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Operations
Operations
Operations
Operations
Operations
Operations
Operations
Operations
Operations
Operations
Operations
Operations
Operations
Operations
Operations
Operations
Operations
Operations
Operations
Operations
Operations
Operations
Operations
Operations
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Operations

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    1. PPT Operations Management Systematic direction, control, and evaluation of the entire range of processes that transform inputs into finished goods or services. Environmental factors-culture, political, and market influences Inputs-HR, capital, materials, land, energy, information, customer Transformations-convert inputs into outputsHellriegel, Jackson, and SlocumMANAGEMENT, 8ESouth-Western College PublishingCopyright © 1999
    2. PPT O.M. (cont) Outputs-goods or services, and waste Customer Contact-customers actively participate in transformation processes, self- service Performance Feedback-repair records, customer commentsHellriegel, Jackson, and SlocumMANAGEMENT, 8ESouth-Western College PublishingCopyright © 1999
    3. PPT Operations Management Refers to the management of the production system that transforms inputs into finished goods and services. Production system: the way a firm acquires inputs then converts and disposes outputs. Operations managers: responsible for the transformation process from inputs to outputs. Operations management seeks to increase the quality, efficiency, and responsiveness of the firm. Seeks to provide a competitive advantage.Hellriegel, Jackson, and SlocumMANAGEMENT, 8ESouth-Western College PublishingCopyright © 1999
    4. PPTOperations 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. Hellriegel, Jackson, and Slocum MANAGEMENT, 8E South-Western College Publishing Copyright © 1999
    5. PPT Differences Between Services and Goods Information Asymmetry Intangible Inventory Customer Contact Response Time Labor IntensityHellriegel, Jackson, and SlocumMANAGEMENT, 8ESouth-Western College PublishingCopyright © 1999
    6. PPT 21.3Typical Characteristics of Services and Goods Producers Primarily GoodsPrimarily Service Continuum of ProducersProducers Characteristics MixedIntangible, nondurable Tangible, durableOutput can’t be Output can be inventoried inventoriedHigh customer contact Low customer contactShort response time Long response timeLabor intensive Capital intensiveHellriegel, Jackson, and SlocumMANAGEMENT, 8E Adapted from Table 21.1South-Western College PublishingCopyright © 1999
    7. Positioning Strategies-approach PPT selected for transformational processes many of one product high-volume, highly Process Focus-layout of automated plant and equipment low flexibility around each production Factory Lines unit custom made Intermediate Strategy- Low Volume plant and equipment Norwegian Ship Building layout reflects some of both strategies Product Focus-arranging batches of products plant and equipment Kinkos, Ball Homes around one or a few output types Agile Strategy-massHellriegel, Jackson, and Slocum customizationMANAGEMENT, 8ESouth-Western College PublishingCopyright © 1999
    8. PPT Flexibility Product Flexibility-speed with which products are created, ability to customize, ability to modify products for special needs Volume Flexibility-ability to respond to sudden changes in demand, change from small to full scale Process Flexibility-ability to manufacture a variety of goods in a short time, adjust to product mix over time, ability to accommodate changes in raw materialsHellriegel, Jackson, and SlocumMANAGEMENT, 8ESouth-Western College PublishingCopyright © 1999
    9. PPT 21.5 Core Positioning Strategies Continuous process Product focus (stable) Auto assembly Resource flows Mass production plant Intermediate Mail processing Garment Large industry batch Process focus Branch banks Space shuttle Sporadic Legal practice (unstable) Custom products, Mixture of custom and standard Standard products, low volume products, moderate volume high volume Product volume Sources: Adapted from Brown, H.K., Clark, K.B., Holloway, C.A., and Wheelwright, S.C. The Perpetual Enterprise Machine: Seven Keys to Corporate Renewal Through Successful Product andHellriegel, Jackson, and Slocum Process Development. New York: Oxford University Press, 1994;MANAGEMENT, 8E Upton, D.M. “The management of manufacturing flexibility.” Adapted from Figure 21.2South-Western College Publishing California Management Review, Winter 1994, 72–89.Copyright © 1999
    10. PPTImproving Responsiveness to Customers Without customers, organizations cease to exist. Non-profit and for-profit firms all have customers. Managers need to identify who the customer is and their needs. What do customers want? Usually customers prefer: A lower price to a higher price. High quality over low quality. Fast service over slow service. Also good after sale support. Many features over few features. Products tailored to their specific needs. Hellriegel, Jackson, and Slocum MANAGEMENT, 8E South-Western College Publishing Copyright © 1999
    11. PPT Quality-how well a product does what the customer expects Internal View-within the organization External View-value customers expect Value-the relationship between quality and priceHellriegel, Jackson, and SlocumMANAGEMENT, 8ESouth-Western College PublishingCopyright © 1999
    12. PPT 21.7 Competitiveness Value Map Higher Premium Poor value value Relative Price Average value Economy value Outstanding Source: Adapted from Gale, value B.T., and Buzzell, R.D. “Market perceived quality: Key strategic Lower concept.” Planning Review, March-April, 1989, 10. Inferior Superior Relative QualityHellriegel, Jackson, and SlocumMANAGEMENT, 8E Adapted from Figure 21.3South-Western College PublishingCopyright © 1999
