3 BA Rev Advance-Operations-Management-2022-A (1).pptx

ADVANCE OPERATIONS
MANAGEMENT
JUAN MARTIN GUASCH, MTHM, MLIS

MAIN HISTORICAL CONCEPTS OF OPERATIONS MANAGEMENT
YEAR CONCEPTS PROPONENT
1760s The Industrial Revolution ushered in the foundation of division of labor
and interchangeable parts, keys to efficient production
The invention of muskets using the concept of interchangeable parts Eli Whitney
1776 Specialization of labor in manufacturing Adam Smith
1799 Interchangeable parts, cost accounting Eli Whitney et. Al.
1832 Division of labor by skill; assignment of jobs by skill; basics of time
study
Charles Babbage
1883 The use of “Stopwatch Method” to time tasks for complex jobs; thus
becoming key for studying efficiency and productivity
Frederick Winslow Taylor
1912 Foundation for predetermined motion time systems (PMTS) which
predict the time it takes to complete tasks
Frank & Lilian Gilbreth
1913 The first moving assembly line started rolling, cutting production time
for a car from 12 hours to less than three
Henry Ford

YEAR CONCEPTS PROPONENT
1901 Scheduling techniques for employees, machine jobs in manufacturing Henry L. Gantt
1915 Economic lot sizes for inventory control F. W. Harris
1931 Statistical inference applied to quality control; inspection sampling
plans
W. A. Shewart
1935 Statistical sampling applied to quality control: inspection sampling
plans
H. F. Dodge & H. G. Roming
1940 Operations research applications in World War II P. M. Blacker et al
1945 Post WWII Japan, Toyota developed JIT, designed to eliminate waste
and increase productivity and quality
1946 Digital Computer John Mauchlly & J. P. Eckert
1947 Linear Programming G. B. Dantzig, Williams et al
1950 Mathematical programming, on-linear and stochastic processes A. Charnes, W. W. Cooper et al
1951 Commercial digital computer: large-scale computations available Sperry Univac

YEAR CONCEPT PROPONENTS
1960 Organizational behavior: continued study of people at work L. Cummings, L. Porter
1970 Integrating operations into over-all strategy and policy computer
applications to manufacturing, scheduling and control Material
Requirement Planning (MRP)
W. Skinner, J. Orlicky & G. Wright
1971 FedEx started the overnight package deliveries
1980 Quality and productivity applications from Hapan: robotics, CAD-
CAM
W. E. Deming & J. Juran
1990 Internet; post-mass production philosophy, lean management Wormack, Jones
2000 Mobile devices in operations management
2010 Worldwide communication, Internet of Things
Present Amazon offers same-day delivery on orders

Importance of Operations Management
Product or Service
Quality
Customer Service
Profitability
Correctly-functioning
processes
Technological
Advances
Market
Competitiveness

Let us watch this video
on the Description of Operations Management

DEFINITIONS OF OPERATIONS MANAGEMENT
• The management of systems or process that create goods
and provide services
• An area of management concerned with designing and
controlling the process of production and redesigning
business operations in the production of goods and services
• The business function responsible for managing the process
of creation of goods and services, is the central core function
of every company

• Operation management involves planning, organizing,
coordinating and controlling all the resources needed to
produce a company’s goods and services, it involves
managing people, equipment, technology, information, and
all other resources needed in the production of goods and
services
• Is the process which combines and transforms various
sources used in the production operations subsystem of the
organization into value added product services in a controlled
manner as per the policies of the organization

• It is that part of an organization, which is concerned with
the transformation of a range of inputs into the required
(products / services) having the requisite quality level
• Is the process which transforms the input resources of an
organization into final goods (or services) through a set of
defined, controlled and repeatable policies
• The process whereby resources flowing within a defined
system are combined and transformed by a controlled
manner to add value accordance with policies
communicated by management

COMMON KEY CONCEPTS, FOUNDATIONS OF OM
PLANNING PROCESS EFFICIENCY COST CONTROL
QUALITY
CONTINUOUS
IMPROVEMENT
TECHNOLOGY PROFITABILITY

Foundations of Operations Management
PLANNING – Operations managers must constantly
forecast, plan and adjust to optimize processes based
on conditions
PROCESS – Production of goods or services requires
having strong repeatable processes

EFFICIENCY – managers must troubleshoot bottlenecks,
inadequate resource and downtimes to create optimal
efficiency
COST CONTROL – production is typically a major part of
a company’s cost structure, and you must manage it
wisely
QUALITY – good quality control is necessary to maintain
customer satisfaction and the company’s reputation.
Companies can greatly suffer without it.

