I use the textbook by Heizer & Render. Many of the slides come from them.

1. Operations Management
PBSB 813 Contact 2
Johan Jordaan
jordaan.johan@nwu.ac.za

2. Note on the use of these slides
• These slides provide the basic theory that I would like you to know.
There are many more techniques on the slides that came with the
textbook, which are also available on eFundi. As I talk you through
this slide show, please stop where you don't understand, go to either
the textbook (Heizer and Render) or the Heizer & Render slides and
make sure you understand them. If you still do not understand, on
the first page that you have to submit is space for you to tell me what
you do not understand so that I can cover it in class.
• Once you have gone through the slides, go to the template on eFundi
and prepare your submissions for the next contact session.

3. Operations &
productivity (1)
Topics covered: Contact 2
Global envi-
ronment &
strategy (2)
Managing
projects (3)
Forecasting
demand (4)
Product
design (5)
Quality
management
(6)
Process
design (7)
Location
decisions (8)
Layout
decisions(9)
Job design &
work mea-
surement (10)
Supply chain
management
(11)
Inventory
management
(12)
Scheduling
(13 & 15)
MRP & ERP
(14)
JIT & Lean
operations
(16)
Maintenance
& reliability
(17)
Study school
Contact 1
Contact 2
Contact 3
Contact 4
Contact 5
Contact 6
Contact 7

4. Outcomes for today's contact
OUTCOMES OF THEME E
• Analyse the product design process for a specific product or service
• Distinguish between the design process for products and services
• Demonstrate a thorough understanding of the concepts by applying the theory to a real-
life organisation
OUTCOMES OF THEME F
• Critically distinguish between final product quality and total quality.
• Effectively demonstrate their understanding of the principles of total quality in a case
study
• Comprehensively analyse variation in production or service processes through statistical
techniques such as Six Sigma
• Demonstrate a thorough understanding of the concepts by applying the theory to a real-
life organisation.

5. Chapter 5 Theory
Product and Service Design

6. Why? - Product Life Cycle
Time
Salesvolume
Growth
Maturity
Decline
Introduction
Revive cycle

7. 60
20
4.3
2.0 1.0
0
10
20
30
40
50
60
70
1990 1995 2000 2005 2010
Average time between new cell phone
innovations 1992-2009 (in months) Year
Ave time
between
innovations
1991 60.0
1992 20.0
1993 15.0
1994 20.0
1995 20.0
1996 10.0
1997 15.0
1998 12.0
1999 5.5
2000 4.3
2001 3.5
2002 2.6
2003 2.1
2004 2.1
2005 2.0
2006 1.8
2007 1.5
2008 1.2
2009 1.0

8. New Product Opportunities
1. Understanding the
customer
2. Economic change
3. Sociological and
demographic change
4. Technological change
5. Political/legal change
6. Market practice, professional
standards, suppliers, distributors

9. Scope of
product
development
team
Product Development Stages
Scope for
design and
engineering
teams
Evaluation
Introduction
Test Market
Functional Specifications
Design Review
Product Specifications
Customer Requirements
Feasibility
Concept

10. The challenges of new product design
• Does it really fulfil customer need?
• Can I build quality in at the design step?
• How can I "idiot-proof" the product design process?
• Trade-offs: time, cost, quality, etc.
• Capacity issues

11. Quality Function
Deployment
Value Analysis/
Value Engineering
Ideal
Customer
Product
House of Quality
Designing for the Customer
• Does the item have any design
features that are not necessary?
• Can two or more parts be combined
into one?
• How can we cut down the weight?
• Are there nonstandard parts that
can be eliminated?

12. QFD House of Quality
Relationship
matrix
How to satisfy
customer wants
Interrelationships
Competitive
assessment
Technical
evaluation
Target values
What the
customer
wants
Customer
importance
ratings
Weighted
rating

13. House of Quality
Example: Camera
Completed
House of
Quality
Lightweight 3
Easy to use 4
Reliable 5
Easy to hold steady 2
Color correction 1
Our importance ratings
Lowelectricityrequirements
Aluminumcomponents
Autofocus
Autoexposure
Paintpallet
Ergonomicdesign
CompanyA
CompanyB
G P
G P
F G
G P
P P
Target values
(Technical
attributes)
Technical
evaluation
Company A 0.7 60% yes 1 ok G
Company B 0.6 50% yes 2 ok F
Us 0.5 75% yes 2 ok G
0.5A
75%
2’to∞
2circuits
Failure1per10,000
Panelranking
22 9 27 27 32 25

