Buspro infosheet1.3

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Buspro infosheet1.3

  1. 1. 1 Operations and Productivity PowerPoint presentation to accompany Heizer and Render Operations Management, 10e Principles of Operations Management, 8e PowerPoint slides by Jeff Heyl © 2011 Pearson Education, Inc. publishing as Prentice Hall
  2. 2. Multi-Factor Productivity Productivity = Output Labor + Material + Energy + Capital + Miscellaneous  Also known as total factor productivity  Output and inputs are often expressed in dollars Multiple resource inputs  multi-factor productivity © 2011 Pearson Education, Inc. publishing as Prentice Hall
  3. 3. Collins Title Productivity Old System: Staff of 4 works 8 hrs/day Payroll cost = $640/day Old labor productivity © 2011 Pearson Education, Inc. publishing as Prentice Hall = 8 titles/day Overhead = $400/day 8 titles/day 32 labor-hrs
  4. 4. Collins Title Productivity Old System: Staff of 4 works 8 hrs/day Payroll cost = $640/day Old labor productivity © 2011 Pearson Education, Inc. publishing as Prentice Hall = 8 titles/day Overhead = $400/day 8 titles/day 32 labor-hrs = .25 titles/labor-hr
  5. 5. Collins Title Productivity Old System: Staff of 4 works 8 hrs/day Payroll cost = $640/day 8 titles/day Overhead = $400/day New System: 14 titles/day Overhead = $800/day Old labor productivity New labor productivity © 2011 Pearson Education, Inc. publishing as Prentice Hall = = 8 titles/day 32 labor-hrs 14 titles/day 32 labor-hrs = .25 titles/labor-hr
  6. 6. Collins Title Productivity Old System: Staff of 4 works 8 hrs/day Payroll cost = $640/day 8 titles/day Overhead = $400/day New System: 14 titles/day Overhead = $800/day Old labor productivity New labor productivity © 2011 Pearson Education, Inc. publishing as Prentice Hall = = 8 titles/day 32 labor-hrs 14 titles/day 32 labor-hrs = .25 titles/labor-hr = .4375 titles/labor-hr
  7. 7. Collins Title Productivity Old System: Staff of 4 works 8 hrs/day Payroll cost = $640/day 8 titles/day Overhead = $400/day New System: 14 titles/day Old multifactor productivity © 2011 Pearson Education, Inc. publishing as Prentice Hall Overhead = $800/day = 8 titles/day $640 + 400
  8. 8. Collins Title Productivity Old System: Staff of 4 works 8 hrs/day Payroll cost = $640/day 8 titles/day Overhead = $400/day New System: 14 titles/day Old multifactor productivity © 2011 Pearson Education, Inc. publishing as Prentice Hall Overhead = $800/day = 8 titles/day $640 + 400 = .0077 titles/dollar
  9. 9. Collins Title Productivity Old System: Staff of 4 works 8 hrs/day Payroll cost = $640/day 8 titles/day Overhead = $400/day New System: 14 titles/day Old multifactor productivity New multifactor productivity © 2011 Pearson Education, Inc. publishing as Prentice Hall Overhead = $800/day = 8 titles/day $640 + 400 = 14 titles/day $640 + 800 = .0077 titles/dollar
  10. 10. Collins Title Productivity Old System: Staff of 4 works 8 hrs/day Payroll cost = $640/day 8 titles/day Overhead = $400/day New System: 14 titles/day Old multifactor productivity New multifactor productivity © 2011 Pearson Education, Inc. publishing as Prentice Hall Overhead = $800/day = 8 titles/day $640 + 400 = .0077 titles/dollar = 14 titles/day $640 + 800 = .0097 titles/dollar
  11. 11. Measurement Problems 1. Quality may change while the quantity of inputs and outputs remains constant (HDTV, iphones) 2. External elements may cause an increase or decrease in productivity (using more reliable electric power system) 3. Precise units of measure may be lacking © 2011 Pearson Education, Inc. publishing as Prentice Hall
  12. 12. Productivity Variables 1. Labor - contributes about 10% of the annual increase 2. Capital - contributes about 38% of the annual increase 3. Management contributes about 52% of the annual increase © 2011 Pearson Education, Inc. publishing as Prentice Hall
  13. 13. Investment and Productivity Percent increase in productivity 10 8 6 4 2 0 10 15 20 25 Percentage investment © 2011 Pearson Education, Inc. publishing as Prentice Hall 30 35
  14. 14. Service Productivity 1. Typically labor intensive (teaching, counseling) 2. Frequently focused on unique individual desires (customer representatives in banks) 3. Often an intellectual task performed by professionals 4. Often difficult to mechanize 5. Often difficult to evaluate for quality © 2011 Pearson Education, Inc. publishing as Prentice Hall
  15. 15. Ethics and Social Responsibility Challenges facing operations managers:  Developing and producing safe, quality products  Maintaining a clean environment  Providing a safe workplace  Honoring stakeholder commitments © 2011 Pearson Education, Inc. publishing as Prentice Hall
  16. 16. Entry-Level Jobs in OM – Purchasing planner/buyer – Production (or operations) supervisor – Production (or operations) scheduler/controller – Production (or operations) analyst – Inventory analyst – Quality specialist – Others …
