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Ch 07 busi20 Fall 07.ppt

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Ch 07 busi20 Fall 07.ppt

  1. 1. Chapter 7 Managing Operations and Improving Quality “ There are many ways of going forward, but only one way of standing still.” — Franklin D. Roosevelt
  2. 2. Key Topics <ul><li>Operations and Utility Creation </li></ul><ul><li>Service operations vs. goods production </li></ul><ul><li>Operations planning </li></ul><ul><li>The supply chain strategy </li></ul><ul><li>Quality management </li></ul>
  3. 3. The Management Process <ul><li>Planning – What are we going to do? </li></ul><ul><li>Organizing – How are we going to do it? </li></ul><ul><li>Directing – Get it done! </li></ul><ul><li>Controlling – How well did we do? </li></ul><ul><li>Operations touches on all areas, especially the middle two. </li></ul>
  4. 4. Organization Chart with Operations As of May 2005
  5. 5. What should operations do? Operations oversees the processes that transform resources (inputs) into services and goods (outputs) that create value & benefits (utility) for customers.
  6. 6. Operations Create Utility to Satisfy Form Time Place
  7. 7. What shouldn’t Operations do? Operations managers should eliminate non-essential processes which do not add utility for the customer.
  8. 8. Key Topics <ul><li>Operations and Utility Creation </li></ul><ul><li>Service operations vs. goods production </li></ul><ul><li>Operations planning </li></ul><ul><li>Total quality management tools </li></ul><ul><li>The supply chain strategy </li></ul>
  9. 9. Defining Operations <ul><li>Service: </li></ul><ul><ul><li>Performing tangible and intangible services. </li></ul></ul><ul><ul><ul><li>High contact </li></ul></ul></ul><ul><ul><ul><li>Low contact </li></ul></ul></ul><ul><li>Goods Production: </li></ul><ul><ul><li>Producing tangible products. </li></ul></ul><ul><ul><ul><li>Analytic (break down) </li></ul></ul></ul><ul><ul><ul><li>Synthetic (build up) </li></ul></ul></ul>
  10. 10. Services in depth <ul><li>Focus on: </li></ul><ul><ul><li>Performance vs production </li></ul></ul><ul><ul><li>Process and outcome both involve customer </li></ul></ul><ul><ul><li>Service characteristics </li></ul></ul><ul><ul><ul><li>Intangible, Customized, Unstorable </li></ul></ul></ul><ul><ul><li>Customer-service link </li></ul></ul><ul><ul><ul><li>The customer is more a part of the process </li></ul></ul></ul><ul><ul><li>Service quality considerations </li></ul></ul><ul><ul><ul><li>What else is important to the customer? </li></ul></ul></ul><ul><ul><ul><li>Modern day feedback </li></ul></ul></ul>
  11. 11. Growth in the Goods and Services Sectors 100 80 60 40 20 Millions of Workers Services Goods Production 1984 1986 1988 1990 1992 1994 1996 1998 2000 $4,000 $3,000 $2,000 $1,000 (Billions) Services Goods Production 1984 1986 1988 1990 1992 1994 1996 1998 2000
  12. 12. What’s Had The Biggest Effect on Productivity?
  13. 13. Integration of Global Operations & the Effect on Production <ul><li>Technology has pushed operations to become better and faster globally. </li></ul><ul><li>The internet has integrated production with global suppliers and customers. </li></ul><ul><li>As technology further evolves, fewer services are naturally protected. </li></ul><ul><li>Bonus: If you can figure out how to build a strength, you can capture the world. </li></ul>
  14. 14. Key Topics <ul><li>Operations and Utility Creation </li></ul><ul><li>Service operations vs. goods production </li></ul><ul><li>Operations planning </li></ul><ul><li>Total quality management tools </li></ul><ul><li>The supply chain strategy </li></ul>
  15. 15. Resource Transformation Process Figure 7 –1
  16. 16. Operations Processes Differ Depending on the Nature of the Business <ul><li>Goods-Manufacturing: </li></ul><ul><ul><li>Analytic processes </li></ul></ul><ul><ul><li>Synthetic processes </li></ul></ul><ul><li>Service Delivery </li></ul><ul><ul><li>High contact processes </li></ul></ul><ul><ul><li>Low contact processes </li></ul></ul>
  17. 17. Operations Planning and Control Figure 7 –2
  18. 18. Operations Planning Topics <ul><li>Layout </li></ul><ul><ul><li>Process </li></ul></ul><ul><ul><li>Product </li></ul></ul><ul><ul><li>Cellular </li></ul></ul>Methods (Processes) Quality Location Capacity
  19. 19. Methods Planning: Process Flow Chart
  20. 20. Layout of a Typical Piccadilly Cafeteria Figure 7 –3
  21. 21. Operations Scheduling <ul><li>Gantt chart </li></ul><ul><li>Pert chart </li></ul>
