Operations Management
Operations Management
Recommended Reading:
1. Operations & Supply Management
Richard B. Chase et al
12th
Edition
Tata McGr...
Curriculum Overview
1. Operation Strategy & Competitiveness
2. Process Analysis
3. Product Design & Process Selection – Mf...
Important objective of Operations function:
Providing Products, what the customers want.
Elements of Operations function:
...
Historical development of Operations Management :
1910s
>> > Principles of scientific management
Industrial psychology
Mov...
1970s
>>> Inventory control / Forecasting / Project management
1980s
>>> Manufacturing as a competitive weapon
KANBAN / Po...
Management Function Levels
Strategic >> Long term decisions
Tactical >> Medium term decisions
Operational >> Short term de...
Operations strategies over a time period :
Upto 1980 1980 – 90 1990 – 2000 Beyond 2000
Ops focus Mass production Lean prod...
Operations management :
Can be defined as the Design, Operation and Improvement of the production
systems that create the ...
Market place
Corporate strategy
Fin. strategy
Ops. strategy Mkt. strategy
Operations Mgt
People Plant Parts Process
Planni...
Operations strategy :
is concerned with setting up of broad policies and plans for using the resources of
the firm to best...
Developing a Manufacturing Strategy :
Theme :
$$ Translate the required priorities (obtained from marketing) into specific...
Framework for Operations Strategy in Manufacturing
Customer needs
Existing and New
Products
Performance priorities
and req...
Productions Systems
Examples of transformation :
Physical >>> Manufacturing
Locational >>> Transportation / Ware-housing
E...
Transformation Process happening in :
Hospital
Restaurant
Automobile Factory
College
Dept. Store
Examples of Operation Systems :
System Input Process Output
Hospital Patients Health care Healthy individuals
Restaurant H...
Operation priorities :
>> Cost
>> Product quality
>> Reliability
>> Delivery speed
>> Delivery adherence
>> Flexibility
>>...
Elements of Operations Strategy
>> Positioning the production system
>> Product / Service plans
>> Outsourcing plans
>> Pr...
Operations Strategy
ExampleStrategy Process
Customer Needs
Corporate Strategy
Operations Strategy
Decisions on Processes
a...
Competitive Dimensions
• Product Quality and Reliability
• Cost
• Delivery Speed
• Service Reliability
• Coping with Chang...
Order Qualifiers and Winners
•Order qualifiers?
• They are the basic criteria that permit the
firm’s products to be consid...
Examples
• A brand name car
can be an “order
qualifier”
• Repair services can be “order winners”
Other Examples:
Warranty,...
Operations Strategy Framework
Customer Needs
New and Old
products
Competitive
Dimensions
Quality, Cost, Delivery,
Service ...
Discussion point :
Holiday Candle Company
Bob Venture is the owner of Holiday Candle Company and would like to expand his
...
Operations – some commonly used terminologies
Competitive capabilities:
Cost / Quality / Delivery / Service / Flexibility
...
Development Speed :
Quickly introducing a new product or a service
Time-based competition :
Focuses on delivery speed and ...
Productivity :
A common measure of how well a country, industry or business unit is using
its resources (or factors of pro...
Some productivity measures :
Business Productivity Measure
Restaurant
Customers per labour hour
Retail store
Sales per squ...
Total Measure Productivity
• Total measure Productivity = Outputs
Inputs
or
• = Goods and services produced
All resources ...
Partial Measure Productivity
• Partial measures of productivity =
• Output or Output or Output or Output
Labor Capital Mat...
Multifactor Measure
Productivity
• Multifactor measures of productivity =
• Output .
Labor + Capital + Energy
or
• Output ...
Example of Productivity
Measurement
• You have just determined that your service
employees have used a total of 2400 hours...
Characteristics of Services and Manufactured products
Services Manufactured products
$$ Intangible outputs Tangible produc...