  17. 17. Let’s Review: Operations Management is: The business function responsible for planning, coordinating, and controlling the resources needed to produce products and services for a company © Wiley 2010 17
  18. 18. Operations Management is: • A management function • An organization’s core function • In every organization whether Service or Manufacturing, profit or Not for profit © Wiley 2010 18
  19. 19. Operations Management Concepts – Quality: goods and services that are reliable and perform correctly. • Quality allows customers to receive the performance that they expect. – Efficiency: the amount of input to produce a given output. • Less input required lowers cost and waste. – Responsiveness to customers: actions taken to respond to customer needs. • Firm can react quickly and correctly to customer needs as they arise.
  20. 20. What is Role of OM? • OM Transforms inputs to outputs – Inputs are resources such as • People, Material, and Money – Outputs are goods and services © Wiley 2010 20
  21. 21. OM’s Transformation Process © Wiley 2010 21
  22. 22. OM’s Transformation Role • To add value – Increase product value at each stage – Value added is the net increase between output product value and input material value • Provide an efficient transformation – Efficiency – means performing activities well for least possible cost © Wiley 2010 22
  23. 23. Goods & Services • Manufacturing • Services • Tangible product • Product can be inventoried • Low customer contact • Longer response time • Capital intensive • Intangible product • Product cannot be inventoried • High customer contact • Short response time • Labor intensive © Wiley 2010 23
  24. 24. On the other hand… • • • • • Both use technology Both have quality, productivity, & response issues Both must forecast demand Both will have capacity, layout, and location issues Both have customers, suppliers, scheduling and staffing issues • Manufacturing often provides services • Services often provides tangible goods © Wiley 2010 24
  25. 25. Today’s OM Environment • Customers demand better quality, greater speed, and lower costs • Companies implementing lean system concepts – a total systems approach to efficient operations • Recognized need to better manage information using ERP and CRM systems • Increased cross-functional decision making © Wiley 2010 25
  26. 26. OM in Practice • OM has the most diverse organizational function • Manages the transformation process • OM has many faces and names such as; – V. P. operations, Director of supply chains, Manufacturing manager – Plant manger, Quality specialists, etc. • All business functions need information from OM in order to perform their tasks © Wiley 2010 26
  27. 27. Self-check • Define and explain OM • Explain the role of OM in business • Describe the decisions that operations managers make • Describe the differences between service and manufacturing operations • Identify current trends in OM
  28. 28. IKEA Case • • Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value. IKEA, the Swedish retailer of home products, dominates markets in 43 countries, and is poised to conquer North America. Above all else, one factor accounts for IKEA's success: good quality at a low price. IKEA sells household items that are cheap but not cheapo, with prices that typically run 30 to 50 percent below those of the competition. While the price of other companies' products tends to rise over time, IKEA says it has reduced its retail prices by a total of about 20 percent during the last four years. At IKEA the process of driving down costs starts the moment a new item is conceived and continues relentlessly throughout the life of the product. • • • • Global IKEA has always had a 50-cent coffee mug. Prior to the new TROFé mug, the company offered the “Bang” mug, which had been redesigned three times, in ways to maximize the number of mugs that could be stored on a pallet. Originally, only 864 mugs would fit. A redesign added a rim such as you would find on a flowerpot so that each pallet could hold 1,280 mugs. Another redesign created a shorter mug with a new handle, allowing 2,024 to squeeze onto a pallet. These changes reduced shipping costs by 60 percent. The latest version of the 50-cent coffee mug has been made even more useful with a simple notch on the bottom that prevents water from pooling up around the base during a dishwasher run. Further refinements have optimized the speed at which the cup can pass through the machines forming the cups and enable IKEA to fit the maximum number into kilns, saving on the expensive firing process. Simple changes in the shape of the mug have reduced the cost to produce the mug significantly while creating more value for customers purchasing this simple 50-cent coffee mug. This is the essence of operations management: creating great value to the customer while reducing the cost of delivering the good or service.

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