Introduction tp operations management

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Slide 1: 

Introduction to Operations Management Dr Felton Lean

Slide 2: 

What is Operations Management? Dr Felton Lean

3 Basic Functions of Business Organizations : 

3 Basic Functions of Business Organizations Ensure and allocating financial resources Produce goods or services Assess consumer needs, and sell / promote goods or services Dr Felton Lean

Operations: A Transformation Process : 

Operations: A Transformation Process Workers Managers Equipment Facility Materials Land Energy Information Goods Services Operations and processes Feedback Performance Lead time The time between ordering a good or service and receiving it. Dr Felton Lean

Operations Management : 

Operations Management The management of systems or processes that create goods and/or provide services. Planning Coordinating Executing Dr Felton Lean

Slide 6: 

OVERVIEW OF OPERATIONS MANAGEMENT MODEL Transformation Process Output Goods or Services Control Input: resources raw materials machines personnel capital land/buildings utilities information etc. Dr Felton Lean

Slide 7: 

Operations management is the process of obtaining and utilizing resources to produce useful goods and services so as to meet the goals of the organization. Dr Felton Lean

Slide 8: 

• The difference between the cost of inputs and the value or price of outputs. Inputs Material Labor Capital Transformation/ Conversion process Outputs Goods Services Control Feedback Feedback Feedback Value added Value added Value of the output or price of the output as accepted by the customers, not just enforced by the supplier. Land Dr Felton Lean

Slide 9: 

Operations management considers how the input are transformed into goods or services. Control is when something is learned about the goods or services that is used to more effectively transform future goods or services. Dr Felton Lean

Slide 10: 

• The difference between the cost of inputs and the value or price of outputs. Inputs Material Labor Capital Transformation/ Conversion process Outputs Goods Services Control Feedback Feedback Feedback Value added Value added Value of the output or price of the output as accepted by the customers, not just enforced by the supplier. Land Dr Felton Lean

Slide 11: 

Feedback and Control Measurements taken at various points in the transformation process for control purposes are called feedback. The process of comparing outputs to previously established standards to determine if corrective action is needed is called controlling Physical Flow Information Flow Dr Felton Lean

Operations = Transformation Process : 

Operations = Transformation Process Inputs 5 Ms Management, Methods, Material, Machines, Maintenance Also: Personnel , information & energy Transformation/conversion process Cutting, machining, storing, transporting, investing, analyzing Output Goods/services Value-added The difference between the cost of inputs and the value or price of outputs. Dr Felton Lean

EXAMPLE OF OPERATIONS MANAGEMENT PROCESS : 

EXAMPLE OF OPERATIONS MANAGEMENT PROCESS Automobile factory Input Output steel, plastic Car glass, paint tools Transformation equipment process machines personnel, buildings utilities, etc. Dr Felton Lean

Example: Hospital : 

Example: Hospital Inputs Processing Outputs Table 1.2 Healthy patients Doctors, nurses Hospital Medical Supplies Equipment Laboratories Examination Surgery Monitoring Medication Therapy Improvement of patients health condition Dr Felton Lean

Example: MBA : 

Example: MBA Inputs Processing Outputs Table 1.2 Knowledge Text Book Lecture Notes Handouts Course CD …… Lecturing Tutoring Assignment Exam Future operations managers Teaching Evaluation Dr Felton Lean

Slide 16: 

Manufacture or Service Operations? Dr Felton Lean

Slide 17: 

• Degree of standardization • Type of Operation • Manufacturing or Service Major characteristics of operational systems Dr Felton Lean

Manufacturing or Service? : 

Manufacturing or Service? Production of goods Delivery of services “perceptible by the senses especially the sense of touch” WordNet ® 2.0, © 2003 Princeton University Dr Felton Lean

Slide 19: 

Degree of standardization Dr Felton Lean

Slide 20: 

Types of operations Dr Felton Lean

Slide 21: 

Production management is concerned with the manufacturing of goods: Examples of goods: cars books chairs computers houses etc. Dr Felton Lean

Slide 22: 

Manufacturing vs. Service Characteristic Manufacturing Service Output Uniformity of output Uniformity of input Labor content Measurement of productivity Customer contact Opportunity to correct quality problems before delivery Evaluation Patentable Table 1.3 Tangible High High Low Easy Low High Easy Usually Intangible Low Low High Difficult High Low Difficult Not Usually Dr Felton Lean

Slide 23: 

Operations management is also concerned with the management of service industries as well as the manufacturing of goods. Dr Felton Lean

Slide 24: 

