Operations and Value Chain Management


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Operations and Value Chain Management

  1. 1. Operations and Value Chain Management CHAPTER 16 0
  2. 2. Learning Objectives <ul><li>Define operations management and describe its applications within manufacturing and service organizations. </li></ul><ul><li>Discuss the role of operations management strategy in the company’s overall competitive strategy. </li></ul><ul><li>Explain the role of e-business in today’s partnership approach to supply chain management. </li></ul><ul><li>Summarize considerations in designing an operations system, including product and service design, facilities layout, and capacity planning. </li></ul>0
  3. 3. Learning Objectives (contd.) <ul><li>Explain why small inventories are preferred by most organizations. </li></ul><ul><li>Discuss major techniques for the management of materials and inventory. </li></ul><ul><li>Describe what is meant by lean manufacturing. </li></ul><ul><li>Define productivity and explain why and how managers seek to improve it. </li></ul>0
  4. 4. Operations and Value Chain Management <ul><li>Strategic success depends on efficient operations </li></ul><ul><li>Operational concerns take on even greater importance in today’s competitive environment where consumers often want customized products and services delivered immediately </li></ul>0
  5. 5. Operations Management <ul><li>The field of management that specializes in the physical production of goods or services and uses quantitative techniques for solving manufacturing problems </li></ul>Technical core = heart of the organization’s production of its product or service 0
  6. 6. The Organization as a Value Chain System Products & Facilities Product design Facilities layout Capacity planning Facilities location Structure Reporting relationships Teams Control Processes Inventory management Productivity Quality The Technical Core Exhibit 16.1 0 Operations Management Inputs Raw materials Human resources Land, buildings Information Technology Outputs Products Services Competitive Strategy Feedback
  7. 7. Manufacturing and Service Organizations Source: Based on Richard L. Daft, Organization Theory and Design (Cincinnati, OH: South-Western College Publishing, 1998), 130; and Byron J. Finch and Richard L. Luebbe, Operations Management (Fort Worth, Texas: The Dryden Press, 1995), 50. Exhibit 16.2 0
  8. 8. Operations Strategy <ul><li>The recognition of the importance of operations to the firm’s success and the involvement of operations managers in the organization’s strategic planning. </li></ul>0
  9. 9. Supply Chain Management <ul><li>Supply chain management - managing the sequence of suppliers and purchasers, covering all stages of processing from obtaining raw materials to distributing finished goods to final consumers </li></ul>0
  10. 10. The Integrated Enterprise 0 16.3
  11. 11. Design for Manufacturability and Assembly - DFMA <ul><li>Often requires </li></ul><ul><ul><li>Restructuring operations </li></ul></ul><ul><ul><li>Creating teams of designers, manufacturers, and assemblers to meet objectives of design </li></ul></ul>0
  12. 12. Product Design Objectives 1 Producibility Cost Quality Reliability 2 3 4 0
  13. 13. Service Design Objectives 1 Producibility Cost Quality Reliability 2 3 4 Timing 5 0
  14. 14. Procurement <ul><li>Purchasing supplies, services, and raw materials for use in the production process </li></ul>0
  15. 15. Facilities Layout <ul><li>Process Layout </li></ul><ul><li>Product Layout </li></ul><ul><li>Cellular Layout </li></ul><ul><li>Fixed-position Layout </li></ul>0
  16. 16. Technology Automation <ul><li>Service Technology </li></ul><ul><ul><li>Restaurants – calculate exact cost and ingredient needs for each menu item </li></ul></ul><ul><ul><li>Banking – ATMs </li></ul></ul><ul><ul><li>Gas stations – pay-at-pump systems </li></ul></ul><ul><ul><li>Retailing = RFID – radio-frequency identification (high-tech barcode) </li></ul></ul>0
  17. 17. Technology Automation <ul><li>Flexible Manufacturing Systems , the use of automated production lines that can be quickly adapted to produce more than one kind of product </li></ul><ul><li>CAD/CAM </li></ul><ul><ul><li>CAD = computer aided design </li></ul></ul><ul><ul><li>CAM = computer aided manufacturing </li></ul></ul><ul><ul><li>PLM = Product-life cycle management </li></ul></ul>0
  18. 18. Facility Location <ul><li>Cost-benefit analysis – most common approach to selecting a site for a new location </li></ul><ul><li>New location scouting software is helping managers turn facilities location into a science </li></ul>0
  19. 19. Capacity Planning <ul><li>Determination and adjustment of the organization’s ability to produce products and services to match customer demand </li></ul>0
  20. 20. Inventory Management Finished goods inventory Work-in-process inventory Raw materials inventory 0
  21. 21. Techniques for Inventory Management Economic order quantity Material requirements planning Just-in-Time inventory systems Logistics & Distribution management 0
  22. 22. Material Requirements Planning - MRP <ul><li>Dependent demand inventory planning and control system </li></ul><ul><li>Schedules exact materials required </li></ul><ul><li>Is computer based </li></ul><ul><li>Based on precise estimates of future needs for production </li></ul>0
  23. 23. Logistics and Distribution Management <ul><li>Logistics = activities required to physically move materials into the company’s operations facility and to move finished products to customers </li></ul><ul><li>Distribution = moving finished products to customers (order fulfillment) </li></ul>0
  24. 24. Lean Manufacturing and Productivity <ul><li>Lean manufacturing = process using highly trained employees at every stage of the production process to cut waste and improve quality – employee involvement is key </li></ul>0
  25. 25. Measuring Productivity <ul><li>Productivity = organization’s output of products and services divided by its inputs </li></ul><ul><li>Total factor </li></ul><ul><li>Productivity </li></ul><ul><li>Labor </li></ul><ul><li>Productivity </li></ul>Output Labor + Capital + Materials + Energy = = Output Labor dollars 0
  26. 26. Improving Productivity <ul><li>Employee productivity </li></ul><ul><li>Managerial productivity </li></ul>0