Managers can use IT to heavily influence OM decisions including productivity, costs, flexibility, quality, and customer satisfaction. One of the greatest benefits of IT on OM is in making operational decisions because operations management exerts considerable influence over the degree to which the goals and objectives of the organization are realized. Most OM decisions involve many possible alternatives that can have varying impacts on revenues and expenses. OM information systems are critical for managers to be able to make well-informed decisions. Show
Decision support systems and executive information systems can help an organization perform what-if analysis, sensitivity analysis, drill-down, and consolidation. Numerous managerial and strategic key decisions are based on OM information systems that affect the entire organization, including:
OM Strategic Business Systems UPS uses package flow information systems at each of its locations. The custom-built systems combine operations strategy and mapping technology to optimize the way boxes are loaded and delivered. The goal is to use the package flow software to cut the distance that delivery trucks travel by more than 100 million miles each year. The project will also help UPS streamline the profitability of each of its facility locations.6 “One of the greatest benefits of IT on OM is in making operational decisions because operations management exerts considerable influence over the degree to which the goals and objectives of the organization are realized.” p. 200
Operations strategy is concerned with the development of a long-term plan for determining how to best utilize the major resources of the firm so that there is a high degree of compatibility between these resources and the firm's long-term corporate strategy. Operations strategy addresses very broad questions about how these major resources should be configured to achieve the desired corporate objectives. Some of the major long-term issues addressed in operations strategy include:
Each of these issues can be addressed by OM decision support systems. In developing an operations strategy, management needs to consider many factors. These include (a) the level of technology that is or will be available, (b) the required skill levels of the workers, and (c) the degree of vertical integration, in terms of the extent to which outside suppliers are used. Today, many organizations, especially larger conglomerates, operate in terms of strategic business units (SBUs) Consist of several stand-alone businesses., which consist of several stand-alone businesses. When companies become really large, they are best thought of as being composed of a number of businesses (or SBUs). As displayed in Figure 8.4, operations strategy supports the long-range strategy developed at the SBU level.7 Decisions at the SBU level focus on being effective, that is, “on doing the right things.” These decisions are sometimes referred to as strategic planning Focuses on long-range planning such as plant size, location, and type of process to be used., which focuses on long range planning such as plant size, location, and type of process to be used. The primary system used for strategic planning is a materials requirement planning system. Materials requirement planning (MRP) systemsUses sales forecasts to make sure that needed parts and materials are available at the right time and place in a specific company. use sales forecasts to make sure that needed parts and materials are available at the right time and place in a specific company. The latest version of MRP is enterprise resource planning, which is discussed in detail in Chapter 10.8 Strategic decisions impact intermediate-range decisions, often referred to as tactical planning, which focuses on being efficient, that is, “doing things right.” Tactical planning Focuses on producing goods and services as efficiently as possible within the strategic plan. focuses on producing goods and services as efficiently as possible within the strategic plan. Here the emphasis is on producing quality products, including when material should be delivered, when products should be made to best meet demand, and what size the workforce should be. One of the primary systems used in tactical planning includes global inventory management. Global inventory management systemsProvides the ability to locate, track, and predict the movement of every component or material anywhere upstream or downstream in the production process. provide the ability to locate, track, and predict the movement of every component or material anywhere upstream or downstream in the production process. This allows an organization to locate and analyze its inventory anywhere in its production process.9 Finally, operational planning and control (OP&C) Deals with the day-to-day procedures for performing work, including scheduling, inventory, and process management. deals with the day-to-day procedures for performing work, including scheduling, inventory, and process management. Inventory management and control systemsProvides control and visibility to the status of individual items maintained in inventory. provide control and visibility to the status of individual items maintained in inventory. The software maintains inventory record accuracy, generates material requirements for all purchased items, and analyzes inventory performance. Inventory management and control software provides organizations with the information from a variety of sources including:
Two additional OP&C systems include transportation planning and distribution management. Transportation planning systemsTracks and analyzes the movement of materials and products to ensure the delivery of materials and finished goods at the right time, the right place, and the lowest cost. track and analyze the movement of materials and products to ensure the delivery of materials and finished goods at the right time, the right place, and the lowest cost. Distribution management systemsCoordinates the process of transporting materials from a manufacturer to distribution centers to the final customer. coordinate the process of transporting materials from a manufacturer to distribution centers to the final customers. Transportation routes directly affect the speed and cost of delivery. An organization will use these systems to help it decide if it wants to use an effectiveness route and ship its products directly to its customers or use an efficiency route and ship its products to a distributor that ships the products to customers. Is the creation of finished goods and services using land labor capital entrepreneurship and knowledge?Production — The creation of finished goods and services using the factors of production: land, labor, capital, entrepreneurship, and knowledge.
What specialized type of management converts human resources into goods and services?Operations management is a specialized area in management that converts or transforms resources including human resources like technical skills and innovation, into goods and services. It includes inventory, management, quality control, production scheduling, follow-up services and more.
What is the process of selecting a geographic location for companies operations?Facility location is the process of selecting a geographic location for a company's operations. Facility layout is the physical arrangement of resources including people, to produce goods and services effectively and efficiently.
Is the part of the production process that physically or chemically changes materials?Chapter 9. |
What uses sales forecasts to make sure that needed parts and materials are available at the right time and place in a specific company?
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