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- 1. Chapter Operations and Productivity PowezPofnt presentadonfa accompany He/xerWendez Principles of Operations gfanagemenf, 7e
- 2. D Global CompanyProfile: Hard Rock Cake What IS *^Rerationn ñfanagement* Organizing to Produce Goods and Services Why Study OM? What Operations Managers Do
- 3. the fYerifage oL Operations Management Operationsin the Service Sector differences Defween Goods and Services Growth of Services Service Pay Exciting New Trends in Operations ñfanapemenf
- 4. The Productivity Challenge ProductivityMeasurement Productivity Variables Productivity and the Service Secfor J2thics an‹:I Social Responsibility
- 5. . Oefine operations management 2.Explain the i::Iistinction between goods and oerviceo 3. Explain the difference between production and ro‹:luctivity
- 6. 4. Compute sinyIe- factor productivity 6.ïs/enfify the critical variables in enhancing productivity
- 8. Production in thecreation of yoods and services
- 9. “ ssential nctions: DMarketing - generates demand Production/operations creates the prod'uct D FinancKaccounting — tracks how well the organization is doing, pays hills, co//ec/s the money
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- 11. Operations Ground support equipment Maintenance C›ound Operations maintenance Caferng fljghtOperations Crew schezfo/ing Communications Oispnlching Management science Finance accounting Paya6/en: Receiva6Jes General Let Markelinp ncfmfrffstwf /on Resezvar/ ons Schezfu/es Sales , AdveRioing Figure 1.1(B)
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- 13. OM is oneoŁ three ma)or functions (marketing, finance, and operations) oŁ any organization D OM in such a costly part oŁ on organization
- 14. Marketing Option Finance/ Accountin g Option OM Option Increase ReducaReduce SalBG Finance Production Current Revenue 50°/ Costs 509a Costs 20% S aga s 5100,000 $150,000 5100,000 5100,000 Cost of Goods —80,000 —120,000 —80,000 —64,000 Gross Margin Finance Costs Subtotal Taxes at 25°/ 20,000 — 6,000 14,00 0 —3,500 30,000 — 6,000 24,000 —6,000 20,000 — 3,000 17,000 —1,250 36,000 — 6,000 30,00 0 —7,500 Contribution $10,500 518,000 $12,750 5 22,500
- 16. Fen Decision Areas Cftapte r Design ofgoods and services Managing quality Process and capacity cfesign Location strategy Layout strategy Human resources and joh design Supply chain management inventory management Schecfczfing 5 6, Supplement 6 7, Sopp/ement 7 8 9 10, Supplement 10 11, Supplement 11 13, 15 17 Table 1.2
- 17. Design of goodsand services ofI'er* How should we design tftese products How do we be/ine quality D Who is responsible for quality Table fl.2 (cont.)
- 18. What process andwhat capacity will these products require?’ What equipment and technology is necessary for these processes* Where should we put the daci/ft * * On what criteria should we base fhe Tocafion cfecision*
- 19. How should wearrange the aci4ty How large must the facility be fo meef our plant How do we provide a reasonable worA environment? for much can we expect onr employees to produce* Table fl.2 (cont.)
- 20. Should we makeor huy this component? Who are our supp/iers ancf who can integrate into our e-commerce program? How much inventory of each item should we haze* D When cfo we re-order?' Table 1.2 (cont.)
- 21. Are are Setterof keeping people or ff›e payroll during slowdowns Who is responsible for maintenance* L V When to we to maintenance Table 1.2 (cont.)
- 23. Techno/ogy/ methods fz Faci//f/eWspace utilization D Strategicissoes /tesponse time D People/team Seve/opment Customer service quality D Cost reduction fz inventory red'oct/on
- 25. Division of/ador (AdamSmith 1776; C•harles Babbage 1852} Sfanrfardized parts (Whitney 1800) Scienti/ie /tfanagement (Taylor 1884) Coordinafe‹:/ assem6/y line (Ford/ Sorenson 1913) GanN charts {GanN 1916) 6fofion study (Franh and Killian Gilbreth 1922) Qualify contro/ (Shewhart 1924; Oeming Y950}
- 26. Computer {4fanasoff 1938) DCPM/PERT (DuPont 1957) Material requirements p/anning (Orlicky 1960) lz Computer aided cfesign (CAD 1970) Flexible manufacturing system (FMS 1975) D Baldrige Quality Awards (1980) D Computer integrated manufacturing g j C/oda/izafion {1992} lz Internet (1995)
- 27. Born J765, diedJ825 In J798, received government contract to make 10,000 mookefs Il4usket yarts could be used:I in any musket
- 28. Known ao ’fatheroT scienfffio management’ In 1881, as chiel'engineer for Midval Sleek, stoc/iec/ how tasks were done Began first motion and lime studies Created efficiency principles
- 29. Matching emp/oyees toright/o6 Providing the proper training D Providing proper work methods and tools D Establishing legitimate incentives for work to be accomp/isf›erf
- 30. Franh (1868-1924); Lillian{1878- 1'972} Husband-and-wife engineering learn
- 31. Born 1863; died:I1 4 In J903, createrf Form:I Motor Company In 9 3, first used moving assembly line to make Model T D Unfinished product moved by conveyor past worh station Paid workers very weTT for t911 ($5/day!)
