Production and Operations Management Report Chapter 7 2012 2013


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Another Powerpoint Presentation from my Production and Operations Class from the Master's in Business Management Program.


Production and Operations Management
William J. Stevenson

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Production and Operations Management Report Chapter 7 2012 2013

  1. 1. CHAPTER SEVEN Design of Work Systems Reported by: Sherinne Christie Ann Z. Albao, 12/10/12 MBM Class, Production and Operations Management, Monday, Room 109
  2. 2. DESIGN ON WORK SYSTEMS • Work design involves job design, work measurement and the establishment of time standard and worker compensation. • The importance of work systems is underscored by the organization’s dependence on human efforts to accomplish its goals. • Work design is one of the oldest fields in operation management. • It is now an important key to productivity and continuous improvement.
  3. 3. OPERATIONS STRATEGY • It is important for management to make design of work system a key element of its operations strategy. In spite of the major advances in computers and manufacturing technology, people are still the heart of the business. They can make or break it regardless how advance the technology used. Technology may be important but it is not enough. • The topics that will be discussed lack the glamour of high technology. They are the back-to-basics fundamentals of work designs. • Workers are a valuable source of insight and creativity since they are the ones working and closest to the problems that may arise.
  4. 4. • Companies today are focusing some of their attention on improving the quality of work life and instilling pride and respect among workers. • Many organizations are reaping surprising gains through worker empowerment – giving workers more say on their jobs. • People work for many reasons. Aside from economic necessities, work is also a reason of giving meaning and purpose to their lives, personal growth and many more. These reasons can play an important role in the lives of workers and should be taken serious considerations in the design f work systems. OPERATIONS STRATEGY
  5. 5. JOB DESIGN • “The act of specifying the contents and methods of jobs” • The goal is to create a work system that is productive and efficient, taking into consideration the costs and benefits of alternative for the organization and the workers. • Job designers are concerned with who will do the job, how the job will be done and where the job will be done. Successful job design must be: 1. Carried out by experienced personnel who have the necessary training and background. 2. Consistent with the goals of the organization. 3. In written form 4. Understood and agreed to by both management and employees.
  6. 6. • Employees are still the source of valuable ideas for job improvements. • A written record of the job design can serve as a basis for referral if question arise about it. JOB DESIGN Job Design contains (2) basic schools of thought: 1. Efficiency Approach 2. Behavioral Approach Reminded managers of the complexity of human beings and that the efficiency approach doesn’t always work. e.g. Frederick Taylor’s Scientific Management concepts
  7. 7. SPECIALIZATION • “Work that concentrates on some aspect of a product/service” • It is the primary issue of disagreement between the efficiency and behavioral approaches. • Describes jobs that have a very narrow scope. • The main rationale for this is the ability to concentrate one’s effort and thereby become proficient in some aspect of a product/service. • Sometimes the amount of knowledge or training required of a specialist and the complexity of work suggest that individuals who choose such work are very happy with their jobs.
  8. 8. SPECIALIZATION ADVANTAGES For Management: • Simplifies training • High productivity • Less wage costs For Labor: • Less education & skill requirements • Minimum responsibilities • Less mental effort needed DISADVANTAGES For Management: • Difficult to motivate quality • Worker dissatisfaction resulting in absenteeism, high turnover, disruptive tactics, poor attention to quality… For Labor: • Monotonous work • Limited opportunities for advancement • Little control over work • Little opportunities for self-fulfillment.
  9. 9. BEHAVIORAL APPROACHES • Job Enlargement – giving a worker a larger portion of the total task, by horizontal loading – the additional work is on the same level of skill and responsibility as the original job. (Increase variety of skills and provide recognizable contribution to overall output.) • Job Rotation – workers periodically exchange jobs – use to avoid having one or monotonous jobs – allows workers to broaden their experiences and fill in for others in the event of sickness or absenteeism. • Job Enrichment – Increase responsibility for planning and coordination tasks by vertical loading – focuses on motivating potential of worker satisfaction.