  22. 22. Gantt Charting Demonstration <ul><li>Identify the activity to be planned </li></ul><ul><li>Set a deadline & time scale (hours, days, months, etc.) </li></ul><ul><li>Identify steps needed to complete the task </li></ul><ul><ul><li>Use scratch paper first! </li></ul></ul><ul><li>Identify time needed for each step </li></ul><ul><li>Is the schedule RUMBA? </li></ul><ul><ul><li>R easonable? U nderstandable? M easurable? B elievable? A chievable? </li></ul></ul><ul><li>THEN build the Gantt chart </li></ul>
  23. 23. Gantt Charting Activity <ul><li>Pick a business task of moderate complexity (>5 steps). </li></ul><ul><li>Set a deadline & time scale (hours, days, months, etc.) </li></ul><ul><li>Identify steps needed to complete the task </li></ul><ul><ul><li>Use scratch paper first! </li></ul></ul><ul><li>Identify time needed for each step </li></ul><ul><li>Is your schedule RUMBA? </li></ul><ul><ul><li>R easonable? U nderstandable? M easurable? B elievable? A chievable? </li></ul></ul><ul><li>THEN fill in chart </li></ul>
  24. 24. Gantt Charting Activity – Controlling <ul><li>Is your schedule Reasonable? Achievable? Measurable? </li></ul><ul><li>Where do you need the most follow-up attention? </li></ul><ul><ul><li>Think: Where will a slow down cause a deliverable delay? </li></ul></ul><ul><li>How will you manage a crisis ? </li></ul><ul><li>What are your contingency plans? </li></ul>
  25. 25. PERT Chart Project Scheduling Figure 7 –5 : A delay here delays the final project deliverable.
  26. 26. Gantt Chart Figure 7 –4
  27. 27. Managing Several Projects with Gant Charts: <ul><li>Master Chart </li></ul><ul><li>Subsidiary Charts </li></ul>
  28. 28. Other management tools: Material Requirements Planning Software <ul><li>Supplier Selection </li></ul><ul><li>Purchasing </li></ul><ul><li>Transportation </li></ul><ul><li>Warehousing </li></ul><ul><li>Inventory Control </li></ul>Planning, organizing, and controlling the flow of materials from design through distribution.
  29. 29. Resource management tools: Enterprise Resource Planning Software <ul><li>manufacturing, logistics, distribution, inventory, shipping, invoicing, sales, delivery , billing, production, inventory management, Human Resources, etc. </li></ul>One comprehensive business management software solution
  30. 30. Operations Planning Topics <ul><li>Layout </li></ul><ul><ul><li>Process </li></ul></ul><ul><ul><li>Product </li></ul></ul><ul><ul><li>Cellular </li></ul></ul>Methods (Processes) Quality Location Capacity
  31. 31. Tools for Operations Process Control Worker Training Just-in-time Production Systems (JIT) Material Requirements Planning Quality Control
  32. 32. Quality Management: Ensuring quality throughout the business <ul><li>Total Quality Management </li></ul><ul><ul><li>Start with customers </li></ul></ul><ul><ul><li>Team approach </li></ul></ul><ul><ul><li>Measurement </li></ul></ul><ul><ul><li>Continual improvement </li></ul></ul>Quality: The combination of characteristics of a product or service that bear on its ability to satisfy stated or implied needs.
  33. 33. Tools for Total Quality Management Statistical Process Control Quality improvement teams Getting Close to the Customer Process improvement vs Reengineering ISO Certification Value-Added Analysis
  34. 34. Process Improvement Management using TQM <ul><li>Results: </li></ul><ul><ul><li>Top down control </li></ul></ul><ul><ul><li>-> Focus at end </li></ul></ul><ul><ul><li>“ J” curve </li></ul></ul><ul><li>Process: </li></ul><ul><ul><li>Delegated control </li></ul></ul><ul><ul><li>Focus on determinants of goal - processes </li></ul></ul><ul><ul><li>Constant improvement </li></ul></ul>Time in Quarters 90% 80% 70% 60% 100% 0 1 2 3 4 Usable Production Time in Quarters 90% 80% 70% 60% 100% 0 1 2 3 4 Usable Production
  35. 35. Process Control Chart at Honey Nuggets Cereal Figure 7 –6
  36. 36. What can you tell about this firm?
  37. 37. Supply Chain Management <ul><ul><li>Managing the supply chain as a whole to maximize customer value and reduce waste. </li></ul></ul>Value Chain Management All factors related to the value received by the customer. Expanding scope of management
  38. 38. Supply Chain for Baked Goods Figure 7 –7
  39. 39. Process Management Diversion
  40. 40. Chapter Review <ul><li>Explain “operations” and the utility that operations processes provide. </li></ul><ul><li>Distinguish service operations from goods production. </li></ul><ul><li>Describe the five decision areas involved in operations planning. </li></ul><ul><li>Identify the key tools for total quality management. </li></ul><ul><li>Explain supply chain management. </li></ul>

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