MGSM 890 Operations Management

1
MGSM 890Operations Management

• Session 7 - Scheduling Control of Operations
  Projects

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This Evenings Program

• Scheduling Control Concepts Techniques
• Information Systems in Managing Operations
• Enterprise Resources Planning (ERP) concepts
• Scheduling Controlling Projects
• In-class Activities
• Problems 2, 5 on pp 639-640 in Chase et al
• Problems 1, 2 4 on pp 89-90 in Chase et al
• Case study analysis (Keep patients waiting? Not
  in My Office on pp 643 - 644)
• Case Study for the week The Rise Demise of an
  Excellent Team

3
What is Planning Control?
Supply of products Services
Planning Control
Demand for products Services
The activities which reconcile supply demand
The organisations resources
The organisations customers
4
PC as a Function of the Volume Variety Matrix
Variety
Short planning horizon Timing decisions
important Detailed plans
Long planning horizons Volume decisions
important Aggregated plans
Volume
5
Planning and Control Functions

• Loading How much to produce?
• Sequencing In what order?
• Scheduling When to produce?
• Controlling Are we on plan?

6
Loading Comparing Demand with Available Capacity
Maximum Time Available
Normal Time Available
Not worked
Planned Time Available
Planned Running Time
Set-ups
Available Time
Actual Running time
Down Time
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Loading
Finite Loading Possible to limit the load eg
GP Necessary to limit the load eg
aircraft Infinite Loading Not possible to
limit the load eg hospital Not necessary to
limit the load eg queue or flexible
capacity
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Sequencing

• Various sequencing rules can be deployed
• Customer priority
• Due Date
• LIFO last in first out
• FIFO first in fist out
• Longest operation time first
• Shortest operation time first

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Scheduling
Forward Scheduling Start work as soon as job
arrives Advantage of flexibility, labour
utilisation High inventory costs Backward
Scheduling Start work to finish when job is
required Advantage of lower inventory
costs Higher risk JIT based
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Gantt Charts
11
Controlling
Monitor deviations from plan and take corrective
action. Push system Material moved to next
stage as soon as processed Downhill
metaphor Consistent with MRP Pull
system Material moved to next stage only as
needed Uphill metaphor Consistent with JIT
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Managing Enterprise Systems
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What is ERP?

• Enterprise Resources Planning
• or
• Eternal Revenue Provider?
• Exaggerated Requirements Promise?
• Extremely Repetitive Pandemonium?

14
Where did ERPs come from?

• Early IT systems (1960s 1980s) were primarily
  stovepipe (standalone) systems
• Organisations began to recognise the need for
  sharing information across the enterprise
• Organisations began to focus on resources and
  their costs
• Organisations had to optimise the utilisation of
  their scarce resources

15
Where did ERPs come from (cont.)?

• Integration of information / processes and
  systems became a requirement
• MRP (Material Requirements Planning) systems
  evolved
• Then MRP II (Manufacturing Resources Planning)
  systems came on the scene
• But what was needed was something which could
  manage the business from end-to-end (i.e. as per
  the Value Chain)
• ERP systems were seen as the solution

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What were the Promised Benefits?

• Cost reduction
• Increased productivity
• Reduced cycle times
• Increased quality customer service
• Managerial benefits
• Organisational benefits

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What is the Reality?

• The average ERP implementation costs around US11
  million and takes around 23 months to complete
• Almost two-thirds of organisational management
  consider that their ERP systems may hurt the
  organisation
• The average large system is finished overall a
  year late and costs almost twice as much as the
  original estimate.

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What are the Problems?

• Poor project management
• Lack of commitment by senior management
• Poor governance of the implementation (the Lego
  Box effect)
• Focus on processes rather than information

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What are the Problems (cont.)?

• Poor, inadequate understanding of the business
  and its information requirements
• Inefficient ineffective business processes
• Not Invented Here syndrome

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What are the Problems (cont.)?