CONTINUOUS IMPROVEMENT – to remain competitive,
companies need to have processes in place to consistently
seek better ways of doing things
TECHNOLOGY – underlying all of these foundations is
technology. Well used technology keeps a company ahead
of the curve
PROFITABILITY – executed properly all of the above
foundations lead to a strong bottom line

Main Functions of Operations Management
PLANNING
SCHEDULING
ORGANIZING
PURCHASING
CONTROLLING
QUALITY
CONTROL
INVENTORY
CONTROL

FUNCTION CHARACTERISTICS
PLANNING Includes choosing a location for the
business and scheduling production.
Where a business is located and is
directly related to how successful the
business will be. This fact is as true for a
company that is opening its first factory
or store as it is for an older business that
is expanding into a new area. Among the
factors to consider are nearness to
markets, raw materials, labor supply, and
transportation facilities

SCHEDULING Operations involves setting beginning
and ending times for each step in the
production process. It includes planning
and checking the use of labor,
machinery, and materials so that
production moves smoothly. Scheduling
ensures that work will be finished on
time whether it is manufacturing
automobiles or books or dry cleaning a
blouse or shirt

ORGANIZING Activities that establish a structure
of tasks and authority. Operation
managers establish a structure of
roles and the flow of information
within the operations subsystem.
They determine the activities
required to achieve the goals and
assign authority and responsibility
for carrying them out

PURCHASING In order to do business, a company
needs the raw materials to produce its
goods or offer its services. It also must
have machinery, office supplies and any
other supplies it uses. Obtaining raw
materials, machines and supplies is the
purchasing function of the production
process and involves getting the best
deal for the company. The people who
buy goods for a business have to decide
what to buy, from whom and at what
price

CONTROLLING The activities that assure the actual
performance in accordance with
planned performance. To ensure that
the plans for the operations subsystems
are accomplished, the operations
manager must exercise control by
measuring actual outputs and comparing
them to planned operations
management. Controlling costs, quality,
and schedules are the important
functions here.

QUALITY CONTROL Quality control is checking the quality of
the goods produced. It involves
overseeing the grade or freshness of
goods, their strength or workability, the
workmanship or design, harmlessness,
adherence to government standards of
industry standards, and many other
factors. Quality control systems may be
as simple as testing the thousandth item
produced or testing each products as it
is finished

INVENTORY
CONTROL
Almost all manufacturers and many service business, such
as dry cleaners, need inventories, or stockpiles of the
materials they use for making their products or offering
their services. Manufacturers and businesses, such as
supermarkets, also keep inventories of finished goods on
hand for sale, but inventories are costly. The more
inventory a business has the less capital it has for other
activities. In deciding how much inventory control also
have other costs to consider. If the price of a raw material
is expected to rise, a business may stockpile it to keep
future costs down. Often a supplier will discount larger
orders. Some businesses may decide that the discounts
outweigh the other costs of maintaining a large inventory

The Four Vs of Operations Management

The Four Vs
of Operations
Management
(1) VOLUME
(2) VARIETY
(3) VARIATION
(4) VISIBILITY

4 Vs of OM: (1) VOLUME DIMENSION
Fast food giant MCDONALDS
(1) High volume, low cost hamburger
and fast food production
(2) The volume of their operation is
the key to how their business is
organized
(3) Essential to their operation is the
repeatability of the tasks and the
systemisation of the work
Local café or restaurant
(1) Lower volume of output
(2) Less labour
(3) Less systemisation
(4) Each staff member completes a
wider variety of tasks which
results in higher unit costs

4 Vs of OM: (2) VARIETY DIMENSION
• A taxi and a bus service both offers
hired transportation services
• But a taxi has a higher variety
dimension, as taxis will basically
pick up the passenger and drop off
the passenger wherever it is that
you need to go
• While a bus can only provide a
defined route and schedule
• Unilever has 400 brands around
the world (Dove, Pepsodent,
Breeze, Close-up, Rexona etc)
• High variety gives more flexibility
to produce goods and services to
match a customer’s requirements.
• Variety and volume correlate – the
higher the variety, the lower the
volume of products or services

4 Vs of OM: (3) VARIATION DIMENSION
Consider two home building
contractors.
One offers prefabricated homes
that you choose from a catalogue
or online.
It is transferred to site and
erected over the course of a few
days.
The second building company
offers customised homes they
have displays that you can walk
through.
Each aspect of the home from
the façade to the number of
bedrooms to the floor materials
to the type of heating can all be
customised
.
The design and build phase can
take anywhere between 24
weeks to 52 weeks. Company
two will have a much higher level
of cost and lower volume than
company one who offers
standard pricing and can control
cost much more easily.

4 Vs of OM: (4) VISIBILITY DIMENSION
Refers to a customers ability to
see, track their experience or
order through the operations
process.
A high visibility dimension
includes courier companies
where you can track your
package online or retail store
where pick up the goods and
purchase them over the counter
A low visibility dimension could
be a web design company who
takes your order and advises
your new website will be ready
in 4 to 8 weeks.
The service skill of employees
will greatly affect the
customers’ experience

10 Decision Areas of Operations Management
1) Design Goods and Services
2) Quality Management
3) Process and Capacity Design
4) Location Strategy
5) Layout Design and Strategy
6) Human Resources and Job Design
7) Supply Chain Management
8) Inventory Management
9) Scheduling
10) Maintenance

