Production Of Goods And Services Pdf
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Our economical output is channeled through goods or services. Any economy thrives through our constant need of both, whether it's our need to stock our refrigerators and furnish our homes, or to spend a nice night dining out and experiencing the finer things.
- An operations management view of the services and goods offering mix
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- An operations management view of the services and goods offering mix
Goods are items that are usually but not always tangible , such as pens, salt, apples, and hats. Services are activities provided by other people, who include doctors, lawn care workers, dentists, barbers, waiters, or online servers, a book, a digital videogame or a digital movie. Taken together, it is the production , distribution , and consumption of goods and services which underpins all economic activity and trade. According to economic theory , consumption of goods and services is assumed to provide utility satisfaction to the consumer or end-user, although businesses also consume goods and services in the course of producing other goods and services see: Distribution: Channels and intermediaries. Physiocratic economists categorized production into productive labour and unproductive labour.
An operations management view of the services and goods offering mix
This free course, Understanding operations management , is designed to provide you with a basic framework for understanding operations management and its organisational and managerial context. It begins with a brief history of the changing nature of operations in a manufacturing context, but emphasises that the operations function is significant in all types of organisation, whether they produce goods or provide services, and whether they are in the private, public or voluntary sectors.
This course presents a process model of operations that describes inputs being transformed into outputs within the boundary of an operations system.
It also discusses the role of operations managers, in particular the importance of focusing on suppliers and customers who are outside this boundary, as well as on other aspects of the operations system's external environment.
This OpenLearn course provides a sample of postgraduate study in business management. Tell us what you think! Consider the ingredients of your breakfast this morning. Unless you live on a farm and produced them yourself, they passed through a number of different processing steps between the farmer and your table and were handled by several different organisations. Similarly, your morning newspaper was created and delivered to you through the interactions of a number of different organisations.
Every day, you use a multitude of physical objects and a variety of services. Most of the physical objects have been manufactured and most of the services have been provided by people in organisations.
Just as fish are said to be unaware of the water that surrounds them, most of us give little thought to the organisational processes that produce these goods and services for our use. The study of operations deals with how the goods and services that you buy and consume every day are produced. To do this, they have to procure resources, convert them into outputs and distribute them to their intended users.
The term operations embraces all the activities required to create and deliver an organisation's goods or services to its customers or clients. Within large and complex organisations operations is usually a major functional area, with people specifically designated to take responsibility for managing all or part of the organisation's operations processes.
It is an important functional area because it plays a crucial role in determining how well an organisation satisfies its customers. In the case of private-sector companies, the mission of the operations function is usually expressed in terms of profits, growth and competitiveness; in public and voluntary organisations, it is often expressed in terms of providing value for money.
Operations management is concerned with the design, management, and improvement of the systems that create the organisation's goods or services. Operations management is therefore critical to organisational success.
You probably found it quite easy to identify the main output of a brewery as beer, and of a publisher as books or newspapers. However, the others are a bit trickier: a satisfied customer hotel and a customer bearing less financial risk insurance company. Operations management deals with producing not only physical goods, but also satisfied customers.
An understanding of the principles of operations management is important for all managers, because they provide a systematic way of looking at an organisation's processes.
The need to manage manufacturing and service operations efficiently and effectively has led to a considerable increase in interest in operations management in recent years. However, the concept of operations is not new. Operations in some form has been around as long as human endeavour itself but, in manufacturing at least, it has changed dramatically over time, and there are three major phases - craft manufacturing, mass production and the modern period.
Let's look at each of these briefly in turn. Craft manufacturing describes the process by which skilled craftspeople produce goods in low volume, with a high degree of variety, to meet the requirements of their individual customers. Over the centuries, skills have been transmitted from masters to apprentices and journeymen, and controlled by guilds.
Craftspeople usually worked at home or in small workshops. Such a system worked well for small-scale local production, with low levels of competition. Some industries, such as furniture manufacture and clockmaking, still include a significant proportion of craft working. In many industries, craft manufacturing began to be replaced by mass production in the 19th century. Mass production involves producing goods in high volume with low variety — the opposite of craft manufacturing.
