Introduction to Operations Management Higher Grade Business Management 2006

Lesson Objectives: Understanding of Operations Management as an system of inputs, processes and outputs Understanding of why different types of production may be chosen by managers

Understanding of Operations Management as an system of inputs, processes and outputs

Understanding of why different types of production may be chosen by managers

Operations A memory aid! Think of what happens in an operating theatre

A memory aid!

Think of what happens in an operating theatre

Operating System An Operating System is a configuration of resources to provide a product or service Raw Materials Machinery Workers

An Operating System is a configuration of resources to provide a product or service

Raw Materials

Machinery

Workers

Operating System What could we make? Paper, Scissors, People

What could we make?

Paper, Scissors, People

Operating System We need to be organised We need to develop procedures

We need to be organised

We need to develop procedures

Operations Management Operations Management is a transforming process turning inputs (resources) into outputs (goods and services) The key here is efficient management of resources

Operations Management is a transforming process turning inputs (resources) into outputs (goods and services)

The key here is efficient management of resources

Operations Management A Transformation Process PROCESS INPUT OUTPUT Information Finance People Materials Machinery Goods Services Customer/Employee Satisfaction

A Transformation Process

Some Product Thoughts Deluxe Double Chocolate Chip Cookies Freddie’s Fish Collette’s Computer Manufacture Krazzy Kazz’s Cars

Deluxe Double Chocolate Chip Cookies

Freddie’s Fish

Collette’s Computer Manufacture

Krazzy Kazz’s Cars

Input Issues Best Price Reliability of Suppliers Delivery Times Quality Quantities Available Storage Space (Raw Materials)

Best Price

Reliability of Suppliers

Delivery Times

Quality

Quantities Available

Storage Space (Raw Materials)

Process Issues Average Demand per Week Production Capacity Available Working Procedures (eg H&S) Storage Space (Finished Product) Efficiency/Productivity Payment Systems Quality Stock Control

Average Demand per Week

Production Capacity Available

Working Procedures (eg H&S)

Storage Space (Finished Product)

Efficiency/Productivity

Payment Systems

Quality

Stock Control

Output Issues Packaging Individual/Groups of Items Nature/Size of Containers Storage Space (Before Despatch) Organising Customer Orders Transportation (Storage/Customers) Customer Requirements

Packaging Individual/Groups of Items

Nature/Size of Containers

Storage Space (Before Despatch)

Organising Customer Orders

Transportation (Storage/Customers)

Customer Requirements

A Complicated Function Operations Management is a complex area which can be further broken down into the following key areas: A) planning B) production C) purchasing D) storage and stock control E) distribution/logistics

Operations Management is a complex area which can be further broken down into the following key areas:

A) planning

B) production

C) purchasing

D) storage and stock control

E) distribution/logistics

Planning To be most efficient production should take place at a constant level

To be most efficient production should take place at a constant level

Planning In reality this is not possible: Consumer Demand Staff Shortages Machinery Breakdowns Maintenance

In reality this is not possible:

Consumer Demand

Staff Shortages

Machinery Breakdowns

Maintenance

Production Systems How will the manufacturer produce goods? Start with the factory layout - where will each part of production take place? Who will complete? The splitting up of production into a number of different jobs is called the division of labour A successful system will need a flow of stocks from one job to another to make sure that there are no delays due to shortages or bottlenecks

How will the manufacturer produce goods?

Start with the factory layout - where will each part of production take place? Who will complete?

The splitting up of production into a number of different jobs is called the division of labour

A successful system will need a flow of stocks from one job to another to make sure that there are no delays due to shortages or bottlenecks

What Production System? The Nature of the Product Washing Machines Bread House Atlas Farming New Bridge

The Nature of the Product

Washing Machines

Bread

House

Atlas

Farming

New Bridge

What Production System? Market Size Where the firm is producing large numbers of standard products the production can be simplified eg Irn Bru Customised products for individual clients need a great deal of client input eg customised software or stained glass windows

Market Size

Where the firm is producing large numbers of standard products the production can be simplified eg Irn Bru

Customised products for individual clients need a great deal of client input eg customised software or stained glass windows

What Production System? Resources Materials People Buildings Machinery/Tools Finance Time

Resources

Materials

People

Buildings

Machinery/Tools

Finance

Time

What Production System? Business Development Small firms, small productions, production system limited eg Wallace & Gromit Cheese As firms grow they can increase their capacity and produce a greater variety of goods

Business Development

Small firms, small productions, production system limited eg Wallace & Gromit Cheese

As firms grow they can increase their capacity and produce a greater variety of goods

What Production System? Labour Intensive Systems A labour intensive system is one which relies more heavily on its workforce than machinery ‘ Tattie Holidays’ Strawberry Picking Clothing Promotion

Labour Intensive Systems

A labour intensive system is one which relies more heavily on its workforce than machinery

‘ Tattie Holidays’

Strawberry Picking

Clothing Promotion

What Production System? Labour Intensive Systems Labour is cheaper than machinery Skill in craftsmanship required Can’t use machinery - working environment Ability required to think/reason/use initiative/make decisions Flexibility in production

Labour Intensive Systems

Labour is cheaper than machinery

Skill in craftsmanship required

Can’t use machinery - working environment

Ability required to think/reason/use initiative/make decisions

Flexibility in production

What Production System? Capital Intensive Systems A Capital Intensive System is most common when: Supply of labour is limited Production benefits from machine efficiency and consistency Production is routine and repetitive

Capital Intensive Systems

A Capital Intensive System is most common when:

Supply of labour is limited

Production benefits from machine efficiency and consistency

Production is routine and repetitive

Automation CAM (Computer Aided Manufacture) CAD (Computer Aided Design) Robotics Allows firms to design, develop and produce products with high quality Ability to make a wider range of similar products to appeal to different segments of the market

CAM (Computer Aided Manufacture)

CAD (Computer Aided Design)

Robotics

Allows firms to design, develop and produce products with high quality

Ability to make a wider range of similar products to appeal to different segments of the market

Automation Advantages Complicated tasks completed quickly High accuracy Less waste Quality consistent Disadvantages Machinery is more likely to break down Narrow range of tasks

Advantages

Complicated tasks completed quickly

High accuracy

Less waste

Quality consistent

Disadvantages

Machinery is more likely to break down

Narrow range of tasks

Sony Walkman At present, Sony has at least 12 different versions of the Sony Walkman on the market. Each has the same basic features, all of which are made on the same production line. Using technology in the design and production of the Walkman can add different features to each models to appeal to different consumers. Prices vary as more advanced features are added.

At present, Sony has at least 12 different versions of the Sony Walkman on the market. Each has the same basic features, all of which are made on the same production line.

Using technology in the design and production of the Walkman can add different features to each models to appeal to different consumers.

Prices vary as more advanced features are added.

Activities Student Activity 1

Student Activity 1

Activities Wallace & Gromit - Stinking Bishop Research and produce a short report on the production of the cheese Stinking Bishop and the Wallace & Gromit effect

Wallace & Gromit - Stinking Bishop

Research and produce a short report on the production of the cheese Stinking Bishop and the Wallace & Gromit effect

Activities Sony Walkman Research The Sony Walkman has evolved over the years resulting in products unconceivable 20 years ago Create a short report detailing the current range of ‘Walkmans’, their features and what market they would appeal to

Sony Walkman Research

The Sony Walkman has evolved over the years resulting in products unconceivable 20 years ago

Create a short report detailing the current range of ‘Walkmans’, their features and what market they would appeal to