Good Afternoon! Classification and Importance of Operations Management

Topics Covered in this Report Operations Management Definition Brief History Importance Productivity, Competitiveness, & Strategy Manufacturing Systems Features, Components & Types Production Systems Features, Components & Types

Operations Management

Definition

Brief History

Importance

Productivity, Competitiveness, & Strategy

Manufacturing Systems

Features, Components & Types

Production Systems

Features, Components & Types

The planning, organizing, controlling, and directing, of systems or processes that create goods and/or services. Operations Management :

Organization of the Operations Function Operations Marketing Finance

History of Operations Management Pre Industrial Revolution Public works or projects for the government Pyramids of Egypt, Great Wall of China, Aqueducts of Rome, etc. Craft Production

Pre Industrial Revolution

Public works or projects for the government

Pyramids of Egypt, Great Wall of China, Aqueducts of Rome, etc.

Craft Production

History of Operations Management Industrial Revolution 1770s in England Replaced manpower with machine power Invention of machines Steam engine Standardization of gauges

Industrial Revolution

1770s in England

Replaced manpower with machine power

Invention of machines

Steam engine

Standardization of gauges

History of Operations Management Scientific Management Focused on observation, measurement, analysis & improvement of work design Replaced craft production by mass production Low skilled workers replaced highly skilled workers

Scientific Management

Focused on observation, measurement, analysis & improvement of work design

Replaced craft production by mass production

Low skilled workers replaced highly skilled workers

History of Operations Management Scientific Management Management Pioneers Frederick Taylor Henry Gantt Harrington Emerson Henry Ford Taylor Gantt Ford

Scientific Management

Management Pioneers

Frederick Taylor

Henry Gantt

Harrington Emerson

Henry Ford

Human Relations Movement Emphasized on the human factor in production Emergence of Motivational Theories by Frederick Herzberg Douglas Mcgregor Abraham Maslow History of Operations Management Herzberg Maslow Mcgregor

Human Relations Movement

Emphasized on the human factor in production

Emergence of Motivational Theories by

Frederick Herzberg

Douglas Mcgregor

Abraham Maslow

History of Operations Management Japanese Influences Developed and refined existing management practices Introduced the concept of quality, continual improvement, and time based management

Japanese Influences

Developed and refined existing management practices

Introduced the concept of quality, continual improvement, and time based management

History of Operations Management Recent Trends Internet & Electronic Business Supply Chain Management Supply chain is a sequence of activities and organizations involved in producing a good or a service

Recent Trends

Internet & Electronic Business

Supply Chain Management

Supply chain is a sequence of activities and organizations involved in producing a good or a service

Importance of Operations Management Operations activity is the core of all business organizations A large percentage of jobs are in the field of operations All activities in the other areas of business are interrelated with operations management Responsible for a large portion of the company’s assets It has a major impact on quality & is the face of the company to its customers

Operations activity is the core of all business organizations

A large percentage of jobs are in the field of operations

All activities in the other areas of business are interrelated with operations management

Responsible for a large portion of the company’s assets

It has a major impact on quality & is the face of the company to its customers

Productivity An index measure that measures output (goods & services) relative to input (labor, materials, energy, and other resources)

An index measure that measures output (goods & services) relative to input (labor, materials, energy, and other resources)

Productivity Measures Single Operation Productivity = Output Input Multifactor Measure = Output Labor+Capital+Materials Total Measure = G&S Produced All Resources Used Examples: = Yards of carpet installed Labor hours worked = 720 Square yards 4 workers x 8 hrs/worker = 720 yards 32 hours = 22.5 yards/hour

Single Operation

Productivity = Output Input

Multifactor Measure

= Output

Labor+Capital+Materials

Total Measure

= G&S Produced

All Resources Used

Examples:

= Yards of carpet installed

Labor hours worked

= 720 Square yards

4 workers x 8 hrs/worker

= 720 yards

32 hours

= 22.5 yards/hour

Factors that Affect Productivity Capital Methods Quality Technology Management

Capital

Methods

Quality

Technology

Management

Steps to Improve Productivity Develop Productivity Measures Look at the system as a whole and determine which operations are critical Develop methods for achieving productivity improvements Establish reasonable goals Consider Incentives Measure improvements & publicize them Do not confuse productivity with efficiency

Develop Productivity Measures

Look at the system as a whole and determine which operations are critical

Develop methods for achieving productivity improvements

Establish reasonable goals

Consider Incentives

Measure improvements & publicize them

Do not confuse productivity with efficiency

Competitiveness How effectively an organization meets the needs of customers relative to others that offer similar goods or services

How effectively an organization meets the needs of customers relative to others that offer similar goods or services

Ways to remain competitive through Operations Price Quality Product / Service Differentiation Flexibility Time Service Management & Workers