14. Designing Service Products
• Service products are very different
• Direct customer involvement introduces significant
variability in the process
• Questions to address:
• How will this variability be addressed?
• What are the implications for operational cost and the
customer service experience?
3-14

15. Moments of Truth
 Concept created by Jan Carlzon of
Scandinavian Airways
 Critical moments between the customer
and the organization that determine
customer satisfaction
 There may be many of these moments
 These are opportunities to gain or lose
business

16. Chapter 6 Theory
Total quality management
Total quality management is defined
as managing the entire organization so
that it excels on all dimensions of
products and services that are
important to the customer

17. Quality Specifications
•Design quality: Inherent value of the product in the
marketplace
• Dimensions include: Performance, Features, Reliability/Durability,
Serviceability, Aesthetics, and Perceived Quality.
•Conformance quality: Degree to which the product or
service design specifications are met

18. Quality makes business sense
Improved
quality
Improved response/
reputation / flexible
pricing
(higher price)
Reduced cost of
failure/rework/ warranty
Higher profit

19. Costs of Quality
External Failure
Costs
Appraisal Costs
Prevention Costs
Internal Failure
Costs
Costs of
Quality

20. Six Sigma Quality
• A philosophy and set of methods companies
use to eliminate defects in their products and
processes
• Seeks to reduce variation in the processes that
lead to product defects

21.  Two meanings
 Statistical definition of a process that is
99.9997% capable, 3.4 defects per
million opportunities (DPMO)
 A program designed to reduce defects,
lower costs, and improve customer
satisfaction
Six Sigma
Mean
Lower limits Upper limits
3.4 defects/million
±6
2,700 defects/million
±3
Figure 6.4

22. Six Sigma Quality: DMAIC Cycle
1. Define (D)
2. Measure (M)
3. Analyze (A)
4. Improve (I)
5. Control (C)
Customers and their priorities
Process and its performance
Causes of defects
Remove causes of defects
Maintain quality

23. Analytical Tools for Six Sigma and
Continuous Improvement
• Flow Chart
• Run Chart
• Pareto Analysis
• Checksheet
• Histogram
• Cause & Effect Diagram (fishbone)
• Control Charts

24. Benchmarking
Selecting best practices to use as a
standard for performance
 Determine what to
benchmark
 Form a benchmark team
 Identify benchmarking partners
 Collect and analyze benchmarking
information
 Take action to match or exceed the
benchmark

25. ISO 9000 and ISO 14000
• Series of standards agreed upon by the International
Organization for Standardization (ISO)
• Adopted in 1987
• More than 160 countries
• A prerequisite for global competition (?)
• ISO 9000: international reference for quality, ISO
14000 concerned with environmental management

26. Determinants of Service Quality
 Reliability
 Responsiveness
 Competence
 Access
 Courtesy
 Communication
 Credibility
 Security
 Understanding/
knowing the
customer
 Tangibles

27. Service Quality
The Operations Manager must
recognize:
1. The tangible component of
services is important
2. The service process is important
3. The service is judged against the
customer’s expectations
4. Exceptions will occur

28. Your assignment
• Step 1: Make sure you understand the concepts that are covered in this slide show. If
necessary, go through it again or study the textbook. The slides by Heizer & Render
(available on eFundi) also give valuable extra information.
• Step 2: Prepare a one-page summary of the theory. Make sure it fits into the template in
the study guide. Remember to make a note of those issues that you want explained in
class.
• Step 3: Find out how new product development and quality management takes place in
your organisation. Give a one-page summary on the template.
• Step 4: Critique the way quality management takes place in your organisation. Where
necessary, suggest improvements. Give a one-page summary on the template. (If there
are diagrams, you are allowed a fourth page for them).
• Step 5: Submit your three-page report on efundi before Thursday night 23:59. This
counts towards your individual assignment and your final pass mark!
• Step 6: For your group assignment, prepare a three-slide PowerPoint show: Slide 1:
Briefly present the essence of quality management to your community organisation. (If it
is important to them, you could do new product development instead. Slide 2: Explain
whether/how they presently do quality management. Slide 3: Give them advice on how
to improve their quality management process. Use the template that is on eFundi. One
group member must submit on efundi before Thursday night 23:59 as well!
• Names of both documents must be as indicated in your study guide.