Customers are expected to buy what is supplied, rather than goods made to their own specifications. Producers concentrated on keeping costs, and hence prices, down by minimising the variety of both components and products and setting up large production runs.
They developed aggressive advertising and employed sales forces to market their products. Instead of being produced for a specific machine or piece of equipment, parts were made to a standard design that could be used in different models. This greatly reduced the amount of work required in cutting, filing and fitting individual parts, and meant that people or companies could specialise in particular parts of the production process.
By breaking down activities into tasks that were sequential, logical and easy to understand, each worker would have narrowly defined and repetitious tasks to perform, at high speed and therefore with low costs Kanigel, A third innovation was the development of the moving assembly line by Henry Ford.
Instead of workers bringing all the parts and tools to a fixed location where one car was put together at a time, the assembly line brought the cars to the workers. Ford thus extended the ideas of scientific management, with the assembly line controlling the pace of production. This completed the development of a system through which large volumes of standardised products could be assembled by unskilled workers at constantly decreasing costs — the apogee of mass production.
Mass production worked well as long as high volumes of mass-produced goods could be produced and sold in predictable and slowly changing markets. However, during the s, markets became highly fragmented, product life cycles reduced dramatically and consumers had far greater choice than ever before.
An unforeseen challenge to Western manufacturers emerged from Japan. New Japanese production techniques, such as total quality management TQM , just-in-time JIT and employee involvement were emulated elsewhere in the developed world, with mixed results. More recently, the mass production paradigm has been replaced, but there is as yet no single approach to managing operations that has become similarly dominant. The different approaches for managing operations that are currently popular include:.
Flexible specialisation Piore and Sabel, in which firms especially small firms focus on separate parts of the value-adding process and collaborate within networks to produce whole products.
Such an approach requires highly developed networks, effective processes for collaboration and the development of long-term relationships between firms. Lean production Womack et al. It focuses on the elimination of all forms of waste from a production system. A focus on driving inventory levels down also exposes inefficiencies, reduces costs and cuts lead times.
Mass customisation Pine et al. Mass customisation is becoming increasingly feasible with the advent of new technology and automated processes. Agile manufacturing Kidd, which emphasises the need for an organisation to be able to switch frequently from one market-driven objective to another. Again, agile manufacturing has only become feasible on a large scale with the advent of enabling technology. In various ways, these approaches all seek to combine the high volume and low cost associated with mass production with the product customisation, high levels of innovation and high levels of quality associated with craft production.
Some people especially those professionally involved in operations management! In this sense, every manager is an operations manager, since all managers are responsible for contributing to the activities required to create and deliver an organisation's goods or services. However, others argue that this definition is too wide, and that the operations function is about producing the right amount of a good or service, at the right time, of the right quality and at the right cost to meet customer requirements.
A stereotypical example of an operations manager would be a plant manager in charge of a factory, such as an automobile assembly plant. But other managers who work in the factory — quality managers, production and inventory control managers, and line supervisors — can also be considered to be working in operations management.
In service industries, managers in hotels, restaurants, banks and stores are operations managers. In the not-for-profit sector, the manager of a nursing home or day centre for older people is an operations manager, as is the manager of a local government tax-collection office and the manager of a charity shop staffed entirely by volunteers.
So operations managers are responsible for managing activities that are part of the production of goods and services.
Their direct responsibilities include managing both the operations process, embracing design, planning, control, performance improvement, and operations strategy. Their indirect responsibilities include interacting with those managers in other functional areas within the organisation whose roles have an impact on operations.
Such areas include marketing, finance, accounting, personnel and engineering. Human resource management — the people employed by an organisation either work directly to create a good or service or provide support to those who do.
People and the way they are managed are a key resource of all organisations. Asset management — an organisation's buildings, facilities, equipment and stock are directly involved in or support the operations function.
