Classification and Purpose of Production and Operations Management


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A discussion on the basics of Production and Operations management. This presentation covers POM's history, classification & purpose.

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Classification and Purpose of Production and Operations Management

  1. 1. Good Afternoon! Classification and Importance of Operations Management
  2. 2. Topics Covered in this Report <ul><li>Operations Management </li></ul><ul><ul><li>Definition </li></ul></ul><ul><ul><li>Brief History </li></ul></ul><ul><ul><li>Importance </li></ul></ul><ul><ul><li>Productivity, Competitiveness, & Strategy </li></ul></ul><ul><li>Manufacturing Systems </li></ul><ul><ul><li>Features, Components & Types </li></ul></ul><ul><li>Production Systems </li></ul><ul><ul><li>Features, Components & Types </li></ul></ul>
  3. 3. The planning, organizing, controlling, and directing, of systems or processes that create goods and/or services. Operations Management :
  4. 4. Organization of the Operations Function Operations Marketing Finance
  5. 5. History of Operations Management <ul><li>Pre Industrial Revolution </li></ul><ul><li>Public works or projects for the government </li></ul><ul><li>Pyramids of Egypt, Great Wall of China, Aqueducts of Rome, etc. </li></ul><ul><li>Craft Production </li></ul>
  6. 6. History of Operations Management <ul><li>Industrial Revolution </li></ul><ul><li>1770s in England </li></ul><ul><li>Replaced manpower with machine power </li></ul><ul><li>Invention of machines </li></ul><ul><ul><li>Steam engine </li></ul></ul><ul><li>Standardization of gauges </li></ul>
  7. 7. History of Operations Management <ul><li>Scientific Management </li></ul><ul><li>Focused on observation, measurement, analysis & improvement of work design </li></ul><ul><li>Replaced craft production by mass production </li></ul><ul><li>Low skilled workers replaced highly skilled workers </li></ul>
  8. 8. History of Operations Management <ul><li>Scientific Management </li></ul><ul><li>Management Pioneers </li></ul><ul><ul><li>Frederick Taylor </li></ul></ul><ul><ul><li>Henry Gantt </li></ul></ul><ul><ul><li>Harrington Emerson </li></ul></ul><ul><ul><li>Henry Ford </li></ul></ul>Taylor Gantt Ford
  9. 9. <ul><li>Human Relations Movement </li></ul><ul><li>Emphasized on the human factor in production </li></ul><ul><li>Emergence of Motivational Theories by </li></ul><ul><ul><li>Frederick Herzberg </li></ul></ul><ul><ul><li>Douglas Mcgregor </li></ul></ul><ul><ul><li>Abraham Maslow </li></ul></ul>History of Operations Management Herzberg Maslow Mcgregor
  10. 10. History of Operations Management <ul><li>Japanese Influences </li></ul><ul><li>Developed and refined existing management practices </li></ul><ul><li>Introduced the concept of quality, continual improvement, and time based management </li></ul>
  11. 11. History of Operations Management <ul><li>Recent Trends </li></ul><ul><li>Internet & Electronic Business </li></ul><ul><li>Supply Chain Management </li></ul><ul><ul><li>Supply chain is a sequence of activities and organizations involved in producing a good or a service </li></ul></ul>
  12. 12. Importance of Operations Management <ul><li>Operations activity is the core of all business organizations </li></ul><ul><li>A large percentage of jobs are in the field of operations </li></ul><ul><li>All activities in the other areas of business are interrelated with operations management </li></ul><ul><li>Responsible for a large portion of the company’s assets </li></ul><ul><li>It has a major impact on quality & is the face of the company to its customers </li></ul>
  13. 13. Productivity <ul><li>An index measure that measures output (goods & services) relative to input (labor, materials, energy, and other resources) </li></ul>
  14. 14. Productivity Measures <ul><li>Single Operation </li></ul><ul><li>Productivity = Output Input </li></ul><ul><li>Multifactor Measure </li></ul><ul><li>= Output </li></ul><ul><li>Labor+Capital+Materials </li></ul><ul><li>Total Measure </li></ul><ul><li>= G&S Produced </li></ul><ul><li> All Resources Used </li></ul><ul><li>Examples: </li></ul><ul><li>= Yards of carpet installed </li></ul><ul><li> Labor hours worked </li></ul><ul><li>= 720 Square yards </li></ul><ul><li>4 workers x 8 hrs/worker </li></ul><ul><li>= 720 yards </li></ul><ul><li> 32 hours </li></ul><ul><li>= 22.5 yards/hour </li></ul>
  15. 15. Factors that Affect Productivity <ul><li>Capital </li></ul><ul><li>Methods </li></ul><ul><li>Quality </li></ul><ul><li>Technology </li></ul><ul><li>Management </li></ul>
  16. 16. Steps to Improve Productivity <ul><li>Develop Productivity Measures </li></ul><ul><li>Look at the system as a whole and determine which operations are critical </li></ul><ul><li>Develop methods for achieving productivity improvements </li></ul><ul><li>Establish reasonable goals </li></ul><ul><li>Consider Incentives </li></ul><ul><li>Measure improvements & publicize them </li></ul><ul><li>Do not confuse productivity with efficiency </li></ul>
  17. 17. Competitiveness <ul><li>How effectively an organization meets the needs of customers relative to others that offer similar goods or services </li></ul>