What does Operations Manger Do? Dr Felton Lean

Slide 25: 

Operations Management includes: Forecasting Capacity planning Scheduling Managing inventories Assuring quality Motivating employees Deciding where to locate facilities And more . . . Scope of Operations Management Dr Felton Lean

Example: Airline Company : 

Example: Airline Company Forecasting: Weather, landing conditions, seat demands for flights. Capacity Planning: How many number of planes in each route? Scheduling: Scheduling of planes for flights and for routine maintenance, scheduling of pilots and flights attendants. Quality: Quality of the services, Safety. Dr Felton Lean

Example: Automobile Factory : 

Example: Automobile Factory Forecasting: Demands for cars. Capacity Planning : Number of shifts, level of workforce. Inventory: Various component, parts. Scheduling: Scheduling of various types of cars, Scheduling of workforce. Quality: Quality of products, services. Dr Felton Lean

Slide 28: 

Responsibilities of Operations Manager Products & services Planning – Capacity – Location – – Make or buy – Layout – Projects – Scheduling Controlling/Improving – Inventory Organizing – Degree of centralization – Process selection Staffing – Hiring/laying off – Use of Overtime Directing – Incentive plans – Issuance of work orders – Job assignments Table 1.6 Dr Felton Lean

Slide 29: 

Why is Operations Management Important? Dr Felton Lean

Reasons to Study Operations Management : 

Reasons to Study Operations Management 50% or more of the jobs in industry are operations management-related: Customer Service Quality Assurance Production Planning Scheduling Inventory Management Logistics Operations Management activities are at the core of all business organizations. All Other Functional Areas are interrelated with Operations Management Dr Felton Lean

Operations as Technical Core : 

Operations as Technical Core Dr Felton Lean

IMPORTANCE OF OPERATIONS MANAGEMENT : 

IMPORTANCE OF OPERATIONS MANAGEMENT Improves productivity: * Effective control of the conversion process of inputs into outputs (e.g., fewer defect output, less wastage of material inputs, effective allocation of staff, will lead to more output per unit time). ** Higher productivity leads to higher profits – How? Improves our ability to meet customer needs: * Ensure provision of high quality products and services at reasonable prices (not just cheap output) * Enables us to provide service to our target customers better than our competitors * Meeting customer needs is crucial to long term survival of the firm – Why? Dr Felton Lean

IMPORTANCE OF OPERATIONS MANAGEMENT : 

IMPORTANCE OF OPERATIONS MANAGEMENT Central to the building of a brand name/reputation of the company/firm, as a competitive weapon: * High-quality product/service provider * Low cost/good value producer/service provider (e.g., Woolworths, Sony & Panasonic) * Fast delivery or response/lead time (e.g., Hong Kong – for 2 hrs suit tailoring Improves the living standards of citizens and wealth of nations: * Has impact on GDP per capital – high output per unit time * High-value added vs. skills needed to manufacture Dr Felton Lean

Slide 34: 

The Overlapping of Three Major Functions Figure 1.5 Budgeting Economic analysis of investment proposals Provision of funds …… Financial indicators Competitor Customer preference Trend of technology …… Judgment of manufacturability Fulfillment lead time Dr Felton Lean

OPERATIONAL-BASED COMPETITIVE ADVANTAGE : 

OPERATIONAL-BASED COMPETITIVE ADVANTAGE Operational based competitive advantage can be achieved by: * Doing things right the first time - Quality advantage; - defect free output, lower costs, improved competitiveness, can even lead to higher prices (e.g., Sony, Toyota, etc). * Doing things cost effectively - Cost advantage; - cost efficiency leads to price competitiveness and decent profits - Lack of cost competitiveness can lead to large-scale retrenchments * Do things fast: Speed advantage; can lose sales if slow - Reputation for speed is important Dr Felton Lean

OPERATIONAL-BASED COMPETITIVE ADVANTAGE : 

OPERATIONAL-BASED COMPETITIVE ADVANTAGE * Change things quickly: Adaptability-advantage (ability to change from making Tea, Coffee, etc) - Change operations to meet customer demand for variety - SME Furniture manufacturer (beds, chairs, tables, sofa) * Do things right every time: Reliability-advantage - offer error-free products or services to customers EVERY time * Do things better: Service-advantage and continuous improvement (e.g., TQM – all aspects of business important in delivering quality service to customer). Dr Felton Lean

Types of Manufacturing Processes (subset of OM Transformations). : 