    13. PPT Price v. Attributes Firms offering high quality, fast service and other customer desires, often must raise price. Customers must tradeoff price for attributes. Operations management tries to push the price/attribute curve to the right with better production. Provides more attributes at the same cost. By enhancing the price/attribute relationship, the firm can increase its competitive position.Hellriegel, Jackson, and SlocumMANAGEMENT, 8ESouth-Western College PublishingCopyright © 1999
    14. PPTCustomer Responsive Production Systems An output’s attributes is determined by the production system. Firms must strike a balance between cost and attributes Improving Quality: can apply to firms producing goods and services. A firm that provides higher quality than others at the same price is more responsive to customers. Higher quality can also lead to better efficiency. Lowers waste levels and operating costs. Hellriegel, Jackson, and Slocum MANAGEMENT, 8E South-Western College Publishing Copyright © 1999
    15. PPT Total Quality Management The continuous process of ensuring every aspect of production builds in product quality Traditional Quality-product inspection during or at the end of the transformation processHellriegel, Jackson, and SlocumMANAGEMENT, 8ESouth-Western College PublishingCopyright © 1999
    16. PPT 21.11Total Versus Traditional QualityTotal Quality Management Traditional Quality Control Quality is a strategic issue Quality is a tactical issue Plan for quality Screen for quality Quality is everybody’s responsibility Quality is the responsibility of the Strive for zero defects quality control department Quality means conformance to Some mistakes are inevitable requirements that meet or exceed Quality means inspection customers’ expectations Scrap and reworking are only a small part of the costs of nonconformance Scrap and reworking are the major costs of poor qualityHellriegel, Jackson, and SlocumMANAGEMENT, 8E Adapted from Table 21.3South-Western College PublishingCopyright © 1999
    17. PPTImproving Efficiency Labor productivity allows labor comparisons between organizations. Improved efficiency leads to lower costs and better performance. TQM and Efficiency: TQM can lead to much higher labor productivity. When quality rises, less time is wasted on scrap. Flexible manufacturing and efficiency: reduces the set-up costs for production systems. Facilities layout: seeks to design the machine-worker interface to increase production efficiency.Hellriegel, Jackson, and SlocumMANAGEMENT, 8ESouth-Western College PublishingCopyright © 1999
    18. PPT Efficient Manufacturing Most firms face major expense when setting up to produce a product. These costs must be paid before production begins. The more often products to be built change, the higher setup costs become. Flexible Manufacturing reduces setup costs. Just-in-Time (JIT) inventory, while developed for TQM, also adds to efficient production. Many costs are reduced including warehousing, holding costs and inventory tracking. Firm does not have a supply of parts, but can be vulnerable to strikes or supply problems.Hellriegel, Jackson, and SlocumMANAGEMENT, 8ESouth-Western College PublishingCopyright © 1999
    19. PPT Efficient Manufacturing Self-managed teams boost efficiency by allowing for a flatter organization structure. The team takes the role of the supervisor. Teams working together often become very skilled at enhancing productivity. Kaizen: Japanese term for a management philosophy the stresses the need for continuous improvement. Better operations can come from many, small, continuous improvements. Focus on what adds value to the product and try to eliminate steps that do not add value (such as inspection for defects).Hellriegel, Jackson, and SlocumMANAGEMENT, 8ESouth-Western College PublishingCopyright © 1999
    20. PPT Reengineering Process Reengineering: the fundamental rethinking and radical redesign of the business process. Can boost efficiency by directing efforts to activities that add value to the good or service produced. While Kaizen focuses on continuous enhancements, process reengineering considers wholesale change. Top managers must support operations enhancement tools for them to be accepted by workers. Usually, a successful operations change means a complete change in the organizational culture. Without a supporting culture, change will not succeed.Hellriegel, Jackson, and SlocumMANAGEMENT, 8ESouth-Western College PublishingCopyright © 1999
    21. PPT 21.4Nine Categories of Operations Management Decisions Product plans Competitive Priorities Positioning Strategies Location Technological Choices Quality management and control Inventory management and control Materials Management Master production schedulingHellriegel, Jackson, and SlocumMANAGEMENT, 8ESouth-Western College PublishingCopyright © 1999
    22. PPT Inventory Costs What contributes to inventory costs? TOTAL COST = ORDERING + CARRYING Carrying Costs Warehouse Insurance Obsolescence taxes breakage Ordering Costs Placing the order Transportation ShortageHellriegel, Jackson, and SlocumMANAGEMENT, 8ESouth-Western College PublishingCopyright © 1999
    23. PPT Inventory Terms Lead Time Elapsed time between placing and receiving an order EOQ-economic order cost optimum order quantity yielding the lowest total inventory cost Just-in-time finished goods to sell sub assemblies to be assembled purchases of raw materials to be transformedHellriegel, Jackson, and SlocumMANAGEMENT, 8ESouth-Western College PublishingCopyright © 1999
    24. PPT 21.13Cost Trade-Offs in Determining Inventory Levels High Average annual cost ($) Total cost Carrying cost Order cost Low Small Q1 LargeHellriegel, Jackson, and SlocumMANAGEMENT, 8E Quantity (Q) Adapted from Figure 21.5South-Western College PublishingCopyright © 1999

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