• Poor fit between the tools, technology and the
  requirements
• Lack of appreciation / recognition of the cascade
  effect in ERP systems
• Underestimation of the effort required
  resources, skills, communication, technology,
  training, post-implementation support, etc.

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One of the biggest problems however is . . .

• The Lack of Proper Change Management over
• The project
• The corporate culture
• The people, and
• The existing business processes
• And communicating the changes effectively

22
The Solution

• Seven things MUST be done right
• Planning
• Senior Management Commitment
• User Involvement Training
• Business Analysis
• Project Management
• Change Management, and
• Constant Communication

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The Opportunities

• If you get your ERP system right, you can
• Reduce order-to-shipment times by 50
  (Colgate-Palmolive)
• Increase efficiencies of coal handling by more
  than 20 (DBCT)
• Obtain improved timeliness of information,
  greater accuracy, better monitoring, quicker
  response for information requests and achieve
  competitive advantage (Philips, Shell, Orica)

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The Opportunities (cont.)

• Improved supply-demand linkages between remote
  locations and local offices (Unilever)
• Improved international operations - multiple tax
  structures, currencies, accounting practices,
  etc. (Deutsche Bank)
• 42 ROI in 2 years (Houston Independent School
  District)

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In Summary . . .

• ERP Systems can provide enormous benefits but
  at a cost
• Done badly, ERP Systems can cost millions (see
  recent press re Crane)
• At worst, the organisation can go belly up
• ERP systems dont just support the business
  they ARE the business

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Exercises

• pp 639-640 Chase et al
• Problem 2 Scheduling Hotel Receptionists
• Problem 5 Scheduling a list of jobs
• pp 89-90 Chase et al
• Problem 1 prepare a CPM diagram
• Problem 2 Scheduling using CPM
• Problem 4 CPM for a construction project

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Case Study Keep My Patients Waiting? Not in My
Office

• What features of the appointment scheduling
  system were crucial in capturing many grateful
  patients?
• What procedures were followed to keep the
  appointment system flexible enough to accommodate
  the emergency cases, and yet able to keep up with
  the other patients appointments?
• How were special cases such as latecomers and
  no-shows handled?

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Case Study The Rise and Demise of an Excellent
Team

• What motivated the team up to the Documentation
  stage?
• What happened then?
• What forces were acting on the group?
• What lessons can be learned here?

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Project Planning and Control
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Volume -Variety Matrix
Variety
Projects
Volume
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Matrix of Project Types
Military Campaign
Oil Exploration
Uncertainty
Wedding
Building an Aircraft
Complexity
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What is a Project?

• Unique set of objectives
• Definite start point and end point
• Governed by scope, cost and time goals
• Aim to achieve results and disband
• Contract to on-going management

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What is Management?

• The Purpose of Management is to plan, lead,
  organise and control (Fayol, 1916)
• leadership of a team
• determination of team objectives
• communication control of a team with its client
  or sponsor
• comparison of achievement against set objectives
• authority to change what a team is doing and
• resolution of conflict.
• Planning and control are the core of project
  management

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Job Design in a Project Environment

• Project team
• - Individuals from different departments within
  company
• Matrix structure
• - Team structure with members from
  different functional areas, depending on skills
  needed
• Project manager
• - Leader of project team

35
Objectives in a Project Environment
Quality
Time
Cost
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Project Planning Tools

• Gantt Charts
• Critical Path Method (CPM)
• Program Evaluation and Review Technique (PERT)

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Gantt Chart

• Also known as a bar chart
• Named after Henry Gantt (World War I
  shipbuilding)
• Very useful for showing
• Amount of time involved
• Sequence of activities
• Dependencies between activities
• Can also be used for
• Tracking progress of the project
• Scheduling resources to activities
• Identify milestones (major review points) for the
  project

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Gantt Chart
?
?
?
?
?
Activity Design house and obtain
financing Lay foundation Order and
receive materials Build house Select
paint Select carpet Finish work

