What I'd like to do is take everything that we've talked

about and put it into a definition.

It's hard to come up with a formal definition for a concept

like this that pervades everything that we do,

but we're going to give it a shot.

So, Operations Management is about

organizations effectively and efficiently using their resources.

Let's pause there, and see what this definition is telling us.

So, it's about organizations effectively and efficiently using their resources.

Effectively means, that it should be using

it for the purpose of what you are giving to the customer.

And efficiently means, it should be using it

from a cost benefit perspective in the right way.

So, effectively means that the consumer gets what they're expecting,

and efficiently means that the company is able to make a profit out of it,

is able to deliver things to customers while making a decent profit.

And continuing on with the definition,

it is made up of resources and activities.

So there are going to be resources,

the location of the plant,

the facilities that are needed to make things.

There are going to be activities within the process that were going to talk

about where they're going to have to do things to

either make something or deliver a service to you.

Continuing on, It has to transform material and information.

So, there is going to be some input of materials and information.

Remember that input process,

output view that we started off from.

There is going to be some transformation.

Hopefully, its value added transformation.

You're actually converting material and information into something useful,

into goods and services that customers are going to use.

So, let's take this input process output view and

get some specifics out of it when you're looking at the business of any organization.

So, here's the process view of operations management.

We're going to start off with the transformation process,

and like we said earlier,

hopefully it's adding value to the product.

The transformation process is taking inputs from

suppliers and delivering outputs to customers.

What you have is the resources,

that's the capital and the equipment and the human expertise that's going in,

and now we can put a circle around this and call it the organizational boundary.

So, this is typically what we think about,

generally what we think about,

in terms of an organization that is making things,

making goods or services,

to be delivered to customers.

It doesn't end there, because when you have inputs and

outputs you also have your suppliers and your customers.

The suppliers are the people who are going to deliver

the companies that are going to deliver the materials and

information that is needed and the outputs

are going to be things that are going to customers.

Further, what you can think about is,

there is going to be some information that has to flow between each of these stages.

The customers have to give performance feedback.

What do they like about the product?

What they didn't like?

How much more do they need?

How much demand are we expecting?

There's going to be performance feedback that goes all the way back to the suppliers,

in terms of how much raw material is needed

and what kind of quality of raw material will be needed.

And finally, we can go beyond

the organizational boundary and the suppliers and the customers that are

intimately tied to the operations management arena that we're talking about here.

And look at the external environment in terms of the competitors,

the technology that's being used, and the regulations.

The competitors are who we are going to have to keep an eye on as

an organization to see what are the different developments that are coming up,

similarly with technology, and similarly with regulations.

There are going to be regulations to a different extent,

depending on which industry you're talking about.

Of course, the Food and Drug Industry,

you're going to have a lot more regulation.

The Airline Industry, the Automobile Industry is going to have

a lot more regulation than you would for let's say,

a mom and pop restaurant or a dry cleaning store for example.

Right, so, now that we have the process view of operations management,

you also want to think about using

this process view for different things that you see around you.

So, two things that you need to keep in mind over here is, one,

is the level of granularity at which you will study a process.

What I mean by that is,

you could be talking about a large organization that for example makes cars,

the inputs are the things that they buy from the suppliers,

and the outputs are the cars that they deliver to you.

However, there are going to be many sub-processes within

this large process that you are talking about of

taking components and converting them into cars.

And each of these sub-processes can be studied.

So what we are saying is that the level of granularity at which you want to study

these processes is going to be determined by whoever is analyzing the process,

and that's going to impact how closely you study each sub-process.

The second thing that I want you to think about is that,

every process is not going to be dealing with external customers.

You're going to have support processes that

relate to the things that you need to do as a business.

A car manufacturing company is going to need

processes for hiring people, for employing people.

A car manufacturing company is going to need to

maintain its facilities and that's where it's going to need the support processes.

So, in summary, what we're saying here is that there is going to be this core process

and there are going to be some support processes that need to be there along with it.

Also, what we're saying is that,

there's going to be a large process and there are going to be

sub-processes that you can analyze,

that you can study, in order to see how the process is working out.

Now, what I'd like you to do is use

this input process view and apply it to any organization that you know of.

Any company, it could be a profit making business,

it could be a nonprofit entity that doesn't really care about profit,

but is trying to do some good.

And what I'd like you to do is apply the Process View,

the input process output view,

and think about the main outcomes that this company, this organization produces.

What I'd also like you to do in addition to this is,

you've thought about the core operations, the core processes.

What I'd also like you to do,

is reflect on some of the sub processes for these core processes.

What are some of the interim things that the company has to do,

the organization has to do,

to get the things done?

And finally, what I'd like you to think about,

is the support processes that support the existence of the business.

So, I'll let you think about it and then we'll talk about

it and see how we can align our thoughts there.

All right. So, now that you've had a chance to reflect on the idea of this process,

and sub-process, core processes, and support processes,

what you may have thought about is probably a manufacturing business.

Somebody that makes furniture,

for example, an organization that makes furniture.

So, what would be the main inputs and

outputs of their core process which is making furniture?

Getting wood and other materials and delivering outputs,

which are furniture that's going to be delivered to customers.

What you could have also thought about could be a service.

You could have thought about a healthcare organization or a fast food restaurant.

They get materials, they convert them into the food that is delivered to customers.

If it's a health care organization,

the input is the patients and the output is

the patients who have been treated in that health care process.

Now, if you're thinking about the furniture organization,

you could break that down into

the sub-assemblies that would have been made inside the organization,

inside the process, the big process that takes wood and converts it into furniture.

The sub-processes will be making this sub-assemblies,

they will be making the legs for the chair,

they'll be making the table tops that need to be put into all these products.

If you're thinking about the service,

you could be thinking about the sub-processes that are the little steps.

When you go in as a patient to a health care clinic,

you have to go through registration.

Next, you have to get your vitals taken.

Next you have to go and talk to the doctor and then

maybe go to radiology or pharmacy and so on and so forth.

So, there's going to be many different sub-processes.

The important distinction that we want to make here in processes and sub-processes

is some sub-processes will have the ultimate customer as their customer,

the person outside the organization who is getting that product or service,

while some of them will be having internal customers.

So, when we think about a process,

and we talk about a process customer,

it could be internal.

The other aspect of processes is the support processes.

If you're a restaurant or a health care clinic,

you still have to hire and train people.

You have to maintain facilities.

Same thing goes for a furniture store.

So, hopefully what you have seen from this,

is that you can take any business and apply

that Input Process Output View and it's going to

prevail in pretty much everything that we

see around us and everything that gets done in any organization.

You can use this view to analyze how they are doing,

how effective and efficient they are being in their operations.

1-1.2b Describing Operations Management

Operations Management

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