Types of Manufacturing Processes (subset of OM Transformations). Conversion - iron ore to iron, mixtures to steel, crude oil to gas, etc. Fabrication - blue beads to pen tops. Assembly - parts to assemblies. Testing - in-house or on-site testing. Dr Felton Lean

Process Flow StructuresFlow of Product or Service : 

Process Flow StructuresFlow of Product or Service Job shop/ Unit Production Batch/ Process Departments Assembly Line/ Product Departments Continuous Flow/ Process Industries Dr Felton Lean

Introduction : 

Process selection Deciding on the way production of goods or services will be organized Major implications Capacity planning Layout of facilities Equipment Design of work systems Introduction Dr Felton Lean

Process Selection and System Design : 

Figure 6.1 Process Selection and System Design Dr Felton Lean

Process Selection : 

Variety How much Flexibility What degree Volume Expected output Job Shop Batch Repetitive Continuous Process Selection Dr Felton Lean

Process Types : 

Job shop Small scale Batch Moderate volume Repetitive/assembly line High volumes of standardized goods or services Continuous Very high volumes of non-discrete goods Process Types Dr Felton Lean

Product – Process Matrix : 

Figure 6.2 Product – Process Matrix Dr Felton Lean

Product – Process Matrix : 

Figure 6.2 (cont’d) Product – Process Matrix Dr Felton Lean

Automation : 

Automation: Machinery that has sensing and control devices that enables it to operate Fixed automation Programmable automation Automation Dr Felton Lean

Automation : 

Computer-aided design and manufacturing systems (CAD/CAM) Numerically controlled (NC) machines Robot Manufacturing cell Flexible manufacturing systems(FMS) Computer-integrated manufacturing (CIM) Automation Dr Felton Lean

Slide 47: 

PROCESS FLOW CONT’D UNIT/JOB SHOP – One of a Kind, Custom Tools, Buildings, Software, Research Projects, Exclusive Restaurants BATCH – Furniture, Clothes, Most Plastic Parts, Many Photo Shops MASS – Autos, BIC pens, Consumer Electronics, One-Hour Photos, Fast Food Restaurants CONTINUOUS PROCESS – Chemicals, Primary Materials, Petroleum, Lumber Dr Felton Lean

INTERMITTENT & CONTINUOUS : 

INTERMITTENT & CONTINUOUS INTERMITTENT PROCESSES UNIT BATCH CONTINUOUSE PROCESSES MASS ASSEMBLY LINE CONTINUOUS PROCESS Dr Felton Lean

Slide 49: 

Source: Modified from Robert Hayes and Steven Wheelwright, Restoring Our Competitive Edge: Competing through Manufacturing (New York: John Wiley & Sons, 1984). p. 209. Exhibit 5.9 13 Dr Felton Lean

ABOVE THE DIAGONAL : 

ABOVE THE DIAGONAL Flexibility/Variety is Higher Costs are Higher OK with low volume markets OK when high customization is necessary Threats: A competitor can undercut you Risky when high volume can be stimulated through price competition Dr Felton Lean

BELOW THE DIAGONAL : 

BELOW THE DIAGONAL Costs are lower Automation is higher Greater investment Threats: Greater market risk – what do you do with an automated highly specialized plant when demand decreases? Competition may match costs with greater product variety. Dr Felton Lean

Service Operations : 

Service Operations Types of Service Operations Service Capital Intensive Labor Intensive Monitored by Unskilled Operators Automatic Operated by Skilled Operators Unskilled Labor Skilled Labor Professionals Vending machines, automated car washes Movie theaters, taxis, dry cleaners Airlines, medical testing, excavating Lawn care, janitorial, guards Appliance repair, banks, catering Doctors, lawyers, consultants Dr Felton Lean

Service Operations : 

Service Operations Defining Services - Types of Processes Project Job Shop Flow Shop Continuous Process Construction, Shipbuilding Sign-making Tailoring Automobiles Appliance Shop Oil Refinery Cereal Plant Consulting, Software Devel. Auto Repair Restaurant Fast Food Rest. Car Wash ATMs Police / Fire Svc Type Mfg. Example Service Example Dr Felton Lean

Service Operations : 

Service Operations The Transformation Process - Services Service Primary Conversion Desired System Input Process Output College Students Knowledge Educated . Transmission People Hospital Patient Health Care Healthy . People Restaurant Customers Food Satisfied . Preparation Customers Video Store Customers Fill Requests Satisfied . Customers Dr Felton Lean

Production Cycle : 

Production Cycle Dr Felton Lean

New Product Development : 

New Product Development Dr Felton Lean