?
?
?
?
?
3
1
5
7
9
Month
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Activity Design house Lay
foundation Order and receive materials Build
house Select paint Select carpet Finish work
Month
0
2
4
6
8
?
?
?
?
?
Resources required
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CPM

• Critical Path Method (CPM)
• Du Pont Remington-Rand (1956)
• based on deterministic task times

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Critical Path

• A path is a sequence of connected activities
  running from start to end nodes in network
• The critical path is the path with the longest
  duration in the network
• A project cannot be completed in a shorter time
  than the time of the critical path

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Activities OrganisedIn a Project
Activity 1

• Activity on Arrow
• Activity on Node

Node 1
Node 2
Activity 1
Activity 2
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Project PlanningActivities in Series
Construct forms
Pour concrete
44
Project PlanningActivities in Parallel
Construct forms
Pour concrete
Build walls
4
Dummy activity
45
Project Plan For A House
3
Dummy
Lay foundation
0
Finish work
2
Build house
3
1
7
6
1
2
4
6
1
Design house and obtain financing
Order and receive materials
1
1
Select carpet
Select paint
5
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PERT
Project Evaluation Review Technique (PERT) -
First used by US Navy - Booz, Allen Hamilton -
Task time estimates are not deterministic, but
have some probability distribution
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PERT
(3,4,6)
(1,3,4)
(optimistic time, most likely time, pessimistic
time)
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PERT
Mean time t (opt) 4 t (likely) t (pess)
6 Variance ( t(pess) - t(opt) )
36 Project Mean Sum of Activity
Means Project Variance Sum of Activity
Variances ( Measure of Riskiness)
2
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PERT Example
2
Equipment testing and modification
Equipment installation
System development
1
6
4
System Testing
Dummy
Recruiting
On-job training
Off-line Training
3
5
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PERT

• Nominate the Critical Path for this project?
• What is the mean duration of the Critical Path?
• What is the variance of the Critical Path
  duration?
• Could there be a better path than the Critical
  Path?

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PERT
Optimistic Likely Pessimistic
Mean Var Installation 1 2
6 2.5 .69 Recruiting 1 4
5 3.7 .44 System development 1
2
4 2.2 .25 Equip. testing 2 3
8 3.7 1.0 Off-line training 4
5 8 5.3 .44 On-job training
2 5
7 4.8 .69 System testing 2 4
8 4.3 1.0
52
PERT Example
2
Equipment testing and modification 3.7, 1.0
Equipment installation 2.5, .69
System Testing 4.3, 1.0
System development 2.2, .25
1
6
4
Recruiting 3.7, .44
Off-line Training 5.3, .44
On-job training 4.8, .69
Dummy
3
5
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Which Is the Critical Path?
Probability
Path 2 1-3-4-5-6
Mean11.0 Var2.38
Mean13.8 Var1.57
Path1 1-2-4-5-6
Time
8.62
13.38
12.23
15.37
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Project Management . . .

• Is more than just the numbers
• Is not the same as Managing the Project
• Dont forget the human factor
• The success of a project is (usually) inversely
  proportional to its size and timeframe
• Need exit champions just as much as they need
  project champions

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Project Management The Problems Pitfalls

• Focus on quantitative aspects
• Project Reification blind faith
• Failure to adequately carry out critical project
  reviews
• Throw more resources at the problem
• What was the objective again?

Royer, Isabelle (2003), Why Bad Projects Are so
Hard to Kill, Harvard Business Review, 81(2),
pp48-56
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Good Project Management must include appreciate
the importance of

• Business Impact
• Risk Management
• Issue Management
• Documentation Management
• Change Management
• Resource Management
• Communications Management
• Scope Management

Matta, Nadim F Ashkenas, Ronald N, (2003), Why
Good Projects Fail Anyway, Harvard Business
Review, 81(9), pp109-114