  10. 10. TEAMS • A team is a small group of people with complementary skills, who work together to achieve a common purpose for which they hold themselves collectively accountable. • Self-directed (self-managed teams) – empower to make certain changes in their work processes. Designed to achieve a higher level of teamwork and employee involvement. BENEFITS • Workers will work harder to ensure that the desired result is achieved. • Fewer managers needed. • Higher quality, higher productivity and greater work satisfaction. • No difficulty in applying team concepts.
  11. 11. METHODS ANALYSIS • The beginning of a job design in an overall operation. • It moves from general to specific details. • A good source of productivity improvements. SOURCES • Changes in tools & equipments • Changes in product design • Changes in materials/procedures • Gov’t/contractual agreements • Other factors (accidents, quality problems) BASIC PROCEDURES 1. Identify the operation to be studied and gather facts. 2. If the job is already in process, discuss the input with the operator & supervisor. 3. Study and document present method using process charts. For new jobs, develop charts. 4. Analyze the jobs 5. Propose new methods. 6. Install the new methods. 7. Follow up installation to assure that improvements have been achieved.
  12. 12. METHODS ANALYSIS OPERATION TO STUDY 1. Have high labor content 2. Done frequently 3. Unsafe, tiring, unpleasant and/or noisy 4. Designed as problems. DOCUMENTING PRESENT METHOD • Charts • Graphs • Verbal Descriptions. ANALYZING JOB & PROPOSED NEW METHODS 1. Flow Process Charts 2. Worker-Machine Charts 3. Gang Process Charts Guidelines for selecting a job to study. Provides understanding of the job and basis for comparison against revisions
  13. 13. METHODS ANALYSIS FLOW PROCESS CHART Chart used to examine the overall sequence of an operation by focusing on movements of the operator or flow of materials. Describes the symbols used in constructing a flow process chart. Illustration of a Flow Process Chart Checklist of questions they ask to generate ideas for improvements. Examples: 1. Why is there a delay/storage at this point? 2. How can travel distances be shortened/avoided? 3. Can material handling be reduced? 4. Would rearrangement of the workplace result in greater efficiency? 5. Can similar activities be grouped? 6. Would the use of additional/improved equipment be helpful? 7. Does the worker have any ideas for improvement?
  14. 14. METHODS ANALYSIS WORKER-MACHINE CHART Chart used to determine portions of a work cycle during which an operator and equipment are busy/idle. Helps determine how many machines or equipment can an operator manage.
  15. 15. MOTION STUDY • Motion Study – systematic study of the human motions used to perform an operation. Purpose is to eliminate any unnecessary motions and identify the best sequence of motions for maximum efficiency. • Motion Study Principles – Guidelines for designing motion efficient work procedures. Divided into three: Principles for the body, arrangement of workplace and design of tools & equipments. • Therbligs – Basic elemental motions of a job that can be broken down. • Micromotion study – Use of cameras to slow down motion so it can be studied if the job is too rapid to analyze.
  16. 16. WORKING CONDITIONS • Important aspect of job design. • Physical factors can have a significant impact on worker performance in terms of productivity, quality of output and accidents. Temperature & Humidity Ventilation Illumination Color Noise & Vibration Work Breaks Safety Humans can function in a wide range of temperature. It’s not a big problems in offices than in factories, field work and other work environmental areas that make it difficult to control the temperature. Solutions range from suitable clothing and devices. The choice of temperature depends on humidity level since we are more sensitive to variations in temperatures in high humidity. Unpleasant, noxious odors, smoke and dust can be distracting and dangerous to workers. Solely depends on the type of work. The more detailed the work, the higher the level of illumination. Illumination in dangerous points of the workplace is important. It is very expensive. Sunlight could be another source. 1.) Produces emotional and psychological effects in workplace situations. 2.) Designate safe and hazardous areas/conditions/meanings. Unwanted sounds. Can be annoying and distracting, leading to errors and accidents. An important variable in the rate of decline of efficiency and potential effects of work breaks is the amount of physical/mental requirements of the job. Most basic issues in job design. Needs constant attention to all people involved. Workers cannot be effectively motivated if they feel physically safe. Two basic causes: carelessness & accidental hazards.