- 32. born J900,’ diedJ993 Engineer and physicist Cre‹::Iited with teaching Japan qoaHfy control methods in post Used statistics fo analyze process
- 34. From Low bid purchasing DLengthy product devslopmeaf “ Sfanc/ard producfs Joó specia/izaf/on r« “ C/oóa/ Focus lost-in-ffme Supply chain partnering Development , afiiances D Mass costomizafion “ 5mpow’ere‹:/ emp/oyees, teams
- 35. Tangible product Consistent product definition Canbe ínveøforied
- 36. Often unique High customer interaction Inconsistentproduct definition Often knowledge- hased Frequent/y dispersed
- 38. A ftrihutss aI Goods (Tangible Product) Can Be reso/d Can be ineentoried Some aspects of quality measurable Se/ling is ‹distinct f'rom production Product is transportable Often easy to automate Revenue generated primarily from iaflpif›le product An ihufes of Semices (/nfangi6/e Product) /?ese//ing unusual Difficult to inventory Qualify difficult fo measure Provider, not product, ‹men transportable Site of facility important for customer Gonfacr o v e n difficult to automate /?evenue Benerated primarily from the intarigibJe service Yable 1.3 „
- 39. 100°/+ 75 5025 0 25 50 75 100% I I 1 1 1 1 I I I Percent of Product that is a Good Percent of'Product that is a Service Figure 1.4
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- 43. Ed‹icałion, Lega/, Medica/, and other trade {rełai/, who/esafe} Lfti/ities, Transportatio n %of all Example home Name University, San giego Zoo, Arnotd Palmer Hospifa/ Walgreen's, WaI-Mart, Nordstrom's Pacific Gas & Electric, JoAs 25.5 15.1 5. 2 American Air/ines, Santa Fe R.R., Roac/way Express
- 44. Professional and Business Services Finance, Information, Rea/ Estate Food,Lodging, Entertainment Public Administration Sne/iing andf Sne//ing, ky'aste Management, Pitney-Bowes 10.1 Citicorp, American Express, Proi:lent/a/, Aetna, Gramme/ Crow, EDS, IBM Olive Car‹:fen, ffarcf Rock Cake, Motel 6, Stilton Hofe/s, Walt pisney, Paramount Pictures U.S., State of Alabama, Cook County 9. 6 8.5 4.6 Table 1.4
- 45. Manu(acturing Genera/ Electric,Ford, U.S. Steel, Intel Becfife/, Afcoermoft fling Ranch Homestake Mining Constructio n ›4grfco/fure Mining Seob z Penren£ofef/ obs Service ñfanofactorin g 78.6% 21.4% 11.5 7.9 1.6 0. 4 Table 1.4
- 46. Past nafiona/ focus Batch (large) shipmanls Reliable wor/dwicfe communicationancf fransportafion nenvorks Short product lifa cyc/as and cost of capital puf pYassure on redu£tng inventory' Supply ctiain competition requires that suppliers be engaged in e focus on the end cus lamer Global focus, moving production offshore performance partners, Figure 1.6
- 47. Past I.engthy Stancfardize d Job specializatio n Shorter /ifé cycles, Internet,rapid international communication, compufer- aicfecf cfesign, and infernationa/ collaboration Affluence and worldazide markets; increasing/y fiexihte production processes Changing sociocu/ture milieu,' increasingly a knowledge and infbrmation society Papirf procfucf development, alliances, collaborative d sjgns Class with added emphasis on quality Empowered employees, teams, and lean production Figure 1.6
- 48. Past focu s Environmental issues, ISO 14000,increasing disposal CO5£S Ethics not af rorefronf Businesses operate more open/y,' pu6/ic and gfoda/ reriew' of ethics; opposition fa child labor, bribery, po//ution fnrirnnmenta/iy sensitive pmduction, green materials, remanu lecturing ffigh ethica/ responsi6i/ ify expeczecf Figure 1.6
- 49. Global focus IN Josf-in-lime performanceSupply chain partnering Rapid proc:Iuct c/evefopment Mass costomfzation Empowered employees IN Environmentally sensitive produCtlon IN Ethics
