
management - the
process of managing
the sequence of
activities and
information along the
entire value chain.

Copyright 2012 Pearson Education, Inc.

Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice Hall 2012 Pearson Education, Inc. publishing as Prentice Hall 19- 9
Value Chain Management
Requirements for Value Chain Management
A new business model incorporating:
Coordination and collaboration
Investment in information technology
Changes in organizational processes
Committed leadership
Flexible jobs and adaptable, capable employees
A supportive organizational culture and attitudes

Copyright 2012 Pearson Education, Inc.

Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice 2012
Hall Pearson Education, Inc. publishing as Prentice Hall 19- 10
Value Chain Strategy
Organizational
processes - the ways
that organizational work
is done.

Copyright 2012 Pearson Education, Inc.

Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice Hall 2012 Pearson Education, Inc. publishing as Prentice Hall 19- 11
 Exhibit 19-2: Value Chain Strategy
Requirements

Copyright 2012 Pearson Education, Inc.

Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice 2012
Hall Pearson Education, Inc. publishing as Prentice Hall 19- 12
 Obstacles to Value Chain
Management
Organizational barriers
Refusal or reluctance to share information
Reluctance to shake up the status quo
Security issues
Cultural attitudes
Lack of trust and too much trust
Fear of loss of decision-making power
Required capabilities
Lacking or failing to develop the requisite value chain
management skills

Copyright 2012 Pearson Education, Inc.

Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice 2012
Hall Pearson Education, Inc. publishing as Prentice Hall 19- 13
 Obstacles to Value Chain
Management (cont.)
People
Lacking commitment to do whatever it takes
Refusing to be flexible in meeting the demands of a
changing situation
Not being motivated to perform at a high level
Lack of trained managers to lead value chain initiatives

Copyright 2012 Pearson Education, Inc.

Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice 2012
Hall Pearson Education, Inc. publishing as Prentice Hall 19- 14
Exhibit 19-3: Obstacles to Value Chain
Management

Copyright 2012 Pearson Education, Inc.

Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice 2012
Hall Pearson Education, Inc. publishing as Prentice Hall 19- 15
Current Issues in Managing Operations

Technologys Role in Manufacturing

Increased automation and integration of
production facilities with business systems to
control costs
Predictive maintenance, remote diagnostics, and utility
cost savings
Quality - the ability of a product or service to
reliably do what its supposed to do and to
satisfy customer expectations

Copyright 2012 Pearson Education, Inc.

Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice 2012
Hall Pearson Education, Inc. publishing as Prentice Hall 19- 16
 Current Issues in
Managing Operations
Quality Initiatives
Planning for quality
Organizing and leading for quality
Controlling for quality

Copyright 2012 Pearson Education, Inc.

Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice 2012
Hall Pearson Education, Inc. publishing as Prentice Hall 19- 17
Quality Goals
ISO 9000 - a series of international quality
management standards that set uniform
guidelines for processes to ensure that
products conform to customer requirements.

Copyright 2012 Pearson Education, Inc.

Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice 2012
Hall Pearson Education, Inc. publishing as Prentice Hall 19- 18
Quality Goals (cont.)
Six Sigma - a quality
program designed to
reduce defects, help
lower costs, save time,
and improve customer
satisfaction.

Copyright 2012 Pearson Education, Inc.

Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice Hall 2012 Pearson Education, Inc. publishing as Prentice Hall 19- 19
 Mass Customization and
Lean Organization
Mass customization - providing customers
with a product when, where, and how they
want it.
Lean organization - an organization that
understands what customers want, identifies
customer value by analyzing all activities
required to produce products, and then
optimizes the entire process from the
customers perspective.
Copyright 2012 Pearson Education, Inc.
Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice 2012
Hall Pearson Education, Inc. publishing as Prentice Hall 19- 20
 Terms to Know
operations management
manufacturing organizations
service organizations
productivity
value
value chain
value chain management
organizational processes
RFID
intellectual property
quality
ISO 9000
Six Sigma
mass customization
Cellular manufacturing
Copyright 2012 Pearson Education, Inc.
Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter 2012 Pearson Education, Inc. publishing as Prentice Hall
Publishing as Prentice Hall 19- 21
 Copyright 2012 Pearson Education, Inc.
Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter 2012 Pearson Education, Inc. publishing as Prentice Hall
Publishing as Prentice Hall 19- 22