  17. 17. WORK MEASUREMENT • “Concern with det. The length of time it takes to complete a job.” • Standard Time – the amount of time it should take a qualified worker to complete a specified task working at a sustainable rate, using given methods, tools and equipment, raw materials, and workplace arrangements. • Stopwatch Time Study – developed a time standard based on observations of one worker over a number of cycles. Most widely used method and appropriate for short, repetitive tasks. 1. Variability of observed times 2. Desired accuracy 3. Desired level of confidence for the estimated job time.
  18. 18. WORK MEASUREMENT (1) Desired accuracy is expressed in percentage of the mean of the observed times. (2) Alternate formula used when the desired accuracy is stated as an amount.
  20. 20. STANDARD ELEMENTAL TIMES • “Time standards derived from a firm’s historical time data.” ADVANTAGES • Potential savings in cost & effort • Less disruption in work • Performance ratings are generally in average. DISADVANTAGES • Times may not exist for enough standard elements to make it worthy • File times may be biased or inaccurate. PROCEDURE FOR USING THIS METHOD CONSIST OF THE FF. STEPS: 1. Analyze the job to identify the standard elements. 2. Check the file for elements that have historical times and record them. Use time study to obtain others (if necessary). 3. Modify the file times if necessary 4. Sum the elemental times to obtain the normal time, and factor in allowances to obtain the standard time.
  21. 21. PREDETERMINED TIME STANDARDS • “Involved the use of published data based on extensive research to determine standard elemental times.” • Commonly used system: Methods-time measurement. Divide the job into basic elements Measure the distances involved Rate the difficulty of the element Refer to appropriate table of data. Sum of all Basic Elements = Standard Time for the job Times of basic elements are measured in time measurement units (TMU) 1 TMU = 0.0006 minutes. ADVANTAGES OF PREDETERMINED TIME STANDARDS Based on large numbers of workers in controlled conditions. Analyst are not required to rate performance in developing the standard. No disruption of operation Standards are established even before the job is finished.
  22. 22. WORK SAMPLING • “Technique for estimating the proportion of time that a worker/machine spends on various activities.” • Does not require timing an activity nor does it even involve continuous observation of the activity. • The observer is required to make short observations of a worker/machine at random intervals and note the activity. • Two primary uses: Ratio delay studies & Analysis of non-repetitive jobs.
  23. 23. • Ratio-delays Studies – percentage of a worker’s time that involves unavoidable delays or the proportion of time a machine is idle. • Analysis Nonrepetitive jobs – involved a broader range of skills than repetitive jobs and workers in these jobs are often paid on the basis of the highest skill involved. It is important to determine the proportion of time spent on the high-skill level. • Work sampling can be part of a program for validation of job content that is needed for “occupational qualifications” – advertised jobs requiring the skills that are specified. WORK SAMPLING
  24. 24. • Work sampling estimates include some degree of error: the same no. of observations taken at different times during the week will probably produce slightly different estimates and all estimates will usually differ from the actual (unknown) values. WORK SAMPLING
  25. 25. For large samples, the maximum error e can be computed: WORK SAMPLING In most instances, management will specify the desired confidence level & amount of allowable error and the analyst will be required to det. a sample size sufficient to obtain these result:
  26. 26. • Random number table – table consisting of unordered sequences of numbers, used to determine random observation schedules. WORK SAMPLING ADVANTAGES OF WORK SAMPLING OVER STOPWATCH TIME STUDY 1. Observations are spread out over a period of time making results less susceptible to short- term fluctuations. 2. There is little or no disruption of work 3. Workers are less resentful 4. Studies are less costly & less time-consuming and the skill requirements are less. 5. The study can be interrupted without affecting the results 6. Many different studies can be conducted simultaneously 7. No timing device is required 8. Lends itself to non-repetitive tasks. DISADVANTAGES 1. There is less detail on the elements of the job 2. Workers may alter their work patterns when they spot the observer resulting in invalid results. 3. In many cases, there is no record of the method used by the worker. 4. Observers may fail to adhere to a random schedule of observation 5. It is not well suited for short, repetitive tasks. 6. More time may be required to move from one workplace to another and back to satisfy the randomness requirement.