Cost management — most of the costs of producing goods or services are directly related to the costs of acquiring resources, transforming them or delivering them to customers. For many organisations in the private sector, driving down costs through efficient operations management gives them a critical competitive edge. For organisations in the not-for-profit sector, the ability to manage costs is no less important. Use the matrix below to analyse your role as an operations manager.
In as many of the cells in the matrix as you can, jot down an example of a decision you have made in the last month. You will almost certainly have left some of the cells in the matrix blank. For example, you may not have been involved at least in the last month in designing the operations system, so you may not have made any decisions that belong to the cells in Column A, though you will almost certainly have found some examples to put in Column B and perhaps in Column C also.
Similarly, if your area of work does not involve any stocks of materials, you will not have found any for cells in Row 4 Inventory. However, it is likely that you will have been able to identify decisions you have made that fall in at least a third of the cells of this matrix.
If so, you are fulfilling many of the roles of an operations manager. The discussion above has highlighted the role of operations in creating and delivering the goods and services produced by an organisation for its customers. This section introduces the transformation model for analysing operations. This is shown in Figure 1 , which represents the three components of operations: inputs, transformation processes and outputs. Operations management involves the systematic direction and control of the processes that transform resources inputs into finished goods or services for customers or clients outputs.
This basic transformation model applies equally in manufacturing and service organisations and in both the private and not-for-profit sectors. Let's look at each of the components of Figure 1 in a little more detail. Some inputs are used up in the process of creating goods or services; others play a part in the creation process but are not used up. To distinguish between these, input resources are usually classified as:.
Many people think of operations as being mainly about the transformation of materials or components into finished products, as when limestone and sand are transformed into glass or an automobile is assembled from its various parts.
But all organisations that produce goods or services transform resources: many are concerned mainly with the transformation of information for example, consultancy firms or accountants or the transformation of customers for example, hairdressing or hospitals. Galloway defines operations as all the activities concerned with the transformation of materials, information or customers.
The staff involved in the transformation process may include both people who are directly employed by the organisation and those contracted to supply services to it.
Operations vary greatly in the mix of labour and capital that make up their inputs. Highly automated operations depend largely on capital; others rely mainly on labour.
What is Operations Management OM? What Are Operations Systems? What is a System? What is an Operations System? Align With Strategic Planning. Phase 3: Managing Productivity What is Productivity?
production line is there has never been two the same (Schaffer and Schleich ). In contrast, services can be standardised. McDonald's.
An operations management view of the services and goods offering mix
Actively scan device characteristics for identification. Use precise geolocation data. Select personalised content. Create a personalised content profile.
To develop and propose a framework, termed here as the value package prism, for assessing the kinds of management processes and flexibility available in providing a range of value packages services and goods offering mix.
Skip to search form Skip to main content You are currently offline. Some features of the site may not work correctly. Sheard Published Business. This paper estimates the effects of airport infrastructure on local sectoral employment, using data from the United States. To address the potential endogeneity in the determination of airport locations and sizes, the National Airport Plan is used to instrument for the current distribution of airports. The Plan had a strong effect on subsequent airport construction but appears to have been unrelated to other factors for current sectoral employment. Save to Library.
Production system , any of the methods used in industry to create goods and services from various resources. The transformation process typically uses common resources such as labour , capital for machinery and equipment, materials, etc. When viewed as a process, a production system may be further characterized by flows channels of movement in the process: both the physical flow of materials, work in the intermediate stages of manufacture work in process , and finished goods; and the flow of information and the inevitable paperwork that carry and accompany the physical flow. The management of information flows, or the planning and control of the system to achieve acceptable outputs, is an important task of the production manager. While the capacity of the system is the major factor in determining whether output expectations can be met, the additional consideration of quality must also be seen as a limiting factor. The quality of a product, measured against some objective standard, includes appearance, performance characteristics, durability, serviceability, and other physical characteristics; timeliness of delivery; cost; appropriateness of documentation and supporting materials; and so on. It is an important part of the definition of a system.
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