(1) Design Goods and Services
a) Robust Design (manufactured uniformly and consistently)
b) Time-based Competition (fast developers gains against
slow developers)
c) Modular Design (segmented components)
d) Computer-aided Design (develops sketch of products)
e) Value Analysis (design production for better product or
economically produced)
f) Environmentally Friendly Design (minimum raw materials
and energy waste
g) “Green” Manufacturing (recyclable, less harmful
ingredients, less energy)

Let’s watch this video on:
A sample of a Quality Control Platform

(2) Quality Management
Principles of Quality Management
a) Engagement of people
b) Customer focus
c) Leadership
d) Process approach
e) Improvement
f) Evidence-based decision making
g) Relationship management

(3) Process and Capacity Design
Determinants of Effective Capacity
• Facilities (the size, provision for expansion, transportation costs, distance to market, labour supply,
energy sources)
• Product and Service Factors (the more uniform the output, the more opportunities there are for
standardization of methods and materials
• Process Factors (process flow)
• Human factors (employee motivation, absenteeism and labour turn over)
• Policy Factors (management policies)
• Operational Factors (scheduling problems, inventory stocking decisions, late deliveries etc.)
• Supply Chain Factors (what impact will the changes have on suppliers, warehousing, transportation
and distributors?)
• External Factors (minimum quality and performance standards)

(4) Location Strategy
• Location, location, location!
• In an increasingly globalized world, with rapid shifts in the economy due to
COVID-19, location strategy has certainly evolved. But it remains a critical part of
any company’s success story.
• What is location strategy?
• Location strategy describes the process companies use to determine where their
offices and employees should be located. While business and economic
incentives certainly play a public role in site selection, successful location
strategy incorporates far more than that. A truly comprehensive location
strategy analyses extensive market information and always uses labour data to
show companies the cost, availability, and sustainability of labour.

Steps in Layout
Planning and Design
(5) Layout Design and
Strategy
Product
Analysis
Expected
Volume of
Production
Plant Labour
Building Design
Direct Labour
Equipment
Facilities
Process
Indirect Labour
Phase 1
Phase 2

(6) Human Resources
and
Job Design
Constraints on
Human Resource
Strategy
Product Strategy
• Skills needed
• Talents
needed
• Materials used
• Safety
Schedules
• Time of day
• Time of year
• Stability of
schedules
Location Strategy
• Climate
• Temperature
• Noise
• Light
• Air quality
Process Strategy
• Technology
• Machinery and
equipment
used
• Safety
Individual
Differences
• Strength and
Fatigue
• Information
processing and
response
Layout Strategy
• Fixed position
• Process
• Assembly line
• Work cell
• Product
HUMAN
RESOURCE
STRATEGY
WHEN WHO

(7) Supply Chain Management
SCM coordinates the logistics of all aspects of the supply chain which
consists of five parts:
a) The plan or strategy
b) The source of raw materials or services
c) Manufacturing which is focused on productivity and efficiency
d) Delivery and logistics
e) The return system for defective or unwanted products

Let us watch this video
On Supply Chain Management as a Career

(8) Inventory Management

(9) Scheduling
Definition
• “prescribing of when
and where each
operation necessary
to manufacture the
product is to be
performed”
• “establishing of times
at which to begin and
complete each event
or operation
comprising a
procedure
Principles
• The principle of optimum
task size (achieve
maximum efficiency,
small or bigger)
• Principle of optimum
production plan (equal
load on all plants)
• Principle of optimum
sequence (planned so
that work hours are
normally used in the
same sequence)
Scheduling Strategies
• Detailed
• Cumulative
• Cumulative Detailed
• Priority Decision
Rules

(10) Maintenance
Types
• Run-to-failure/ Reactive (wait for things
to breakdown before fixing them)
• Predetermined (follow the
manufacturer’s recommendations)
• Preventive (an ounce of prevention is
worth a pound of cure)
• Corrective (maintenance tasks to
identify, isolate, repair a fault)
• Predictive (the data is analysed to make
accurate predictions about future
failures
• Condition-based (based on the asset or
equipment’s condition)
• Reliability-centered (finding the best
possible maintenance strategy)
Ways Facilities Management Software
Improves Workday
1) Managing work orders is no work at
all
2) Guesswork is replaced by data-
driven decision making
3) Compliance become uncomplicated
4) Preventive maintenance stays on
schedule like clockwork
5) Out of office but in touch
6) Productivity stays on track
7) Attracting new skilled workers looks
better than ever

THANK
YOU
LIDO DE PARIS
HOTEL!
BRILLIANT!
AHTOMP!
STUDENTS AND
FACULTY!

References
• https://sciendo.com/pdf/10.30657/pea.2020.26.03
• http://panmore.com/google-10-decisions-areas-operations-
management-productivity
• https://www.financialexpress.com/opinion/understanding-the-four-
vs-of-operations-management-volume-variety-variation-and-
visibility/2231160/
• https://www.wisdomjobs.com/e-university/production-and-
operations-management-tutorial-295/scheduling-9619.html

References
• https://study.com/academy/course/business-312-advanced-
operations-management.html
• https://www.investopedia.com/terms/o/operations-management.asp
• https://www.smartsheet.com/operations-management
• https://www.linkedin.com/pulse/4-vs-operation-management-philip-
eshelby/

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