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Om 2012 m1 intro - operations strategy

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Om 2012 m1 intro - operations strategy

  1. 1. Operations Management
  2. 2. Operations Management Recommended Reading: 1. Operations & Supply Management Richard B. Chase et al 12th Edition Tata McGraw Hill Education Private Limited 2. Operations Mgt strategy and Analysis ---- Krajweski & Ritzman 3. Operations Management ---- Norman Gaither & Greg Fraizer
  3. 3. Curriculum Overview 1. Operation Strategy & Competitiveness 2. Process Analysis 3. Product Design & Process Selection – Mfg 4. Product Design and Process Selection - Services 5. Facility Location 6. Facility Layout 7. Waiting Line Management 8. Strategic Capacity Management 9. Aggregate Sales & Operations Planning 10. Inventory Control 11. Material Requirements Planning 12. Supply Chain Strategy 13. Total Quality management 14. Just in time & Lean Systems 15. Project Management
  4. 4. Important objective of Operations function: Providing Products, what the customers want. Elements of Operations function: Quality / Cost / Delivery / Service with Flexibility
  5. 5. Historical development of Operations Management : 1910s >> > Principles of scientific management Industrial psychology Moving assembly line / Economic Order Quantity 1930s >>> Quality control Hawthorne studies of worker motivation 1940s >>> Linear programming concepts 1960s >>> Development of Operations Research tools
  6. 6. 1970s >>> Inventory control / Forecasting / Project management 1980s >>> Manufacturing as a competitive weapon KANBAN / Poka-Yoke / CAD / CAM / CIM …… 1990s >>> Malcom Baldrige Quality Award ISO 9000 Quality Function Deployment Kaizen ERP Lean Supply chain management
  7. 7. Management Function Levels Strategic >> Long term decisions Tactical >> Medium term decisions Operational >> Short term decisions Basic concepts in Operations Management : Plan your work Control quality Ensure productivity Five Ps of Ops. Mgt : People Plant Parts Process Planning
  8. 8. Operations strategies over a time period : Upto 1980 1980 – 90 1990 – 2000 Beyond 2000 Ops focus Mass production Lean production Agile mfg. Competitive Cost Quality Delivery Flexibility strategy Process criteria Economy Kaizen Quick Integration of scale response Economy of knowledge Source Capital Work teams IT enabled Intelligent of value addition automation CFTs processes systems
  9. 9. Operations management : Can be defined as the Design, Operation and Improvement of the production systems that create the firm’s primary products or services. Operations Management is a functional field of business
  10. 10. Market place Corporate strategy Fin. strategy Ops. strategy Mkt. strategy Operations Mgt People Plant Parts Process Planning and Control
  11. 11. Operations strategy : is concerned with setting up of broad policies and plans for using the resources of the firm to best support the firm’s long-term competitive strategy. Operation strategy needs to get integrated with firm’s corporate strategy. Operations priorities >> Cost >> Product quality and reliability >> Delivery reliability >> Coping with changes in demand >> Flexibility >> New product introduction speed >> Technical liaison and support >> After sale support
  12. 12. Developing a Manufacturing Strategy : Theme : $$ Translate the required priorities (obtained from marketing) into specific performance requirements for operations. $$ Make the necessary plans to assure that operations capabilities are sufficient to accomplish them. Steps for developing priorities : 1. Segment the market according to product group 2. Identify the product requirements, demand patterns and profit margins of each group. 3. Determine the order winners and order qualifiers for each group. 4. Convert order winners into specific performance requirements.
  13. 13. Framework for Operations Strategy in Manufacturing Customer needs Existing and New Products Performance priorities and requirements Quality / Dependability / Flexibility / Price / Speed Operational capabilities / Supplier capabilities / R&D / Systems / TQM / JIT / People Service New product Development
  14. 14. Productions Systems Examples of transformation : Physical >>> Manufacturing Locational >>> Transportation / Ware-housing Exchanges >>> Retailing Physiological >>> Health-care Psychological >>> Entertainment Informational >>> Communication Transformation process Input Output Feedback
  15. 15. Transformation Process happening in : Hospital Restaurant Automobile Factory College Dept. Store
  16. 16. Examples of Operation Systems : System Input Process Output Hospital Patients Health care Healthy individuals Restaurant Hungry well prepared Satisfied customers customers food Automobile Steel, Plastic… Fabrication and High quality cars Factory assembly College High school Imparting Educated graduates knowledge individuals Dept. Store Shoppers Fill orders Sales to satisfied customers
  17. 17. Operation priorities : >> Cost >> Product quality >> Reliability >> Delivery speed >> Delivery adherence >> Flexibility >> New product introduction speed
  18. 18. Elements of Operations Strategy >> Positioning the production system >> Product / Service plans >> Outsourcing plans >> Process and Technology plans >> Strategic allocation of resources >> Facility plans : Capacity / Location / Layout
  19. 19. Operations Strategy ExampleStrategy Process Customer Needs Corporate Strategy Operations Strategy Decisions on Processes and Infrastructure More Product Increase Org. Size Increase Production Capacity Build New Factory
  20. 20. Competitive Dimensions • Product Quality and Reliability • Cost • Delivery Speed • Service Reliability • Coping with Changes in Demand • Flexibility and New Product Introduction Speed
  21. 21. Order Qualifiers and Winners •Order qualifiers? • They are the basic criteria that permit the firm’s products to be considered as candidates for purchase by customers. •Order winners? •They are the criteria that differentiates the products and services of one firm from another.