Price

Quality

Product / Service Differentiation

Flexibility

Time

Service

Management & Workers

Operational Strategy Strategy is a plan for achieving goals Organizational strategy provides for the overall direction for the organization. It is very broad and covers the entire organization Operations strategy deals only with the operations aspect of the organization

Strategy is a plan for achieving goals

Organizational strategy provides for the overall direction for the organization. It is very broad and covers the entire organization

Operations strategy deals only with the operations aspect of the organization

Things to consider in Strategy Formulation External Scanning Economic Conditions Political Conditions Legal Environment Technology Competition Markets Internal Scanning Human Resources Facilities & Equipment Financial Resources Customers Products/Services Technology Suppliers Others External Factors

External Scanning

Economic Conditions

Political Conditions

Legal Environment

Technology

Competition

Markets

Internal Scanning

Human Resources

Facilities & Equipment

Financial Resources

Customers

Products/Services

Technology

Suppliers

Others

External Factors

Things to consider in Strategy Formulation Distinctive Competency Cost Quality Time Flexibility Customer service Location

Distinctive Competency

Cost

Quality

Time

Flexibility

Customer service

Location

Examples of Distinctive Competencies 711, Mercury Drug, Service Stations, Banks/ATMs Convenience Location Disneyland, IBM Superior Customer Service Burger King, Emergency Rooms Jollibee, Supermarkets Variety Volume Flexibility Domino’s Pizza, UPS FedEx Rapid Delivery On-time Delivery Time Five Star Hotels, Cadillac Kodak, Xerox High Performance Consistent Quality Quality Motels, Thrift Shops Low cost Price Company/Service Competency Type

Manufacturing Systems A collection of all interrelated activities involved in producing goods Manufactured goods are tangible items that can be transferred from one place to another and can be stored for purchase by a consumer at a later date and time

A collection of all interrelated activities involved in producing goods

Manufactured goods are tangible items that can be transferred from one place to another and can be stored for purchase by a consumer at a later date and time

Components of a Manufacturing System Inputs & Outputs Suppliers & Customers Processes Managers & Feedback Suppliers Customer Input Output Process Manager

Inputs & Outputs

Suppliers & Customers

Processes

Managers & Feedback

Productive System Types Continuous Flow: Characterized by high production volume and a high degree of product standardization Processes are highly specialized High degree of automation Little use for skilled work force Costs are generally low

Continuous Flow:

Characterized by high production volume and a high degree of product standardization

Processes are highly specialized

High degree of automation

Little use for skilled work force

Costs are generally low

Productive System Types Mass or Assembly line: High production volume Small variety of different products Labor skill requirements are low

Mass or Assembly line:

High production volume

Small variety of different products

Labor skill requirements are low

Productive System Types Batch or Intermittent: Used for producing small lots of similar products Products are made in batches with short production runs Differs from mass production in the materials used, machine setups, & layout

Batch or Intermittent:

Used for producing small lots of similar products

Products are made in batches with short production runs

Differs from mass production in the materials used, machine setups, & layout

Productive System Types Job Shop: Produce a wide variety of small quantity of specialized products Products are customized May be produced by different sequences of operations General purpose equipment is used Labor force must be highly skilled

Job Shop:

Produce a wide variety of small quantity of specialized products

Products are customized

May be produced by different sequences of operations

General purpose equipment is used

Labor force must be highly skilled

Productive System Types Project: One in which unique and unusually large and complex items are produced Products are assembled at a fixed location Components and subassemblies must be brought to the location

Project:

One in which unique and unusually large and complex items are produced

Products are assembled at a fixed location

Components and subassemblies must be brought to the location

Service Systems A collection of all interrelated activities involved in producing services Non-manufactured goods are intangible items that cannot be transferred from one place to another and is usually consumed by the consumer at the point of sale

A collection of all interrelated activities involved in producing services

Non-manufactured goods are intangible items that cannot be transferred from one place to another and is usually consumed by the consumer at the point of sale

Distinctive Features of Service Systems Customer Contact Uniformity if Input Labor content of jobs Uniformity of Output Labor content of jobs Measurement of productivity Simultaneous production and delivery Quality assurance

Customer Contact

Uniformity if Input

Labor content of jobs

Uniformity of Output

Labor content of jobs

Measurement of productivity

Simultaneous production and delivery

Quality assurance

Service Strategy Identification of a target market Development of a service concept to address targeted customers’ needs Design of an operating strategy to support the service concept Design of a service delivery system to support the service concept

Identification of a target market

Development of a service concept to address targeted customers’ needs

Design of an operating strategy to support the service concept

Design of a service delivery system to support the service concept

Implications for the Manager?

Thank you & Good Afternoon