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Operations
Management:
Managing Vital
Operations
and Processes
Chapter
Fourteen

2. 14-2
Operations Management
Operations
Management
 The management of
any aspect of the
production system
that transforms
inputs into finished
goods and services

3. 14-3
Operations Management
Production System
 The system that an organization uses to acquire
inputs, convert inputs into outputs, and dispose
of the outputs

4. 14-4
Operations Management
Operations Manager
 Manager who is responsible for managing an
organization’s production system and for
determining where operating improvements
might be made

5. 14-5
Question?
What is action taken to meet the demands and
needs of customers?
A. Quality
B. Efficiency
C. Responsiveness to customers
D. Effectiveness

6. 14-6
Operations Management
Quality
 goods and services that are reliable, dependable,
or psychologically satisfying
Efficiency
 amount of inputs required to produce a given
output
Responsiveness to customers
 action taken to meet the demands and needs of
customers

7. 14-7
The Purpose of
Operations Management
Figure 14.1

8. 14-8
Improving Responsiveness
to Customers
Without customers, organizations would
cease to exist.
 Non-profit and for-profit firms all have customers.
 Managers need to identify who the customer is
and their wants or needs.

9. 14-9
What do customers want?
Most customers prefer:
 A lower price to a higher price
 High-quality products to low-quality products
 Quick service to slow service
 Many features over few features.
 Products that are customized or tailored to their
specific needs

10. 14-10
Designing Production Systems to Be
Responsive to Customers
The attributes of an organization’s outputs—their
quality, cost, and features—are determined by the
organization’s production system
Since the ability of an organization to satisfy the
demands of its customers derives from its
production system, managers need to devote
considerable attention to constantly improving
production systems

11. 14-11
Customer Relationship Management
Customer relationship management (CRM)
 technique that uses IT to develop an ongoing
relationship with customers to maximize the
value an organization can deliver to them over
time

12. 14-12
Improving Quality
A firm that provides higher quality than
others at the same price is more responsive
to customers.
Higher quality can also lead to better
efficiency through lower waste levels and
operating costs.

13. 14-13
Impact of Increased Quality on
Organizational Performance
Figure 14.2

14. 14-14
Improving Efficiency
The fewer the inputs
required to produce a
given output, the
higher the efficiency
of a production
system

15. 14-15
Improving Efficiency
Total factor productivity
 looks at how well an organization utilizes all of its
resources—such as labor, capital, materials, or
energy—to produce its outputs

16. 14-16
Improving Efficiency
Partial productivity
 specific measure of productivity that measures
the efficiency of an individual unit.

17. 14-17
Facilities Layout, Flexible
Manufacturing, and Efficiency
Facilities Layout
 The operations
management
technique whose goal
is to design the
machine-worker
interface to increase
production system
efficiency.

18. 14-18
Facilities Layout, Flexible
Manufacturing, and Efficiency
Flexible Manufacturing
 Operations management techniques that attempt
to reduce the setup costs associated with a
production system.

19. 14-19
Figure 14.3
Three Facilities Layouts

20. 14-20
Discussion Question
Which facilities layout is best?
A. Product layout
B. Process Layout
C. Fixed-Position Layout

21. 14-21
Facilities Layout
Product layout
 Machines are organized so that each operation is
performed at work stations arranged in a fixed
sequence.
 Example: mass production systems where workers
are stationary and a belt moves work to them.

22. 14-22
Facilities Layout
Process Layout
 Self contained work stations not organized in a
fixed sequence.
 Provides flexibility in making a wide variety of
products tailored to customers.

23. 14-23
Facilities Layout
Fixed-Position Layout
 The product stays in a fixed spot and components
produced at remote stations are brought the
product for to final assembly.
 Large jet aircraft assembly uses this type of
layout.

24. 14-24
Changing a Facilities Layout
Figure 14.4

25. 14-25
Flexible Manufacturing
Flexible manufacturing aims to reduce the time
required to set up production equipment.
Redesigning the manufacturing process so that
production equipment geared for manufacturing
one product can be quickly replaced with
equipment geared to make another product can
dramatically reduce setup times and costs.

26. 14-26
Flexible Manufacturing
Flexible manufacturing increases a company’s
ability to be responsive to its customers.
Increasingly, organizations are experimenting
with new designs for production systems that
not only allow workers to be more productive
but also make the work process more flexible,
thus reducing setup costs

27. 14-27
Just-in-Time Inventory
and Efficiency
Inventory
 the stock of raw
materials, inputs, and
component parts that
an organization has
on hand at a
particular time

28. 14-28
Just-in-Time Inventory
and Efficiency
Just-in-Time (JIT) Inventory
 A system in which parts or supplies arrive at an
organization when they are needed, not before

29. 14-29
Just-in-Time Inventory
and Efficiency
One drawback of JIT systems is that they leave
an organization without a buffer stock of
inventory.
Although buffer stocks of inventory can be
expensive to store, they can help an organization
when it is affected by shortages of inputs
brought about by a disruption among suppliers

30. 14-30
Self-Managed Work Teams
The use of empowered self-managed teams
can increase productivity and efficiency.
Cost savings arise from eliminating
supervisors and creating a flatter
organizational hierarchy, which further
increases efficiency.

31. 14-31
Question
What is the rethinking and redesign of the
business process to achieve dramatic
improvement in critical measures of
performance?
A. Corporate efficiency
B. Process redesign
C. Process re-qualification
D. Process reengineering

32. 14-32
Process Reengineering
and Efficiency
Process Reengineering
 The fundamental rethinking and radical redesign
of the business process to achieve dramatic
improvement in critical measures of performance
such as cost, quality, service, and speed

33. 14-33
Process Reengineering
and Efficiency
Process reengineering can boost efficiency
because it eliminates the time devoted to
activities that do not add value.
Top management’s role is to encourage
efficiency improvements by emphasizing the
need for continuous improvement or
reengineering.