  27. 27. COMPENSATION A significant issue in design systems. It is important to develop suitable compensation plans for your employees since the failure and success of a firm depends in large measure on employee efforts. A firm used two basic systems of compensation: 1. Time based system – compensation based on time an employee has worked during the pay period. (hourly and/or measure daywork systems) 2. Output based system – compensation based on amount of output an employee produced during the pay period.
  28. 28. • Individual incentives could disrupt the even flow of work. • Group incentives are sometimes successful in some cases. • Quality considerations vs. Quantity considerations. COMPENSATION Management Worker TIME-BASED 1. Stable labor cost. 2. Easy to administer 3. Simple computation 4. Stable output 1. Stable pay 2. Less pressure to produce than under output system.Advantages Disadvantages 1. No incentives for workers to increase output 1. Extra efforts not rewarded OUTPUT BASED 1. Less cost per unit 2. Greater output 1. Pay related to effort 2. Opportunity to earn more Advantages Disadvantages 1. Difficult wage computation 2. Need to measure output 3. Quality may suffer 4. Difficult in adjusting increase 5. High scheduling problems 1. Pay fluctuates 2. Workers may be penalized because of factors beyond their control.
  29. 29. • There situations where incentives are desirable. • Incentives reward the workers for their output. • In order to obtain the maximum benefit from an incentive plan it should be: 1. Accurate 2. Easy to apply 3. Consistent 4. Easy to understand 5. Fair COMPENSATION
  30. 30. • Individual incentive plan - it takes in different forms. • Group incentive plan – sharing productivity gains with employees. • Knowledge – based pay systems – a pay system used by organizations to reward workers who undergo training that increases their skills. • Management compensation – a tradition that rewards managers/executives on the basis of output but is currently reconsidered. COMPENSATION
  31. 31. LEARNING CURVES Supplement to Chapter Seven
  32. 32. THE CONCEPT • Human performance of activities typically shows improvement when the activities are done on repetitive basis. • Learning curves summarize this phenomenon. The curve will never touch the horizontal line because the time per unit will never be zero.
  33. 33. THE CONCEPT Improvements may create a scallop effect in the curve:
  34. 34. THE CONCEPT On a log-log scale, learning curves are straight lines:
  35. 35. THE CONCEPT • Time reduction per unit is less and less as the number of repetition increases. • There are two ways to obtain the times: Formula & Table of values.
  36. 36. APPLICATIONS Learning curve theory has found useful applications in a number of areas: 1. Manpower planning and scheduling 2. Negotiation of prices 3. Pricing new products 4. Budgeting, purchasing, and inventory planning. • Managers use learning curves to avoid under/over pricing. • Learning curve helps plan costs, labor, purchasing and inventory needs.
  37. 37. APPLICATIONS • Failure to refer to learning curves would lead to substantial overestimates of labor and underestimates of raw materials. • Can also be used to evaluate worker performance. The comparison reveals which workers are under qualified, average and overqualified for the given work.
  38. 38. CAUTION & CRITICISM 1. Learning rates differ from organization to organization and the type of work. 2. Projections from learning curves should be regarded as approximations of actual times and must be treated as such. 3. Be cautious in the time estimates for the first unit prior to production. 4. It is possible that at some point the curve might level off or even tip upward. The potential for savings at that point is so slight that most jobs do not command the attention or interest to sustain improvements. 5. Some improvements may be apparent than real: Improvement in times may be caused in part by increase in indirect labor cost.
  39. 39. CAUTION & CRITICISM 6. Learning curves are useful for production start-up but not usually for mass production.
  40. 40. CAUTION & CRITICISM 7. Users of learning curves sometimes fail to include carryover effects, previous experience with similar activities can reduce the activity times, although it should be noted that the learning rate remains the same. 8. Shorter product life cycles, flexible manufacturing and cross- functional workers can affect the ways in which learning curves may be applied.