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OPERATIONS MANAGEMENT

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OPERATIONS MANAGEMENT OPERATIONS AND PRODUCTIVITY $ Mo Money Mo Problems $ OUTLINE What is Operations Management? The heritage of Operations Management Why study OM? – PowerPoint PPT presentation

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Title: OPERATIONS MANAGEMENT


1
OPERATIONSMANAGEMENT
  • OPERATIONS
  • AND PRODUCTIVITY

Mo Money Mo Problems
2
OUTLINE
  • What is Operations Management?
  • The heritage of Operations Management
  • Why study OM?
  • What Operations Managers do?
  • Organizing to produce goods and services
  • Where are the OM jobs?
  • Exciting new trends in Operations Management
  • Operations in the service sector
  • The Productivity challenge

3
LEARNING OBJECTIVES
  • When you complete this chapter, you should be
    able to
  • Identify or Define
  • Production and productivity
  • Operations Management (OM)
  • What operations managers do
  • Services
  • Describe or Explain
  • A brief history of operations management
  • The future of the discipline
  • Measuring productivity

4
WHAT IS OPERATIONS MANAGEMENT?
  • Operations Management is the set of activities
    that creates goods and services by transforming
    inputs into outputs
  • Operations Management focuses on carefully
    managing the processes to produce and distribute
    products and services.

AND PRODUCTION
  • Production is the creation of goods and
    services

5
SIGNIFICANT EVENTS IN OPERATIONS MANAGEMENT
  • Division of labor (Smith, 1776)
  • Standardized parts (Whitney, 1800)
  • Scientific management (Taylor, 1881)
  • Coordinated assembly line (Ford 1913)
  • Gantt charts (Gantt, 1916)
  • Motion study (the Gilbreths, 1922)
  • Quality control (Shewhart, 1924)

6
SCIENTISTS
  • Adam Smith
  • He suggested that the huge increases in
    productivity obtainable from technology or
    technological progress are possible because human
    and physical capital are matched, usually in an
    organisation.

7
  • Eli Whitney
  • Whitney's defenders have claimed that he
    invented the American system of manufacturing--
    the combination of power machinery,
    interchangeable parts, and division of labor that
    would underlie the nation's subsequent industrial
    revolution.

8
  • Frederick Winslow Taylor
  • He developed the theory of management that
    analyzes and synthesizes processes, improving
    labor productivity.

9
  • Henry Ford
  • He said that an assembly line is a manufacturing
    process in which interchangeable parts are added
    to a product in a sequential manner using
    optimally planned logistics to create a finished
    product much faster than with handcrafting-type
    methods.

10
  • Henry Gantt
  • A Gantt chart is a popular type of bar chart
    that illustrates a project schedule. Gantt charts
    illustrate the start and finish dates of the
    terminal elements and summary elements of a
    project.

11
  • The Gilbreths
  • The Gilbreths' motion studies were more focused
    on how a task was done, and how best to eliminate
    unneeded, fatiguing steps in any process.

12
  • Walter Shewhart
  • Shewhart framed the problem in terms of
    assignable-cause and chance-cause variation and
    introduced the control chart as a tool for
    distinguishing between the two. Shewhart stressed
    that bringing a production process into a state
    of statistical control, where there is only
    chance-cause variation, and keeping it in
    control, is necessary to predict future output
    and to manage a process economically.

13
SIGNIFICANT EVENTS
  • CPM/PERT (Dupont, 1957)
  • MRP (Orlicky, 1960)
  • CAD
  • Flexible manufacturing systems (FMS)
  • Manufacturing automation protocol (MAP)
  • Computer integrated manufacturing (CIM)

14
WHY STUDY OM?
  • OM is one of three major functions (marketing,
    finance, and operations) of an organization
  • We want/need to know how goods and services are
    produced
  • We want to know what operations managers do
  • OM is such a costly part of an organization

15
WHY STUDY OM?
  • Related activities
  • managing purchases
  • inventory control
  • quality control
  • storage
  • logistics
  • evaluations
  • and we need to comunicate them with each others.

16
WHY STUDY OM?
  • OM often includes substantial measurement and
    analysis of internal processes, because a great
    deal of focus is on efficiency and effectiveness
    of processes.
  • Ultimately, the nature of how operations
    management is carried out in an organization
    depends very much on the nature of products or
    services in the organization.

17
WHAT OPERATIONS MANAGERS DO (by Henri Fayol)
  • Plan
  • Organize
  • Staff
  • Lead
  • Control

18
PLANNING
  • The process of deciding what to do. Effective
    planning seeks to answer questions such as
  • What should the firm do? The output of this
    process are goals and objectives.
  • When must the firm achieve these goals? The
    output is a schedule defining milestones and due
    dates.
  • Who is responsible for doing it? The outputs are
    assigned responsibilities.
  • How should this be done? The outputs may be
    directions or plans of action.
  • How should performance be measured? The output
    includes standards of performance.
  • Planning is forward looking. When planning is
    operational, the planning horizon is shorter and
    the level of detail within is greater. When
    strategic, the planning horizon is long and done
    in less detail.

19
ANALYSING
  • The process of making sense of data that is
    often poorly structured, incomplete,
    inconsistent, inaccurate, and/or available in
    overwhelming quantities.
  • Analysis supports the planning process by
  • providing the facts in useful formats that can
    then be
  • used to evaluate business alternatives.
  • Analyzing also supports managements control
    activity by providing the basis for corrective
    actions.