- 50. Productivity is tf›erafio of outputs (goods and services) c/imicfecf by the inpufs (resources such as Iahor and capital) the od/ective s to mprove #zo#vc1v‹tyT IAi 0 nt Note! Production Is a measure of output only aziz/ not a measure of efficiency
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- 52. Stop requiring signatures oncrezf/f card purchases under $25 Saved 8 seconds per transaction Change the size of the ice scoop he›v espresso machines Sared 14 seconds per drink Saved 12 seconi:is per shot
- 53. oa credit ca under$25 Change fhe /let espres per shot
- 54. Units pmducad Input used Measureof process improvement Represents ootpot re/ative to input Only through productivity increases can our standard of living improve
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- 56. Also known astotal factor productivity Output and inputs are often expressed in cfo//ars Multiple resource inputs A mu/fi-factor.productivity
- 57. O/ó System: Słaff of4 words8 hrs/day st -- $640/rfay 8 titles/day Overhead -- $400/day 8 łit/es/day 32 /af›or- hrs
- 58. O/zf System: Sfaff of4wor/rs 8 hrs/day Payroff cost = $640/day 8 titles/day Overhead ——$400/day Old labor fi›fOdu /IVit " 32 /ador-firs 8 fYt/es/day = .25 fit/es//aöor-hr
- 59. O/d System: Staff of4 worJrs8 hrs/day 'II cost -- $640/clay 8 titlesfday Overhead -- $400/clay 14 titlesyday 32 faDor-firs 14 titles/day 32 labor-hrs Overheacf = $800/clay 8 fit/es/day =.25 titlesylabor- hr
- 60. O/d System: Staff of4 worJrs8 hrs/day Payroll cost -- $640/clay New System: 14 titlesyday 8 titlesfday Overhead -- $400/clay oil labor produCtiVity " 32 labor-hrs 8 fit/es/day = .25 titles/labor- hr New Ia6or productivi " 32 labor-hrs 14 titles/day = .4375 titIes/Iabor-hr Overheacf = $800/clay
- 61. O/d System: Staff of4 worJrs8 hrs/day Payroll cost -- $640/clay 8 titlesfday Overhead -- $400/clay 14 titlesyday Overheacf = $*/ 00/clay Old muttifac•‘or productivity ^Y $640 400
- 62. O/d System: Staff of4worJrs 8 hrs/day Payroll cost -- $640/clay N e w System: 14 lilies/clay 8 titlesfday Overhead -- $400/clay Overheacf = $800/clay o e •it/factor prodUctivify " $640 + 400 8 tit/eWday = .0077 t/tles/do//ar
- 63. O/d System: Staff of4 words8 hrs/day Payroll cost -- $640/clay 8 titlesfday Overhead -- $400/clay 14 titlesyday Overheacf = $800/clay 8 fifJes/day 640 + 400 14 fif/es/day $640 + 800 = .0077 title
- 64. O/d System: Staff of4 worJrs8 hrs/day 8 titlesfday Overhead -- $400/clay Payroll cost -- $640/clay New System: 14 titlesyday Overheacf = $800/clay o e •it/factor prodUctivify " $640 + 400 8 tit/eWday = .0077 UI/es/do//ar New multifactor productivity " $ 40 800 14 lilies/day = .0097 titles/dollar
- 66. Labor - contributes Capital - contriżiutesabout 38% oŁ the annual increase
- 67. Basic education appropriatefor the lahor force “ Diet obtfie labor force Social overhead that makes IaL›or available Maintaining and enhancing skills in the midst oLrapidly changing technoTopy and knowTe6pe
- 68. 10. square yds 20square yds ź'4 square yds ț t İ e gr+water ț ł j ąn TOO . k le less than 100 h ie equal Ø 100 Ftguæ 1.a
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- 70. D Typically la6or intensive E1Frequently focuser/ on unique individual affribufes or z/esires Offen an inte//ectua/ task performerf 6y professionals a onen difficult to mechanize Often difficult to evaftfate for quality
- 71. improvement s: IN Reviserffhe menu Designed mea/s for easy preparation D Shifted some preparation to suppliers D Efficient layout and automation 0 training anrf emp/oyee empowerment
- 73. dexeToping and producingsafe, quality products IZ Maintaining a clean envïronment Providing a safe workplace Honoring community commitments