  22. 22. Examples • A brand name car can be an “order qualifier” • Repair services can be “order winners” Other Examples: Warranty, Roadside Assistance, Lease facilities etc;
  23. 23. Operations Strategy Framework Customer Needs New and Old products Competitive Dimensions Quality, Cost, Delivery, Service & Flexibility Operations & Supplier capabilities Technology PeopleSystems R&D CIM JIT TQM Distribution Support Platforms Financial management Human resource management Information management Enterprise capabilities
  24. 24. Discussion point : Holiday Candle Company Bob Venture is the owner of Holiday Candle Company and would like to expand his Company’s operations. For the past two years Bob has sold candles via the Internet, but sales have steadily grown beyond his ability to produce the candles alone from his garage workshop. Because future sales growth looks very promising, Bob has decided to open a small manufacturing plant to produce the candles. Sales have primarily been to customers in the United States with occasional orders from other countries. In addition to selling via the Internet, Bob would like to start selling his candles to specialty stores in the United States. With the new plant, he would also like to consider expanding the products he offers in the new future. Discuss: 1. What do you think should be Bob’s competitive priorities ? 2. Different aspects of the operations strategy that you think Bob needs to develop.
  25. 25. Operations – some commonly used terminologies Competitive capabilities: Cost / Quality / Delivery / Service / Flexibility Low-cost operations: Producing a product at the lowest possible cost Top Quality: Delivering an outstanding product or service Consistent Quality: Producing products that meet design specifications on a consistent basis Delivery Speed : Quickly filling a customer’s order Lead Time : A measure often used for delivery speed On-time Delivery : Meeting delivery time promises
  26. 26. Development Speed : Quickly introducing a new product or a service Time-based competition : Focuses on delivery speed and development speed Customisation : Satisfying the unique need of each customer by changing service or product designs Variety : A wide assortment of products and services Volume Flexibility : Accelerating or slowing down the rate of production to handle large fluctuations In demand.
  27. 27. Productivity : A common measure of how well a country, industry or business unit is using its resources (or factors of production). Productivity = Quantity of products or services produced Amount of resources used Productivity = Total output Total Input
  28. 28. Some productivity measures : Business Productivity Measure Restaurant Customers per labour hour Retail store Sales per square feet Utility plant Kilowatts per ton of coal Paper mill Tons of paper per cord of wood
  29. 29. Total Measure Productivity • Total measure Productivity = Outputs Inputs or • = Goods and services produced All resources used
  30. 30. Partial Measure Productivity • Partial measures of productivity = • Output or Output or Output or Output Labor Capital Materials Energy
  31. 31. Multifactor Measure Productivity • Multifactor measures of productivity = • Output . Labor + Capital + Energy or • Output . Labor + Capital + Materials
  32. 32. Example of Productivity Measurement • You have just determined that your service employees have used a total of 2400 hours of labor this week to process 560 insurance forms. Last week the same crew used only 2000 hours of labor to process 480 forms. • Is productivity increasing or decreasing? • Answer: Last week’s productivity = 480/2000 = 0.24 This week’s productivity is = 560/2400 = 0.23 Here productivity is decreasing slightly.
  33. 33. Characteristics of Services and Manufactured products Services Manufactured products $$ Intangible outputs Tangible products $$ Outputs can not be stored Products can be inventoried $$ Extensive customer contact Little customer contact $$ Short lead times Long lead times $$ Labour intensive Capital intensive $$ Service quality subjectively Product quality objectively determined determined

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