  18. 18. Ways to remain competitive through Operations <ul><li>Price </li></ul><ul><li>Quality </li></ul><ul><li>Product / Service Differentiation </li></ul><ul><li>Flexibility </li></ul><ul><li>Time </li></ul><ul><li>Service </li></ul><ul><li>Management & Workers </li></ul>
  19. 19. Operational Strategy <ul><li>Strategy is a plan for achieving goals </li></ul><ul><li>Organizational strategy provides for the overall direction for the organization. It is very broad and covers the entire organization </li></ul><ul><li>Operations strategy deals only with the operations aspect of the organization </li></ul>
  20. 20. Things to consider in Strategy Formulation <ul><li>External Scanning </li></ul><ul><ul><li>Economic Conditions </li></ul></ul><ul><ul><li>Political Conditions </li></ul></ul><ul><ul><li>Legal Environment </li></ul></ul><ul><ul><li>Technology </li></ul></ul><ul><ul><li>Competition </li></ul></ul><ul><ul><li>Markets </li></ul></ul><ul><li>Internal Scanning </li></ul><ul><ul><li>Human Resources </li></ul></ul><ul><ul><li>Facilities & Equipment </li></ul></ul><ul><ul><li>Financial Resources </li></ul></ul><ul><ul><li>Customers </li></ul></ul><ul><ul><li>Products/Services </li></ul></ul><ul><ul><li>Technology </li></ul></ul><ul><ul><li>Suppliers </li></ul></ul><ul><ul><li>Others </li></ul></ul><ul><li>External Factors </li></ul>
  21. 21. Things to consider in Strategy Formulation <ul><li>Distinctive Competency </li></ul><ul><ul><li>Cost </li></ul></ul><ul><ul><li>Quality </li></ul></ul><ul><ul><li>Time </li></ul></ul><ul><ul><li>Flexibility </li></ul></ul><ul><ul><li>Customer service </li></ul></ul><ul><ul><li>Location </li></ul></ul>
  22. 22. Examples of Distinctive Competencies 711, Mercury Drug, Service Stations, Banks/ATMs Convenience Location Disneyland, IBM Superior Customer Service Burger King, Emergency Rooms Jollibee, Supermarkets Variety Volume Flexibility Domino’s Pizza, UPS FedEx Rapid Delivery On-time Delivery Time Five Star Hotels, Cadillac Kodak, Xerox High Performance Consistent Quality Quality Motels, Thrift Shops Low cost Price Company/Service Competency Type
  23. 23. Manufacturing Systems <ul><li>A collection of all interrelated activities involved in producing goods </li></ul><ul><li>Manufactured goods are tangible items that can be transferred from one place to another and can be stored for purchase by a consumer at a later date and time </li></ul>
  24. 24. Components of a Manufacturing System <ul><li>Inputs & Outputs </li></ul><ul><li>Suppliers & Customers </li></ul><ul><li>Processes </li></ul><ul><li>Managers & Feedback </li></ul>Suppliers Customer Input Output Process Manager
  25. 25. Productive System Types <ul><li>Continuous Flow: </li></ul><ul><ul><li>Characterized by high production volume and a high degree of product standardization </li></ul></ul><ul><ul><li>Processes are highly specialized </li></ul></ul><ul><ul><li>High degree of automation </li></ul></ul><ul><ul><li>Little use for skilled work force </li></ul></ul><ul><ul><li>Costs are generally low </li></ul></ul>
  26. 26. Productive System Types <ul><li>Mass or Assembly line: </li></ul><ul><ul><li>High production volume </li></ul></ul><ul><ul><li>Small variety of different products </li></ul></ul><ul><ul><li>Labor skill requirements are low </li></ul></ul>
  27. 27. Productive System Types <ul><li>Batch or Intermittent: </li></ul><ul><ul><li>Used for producing small lots of similar products </li></ul></ul><ul><ul><li>Products are made in batches with short production runs </li></ul></ul><ul><ul><li>Differs from mass production in the materials used, machine setups, & layout </li></ul></ul>
  28. 28. Productive System Types <ul><li>Job Shop: </li></ul><ul><ul><li>Produce a wide variety of small quantity of specialized products </li></ul></ul><ul><ul><li>Products are customized </li></ul></ul><ul><ul><li>May be produced by different sequences of operations </li></ul></ul><ul><ul><li>General purpose equipment is used </li></ul></ul><ul><ul><li>Labor force must be highly skilled </li></ul></ul>
  29. 29. Productive System Types <ul><li>Project: </li></ul><ul><ul><li>One in which unique and unusually large and complex items are produced </li></ul></ul><ul><ul><li>Products are assembled at a fixed location </li></ul></ul><ul><ul><li>Components and subassemblies must be brought to the location </li></ul></ul>
  30. 30. Service Systems <ul><li>A collection of all interrelated activities involved in producing services </li></ul><ul><li>Non-manufactured goods are intangible items that cannot be transferred from one place to another and is usually consumed by the consumer at the point of sale </li></ul>
  31. 31. Distinctive Features of Service Systems <ul><li>Customer Contact </li></ul><ul><li>Uniformity if Input </li></ul><ul><li>Labor content of jobs </li></ul><ul><li>Uniformity of Output </li></ul><ul><li>Labor content of jobs </li></ul><ul><li>Measurement of productivity </li></ul><ul><li>Simultaneous production and delivery </li></ul><ul><li>Quality assurance </li></ul>
  32. 32. Service Strategy <ul><li>Identification of a target market </li></ul><ul><li>Development of a service concept to address targeted customers’ needs </li></ul><ul><li>Design of an operating strategy to support the service concept </li></ul><ul><li>Design of a service delivery system to support the service concept </li></ul>
  33. 33. Implications for the Manager?
  34. 34. Thank you & Good Afternoon