20
ORGANIZING
  • The process of building organization structures
    and interrelated task coordination teams. In the
    past, organizing dealt mostly with humans, but
    increasingly it involves data-getting
  • the right person
  • the right information
  • in the right form
  • at the right time
  • those factors are the key success in
    organization design.

21
DIRECTING/IMPLEMENTING
  • An action-oriented process that carries out the
    outputs of the first three management activities.
  • This is where money is made and lost (!).
  • In this process, management expends resources to
    perform the tasks defined by the planning
    process.

22
CONTROLLING
  • The process of measuring the results of the other
    four management activities.
  • Were the plans any good?
  • Did the analysis provide meaningful information
    to the other processes?
  • How well did we organize our resources to get the
    job done?
  • How well did we do it?
  • We might even add, how well did we measure the
    performance of our control function?

23
10 CRITICAL DECISIONS
  • Service, product design
  • Quality management
  • Process, capacity design
  • Location
  • Layout design
  • Human resources, job design.
  • Supply-chain management
  • Inventory management
  • Scheduling
  • Maintenance

24
SECTION OF OM
  • Procurement (Purchasing) Practices
  • reviews guidelines for buying various materials
    from suppliers and vendors - materials, including
    computers, services from lawyers, insurance, etc.
  • Management Control and Coordinating Function
  • includes a broad range of activities to ensure
    that organizational goals are consistently being
    met in an effective and efficient fashion

25
SECTION OF OM
  • Product and Service Management
  • the major activities involved in product and
    service management are similar to those in
    operations management. However, operations
    management is focused on the operations of the
    entire organization, rather than managing a
    product or service.
  • Quality Management
  • is crucial to effective operations management,
    particularly continuous improvement. More recent
    advancements in quality, such as benchmarking and
    Total Quality Management, have resulted in
    advancements to operations management as well.

26
SECTION OF OM
  • Inventory Management
  • Costs can be substantial to store and move
    inventory. Innovative methods, such as
    Just-in-Time inventory control, can save costs
    and move products and services to customers more
    quickly.
  • Logistics and Transportation Management
  • is focused on the flow of materials and goods
    from suppliers, through the organization and to
    the customers, with priority on efficiency and
    cost effectiveness.

27
SECTION OF OM
  • Facilities Management
  • depnds a great deal on effective management of
    facilities, such as buildings, computer systems,
    signage, lighting, etc.
  • Configuration Management
  • It's important to track the various versions of
    products and services. Consider the various
    versions of software that continually are
    produced, each with its own version number.
    Tracking these versions is configuration
    management.
  • Distribution Channels
  • The means of distribution depend very much on the
    nature of the product or service.

28
ORGANISATIONAL FUNCTIONS
  • Marketing
  • Gets customers
  • Operations
  • creates product or service
  • Finance/Accounting
  • Obtains funds
  • Tracks money

29
WHERE ARE THE OM JOBS?
  • Technology/methods
  • Facilities/space utilization
  • Strategic issues
  • Response time
  • People/team development
  • Customer service
  • Quality
  • Cost reduction
  • Inventory reduction
  • Productivity improvement

30
NEW CHALLENGES IN OM
FROM
TO
  • Local or national focus
  • Batch shipments
  • Low bid purchasing
  • Lengthy product development
  • Standard products
  • Job specialization
  • Global focus
  • Just-in-time
  • Supply chain partnering
  • Rapid product development, alliances
  • Mass customization
  • Empowered employees, teams

31
CHARACTERISTICS OF GOODS
  • Tangible product
  • Consistent product definition
  • Production usually separate from consumption
  • Can be inventoried
  • Low customer interaction

32
CHARACTERISTICS OF SERVICES
  • Intangible product
  • Produced consumed at same time
  • Often unique
  • High customer interaction
  • Inconsistent product definition
  • Often knowledge-based
  • Frequently dispersed

33
GOODS VS. SERVICES
SERVICES
GOODS
  • Can be resold
  • Can be inventoried
  • Some aspects of quality measurable
  • Selling is distinct from production
  • Reselling unusual
  • Difficult to inventory
  • Quality difficult to measure
  • Selling is part f serviceo

34
GOODS VS. SERVICES (2)
SERVICES
GOODS
  • Product is transportable
  • Site of facility important for cost
  • Often easy to automate
  • Revenue generated primarily from tangible product
  • Provider, not product is transportable
  • Site of facility important for customer contact
  • Often difficult to automate
  • Revenue generated primarily from intangible
    service.

35
THE ECONOMIC SYSTEM TRANSFORMS INPUTS TO OUTPUTS
36
INPUTS / OUTPUTS
37
PRODUCTIVITY
  • Measure of process improvement
  • Represents output relative to input
  • Productivity increases improve standard of living
  • From 1889 to 1973, U.S. productivity increased at
    a 2.5 annual rate

38
MEASUREMENT PROBLEMS
  • Quality may change while the quantity of inputs
    and outputs remains constant
  • External elements may cause an increase or
    decrease in productivity
  • Precise units of measure may be lacking

39
PRODUCTIVITY VARIABLES
  • Labor - contributes about 10 of the annual
    increase
  • Capital - contributes about 32 of the annual
    increase
  • Management - contributes about 52 of the annual
    increase

40
SERVICE PRODUCTIVITY
  • Typically labor intensive
  • Frequently individually processed
  • Often an intellectual task performed by
    professionals
  • Often difficult to mechanize
  • Often difficult to evaluate for quality
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