Managing Operations
Module
Every organization “produces” something, whether it’s a good or a service. This module
focuses on how organizations do that through a process called operations management.
We also look at the important role that managers play in managing those operations.
As your students have learned throughout this course, organizational success in today’s
highly competitive marketplace is based on effective and efficient management of all
available resources. The opening case describes the challenges faced by Hyundai
Heavy Industries Inc. at their ship building plant in South Korea. The facility, which
covers miles and can build over 30 ships at a time, relies on a steady stream of data
including the tracking of parts and progress of subcomponents. Hwang See-young,
chief information officer at Hyundai Heavy, is responsible for a system that combines
data sensors, a 4g network, and employee laptops to make sure that production runs
smoothly. This system also has the capabilities to host video conversations with
employees in offices over a mile away. In the future, Hyundai Heavy plans to implement
their technology in its other construction divisions.
This module examines the topics of operations management including productivity,
value chain management, e-manufacturing, and quality. The concepts in this module
could be applied to almost every company, from the gigantic operations of Hyundai
Industries, to your local McDonalds.
1. THE ROLE OF OPERATIONS MANAGEMENT
Operations management is the design, operation, and control of the
transformation process that converts resources into finished goods or services.
Exhibit MO-1 illustrates a simplified operations system. Operations
management is important for three key reasons:
A. Services and Manufacturing. Operations management encompasses
2. WHAT IS VALUE CHAIN MANAGEMENT AND WHY IS IT IMPORTANT?
This section of the module examines several aspects of value chain
management, including its definition, goals, benefits, and potential obstacles to
successful implementation.
A. What is value chain management?
In order to understand the term value chain management, students must
first grasp the meaning of several individual terms.
1. Value is the performance characteristics, features and attributes,
2. The value chain is the entire series of organizational work
3. Value chain management, then, is the process of managing the
sequence of activities and information along the entire product
chain.
1. Improved procurement
2. Improved logistics
3. Improved product development
3. MANAGING OPERATIONS USING VALUE CHAIN MANAGEMENT
Today’s dynamic competitive environment demands new solutions from global
1. Coordination and Collaboration. Coordination and collaboration
among all members of the value chain
3. Organizational Processes. Organizational processes, which are
the ways that organizational work is done. Changes must be
made, as illustrated below:
4. Leadership. Strong leadership is essential for successful value
chain management.
5. Employees/Human Resources. An organization’s employees play
an important role as well.
a. Traditional, functional job roles are inadequate in a value
6. Organizational Culture and Attitudes. Supportive organizational
1. Organizational barriers. These barriers are among the most
2. Cultural attitudes. Unsupportive cultural attitudes—especially trust
and control—are also obstacles. In addition, organizations are
3. Required capabilities. A number of capabilities are required,
4. People. An organization’s people must be committed and willing to
4. CURRENT ISSUES IN OPERATIONS MANAGEMENT
Three issues currently on top of managers’ lists for improving operations
management: capitalizing on e-manufacturing technology and successfully
2. How is quality achieved? A good way to address this question is in
1. ISO 9000 is a series of international quality management
2. Six Sigma is a quality standard that establishes a goal of no more
3. In summary, the key benefit of implementing value chain
management comes from the quality improvement journey itself,
1. An intense focus on customers is also important in order to be a
lean organization, which is an organization that understands
MO–1. What is operations management?
MO–2. Do you think that manufacturing or service organizations have the greater need
for operations management? Explain.
MO–3. What is a value chain and what is value chain management? What is the goal of
value chain management? What are the benefits of value chain management?
MO–4. What is required for successful value chain management? What obstacles exist
to successful value chain management?
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employees or human resources, and organizational culture and attitudes. The obstacles
to value chain management include organizational barriers (refusal to share information,
reluctance to shake up the status quo, or security issues), unsupportive cultural
attitudes, lack of required capabilities, and employees unwilling or unable to do it.
MO–5. How could you use value chain management in your everyday life?
MO–6. How does technology play a role in manufacturing?
MO–7. What are ISO 9000 and Six Sigma?
MO–8. Describe lean management and explain why it’s important.
Mass customization provides customers with a product when, where, and how they want
MO–9. How might operations management apply to other managerial functions besides
control?
MO–10. Which is more critical to success in organizations: continuous improvement or
quality control? Support your position.