ch1 intro to operations management

8/8/2019 Ch1 Intro to Operations Management

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Fundamentals ofOperations Management

BUS 3 140

Mr. Jess Marino

Fall, 2007


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Page 2

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Agenda

Introduction

Green Sheet review and other administrative items

Additional comments on the course

Initial Lecture


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Introduction


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Marino Background

Academics

Supply Chain Experience

Graduate in Production and Operations Management

Product of CSU system (San Diego State)

Developed and presented several courses as a Management Consultant

Over 25 years as a practitioner at all levels of responsibility

Leadership in small and large organizations

Many different hourly and professional jobs

Over eight years as a Management Consultant

Certified in Production and Operations Management by the Association forOperations Management (APICS)

Exposure to many industries and organizations

Have done business in 13 countries throughout the world


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Positions Held

MachineOperator

ProductionExpediter

Mail RoomClerk

WarehouseClerk

ProductionSupervisor

BuyerProductionController

MaterialController

StockroomManager

Production ControlManager

Director of Materials

Executive Directorof Fulfillment

Director of Supply Chain Management

Director of Operations


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Have conducted Business in 13 Countries, Worldwide

UNITED STATES

CANADA

MEXICO

ENGLAND

SCOTLAND

FRANCE

HOLLAND

HONG KONG

CHINA

TAIWAN

SINGAPORE

MALAYSIA

THAILAND


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Green Sheet Review


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Student Information Sheet

NAME

MAJOR (and Emphasis)

CURRENT JOB (Company Optional)

PREVIOUS SUPPLY CHAIN JOBS / EXPEIRIENCE

OTHER


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Course Overview and Objectives

Understanding how the Operations function interrelates with other functional

organizations in a business

Understanding how an organization uses its resources, processes, data, andtechnologies to create goods and provide services to customers

Understanding how operational effectiveness can be a critical success factor indetermining an organizations Revenue, Profitability, and Shareholder return

Understanding the managerial responsibility for Operations, even whenproduction is outsourced, or done in regions far from corporate headquarters


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Student Learning Objectives for the Course

Understand how Operations is relevant to all functions of a business

Understand Operations Management and how it fits within the overallorganization strategy, objectives, and competitiveness

Develop an interest in Operations and apply that understanding,

whether in a manufacturing or service career


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Course Introduction


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Operations is a Key Element of a Supply Chain

Revenue

Utilization of Assets

(People, Plant, Equip)

Cash

Inventory

BALANCING keeping Customers completely satisfied and Resourcesoptimally utilized . against spending the least amount of Cash

and carrying the least amount of Inventory


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Scope of this Course

Customer

Demand

Production

Scheduling

Materials

Mgmt Production Shipping

Customer

Service

Forecasting

AggregatePlanning

Strategic

CapacityPlanning

Demand &SupplyMatching

Scheduling

Just In Time(JIT)

ProjectMgmt

InventoryMgmt

MRP

ERP

ProcessLayout

WorkSystemDesign

LeanOperations

Quality


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Introduction toOperations Management


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Highest Level Operations Management Process (Fig 1.2)

There is a CONVERSION that takes Information, Intelligence,Resources, and Activities and turns them into something

VALUABLE to Customers and / or Society

InputsProcess

(Transformation)Outputs

ControlFeedback

Feedback

Feedback

* From Stevenson, Operations Management, Ninth Edition, McGraw Hill Irwin


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Inputs / Process / Outputs (Table 1.1)

Land Processes

Human Cutting, drillinPhysical Labor Transporting

Intellectual Labor Teaching

Capital FarmingRaw Materials Mixing

Energy Packing

Water Copying, faxiMetals

Wood

Equipment

Machines

Inputs Transform



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Operations are managed for both Production and Services

Inputs Process Outputs

Raw vegetables

Metal sheets

Water

Energy

Labor

Building

Equipment

Cleaning

Making cans

Cutting

Cooking

Packing

Labeling

Canned Vegetables

PRODUCTIO

N

Inputs Process Outputs

Doctors, nurses

Hospital

Medical supplies

Equipment

Laboratories

Examination

Surgery

Monitoring

Medication

Therapy

SERV

I CE

Treated Patients

Foodp

rocess in

gPlant

Hosp

ita

l

Result is

TANGIBLE OUTPUT

Result implies

an ACT


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Differences between Goods and Service (Book Table 1.3)

Characteristic

Customer contact

Uniformity of Input

Labor content

Uniformity of Output

Output* From Stevenson, Operations Management, Ninth Edition, McGraw Hill Irwin


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Goods and Services continuum (Fig 1.3)

Goods

Automobil

Compute


C bi i f P d i d S i


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Combination of Production and Service


Stage of Production ValueAdded

Value ofProduct

Farmer produces and harvests wheat $0.15 $0.15

Wheat transported to mill $0.08 $0.23

Mill produces flour $0.15 $0.38

Flour transported to baker $0.08 $0.46

Baker produces bread $0.54 $1.00

Bread transported to grocery store $0.08 $1.08

Grocery store displays and sells bread $0.21 $1.29

Total Value-Added $1.29

M f t i J b


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Manufacturing Jobs

U.S. Manufacturing vs. Service Employment

0

10

20

30

40

50

60

7080

90

45 50 55 60 65 70 75 80 85 90 95 00 02 05Year

Percen

t

Mfg.Service

> 70%

Greater PRODUCTIVITY allows for increased output with fewer workers Many manufacturing jobs have moved OFFSHORE to lower labor cost areas



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How Operations Interactswith Other Organizations

K i t ti ith S l & M k ti d ith Fi


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Key intersections with Sales & Marketing and with Finance

FINANCE & ACCOUNTING

Budgeting

Authorizing Capital spending

Authorizing major inventory buys

Cost accounting

Make vs. Buy decisions

Location planning

Managing international trade

Analyzing trade-off decisions

K i t ti ith S l & M k ti d ith Fi


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Key intersections with Sales & Marketing and with Finance

SALES & MARKETING

Forecasting Demand

Influencing demand

Committing supply

Negotiating schedules with customers

Providing competitive information

Requesting new products and services

Opening new markets

I t ti ith th F ti l O i ti


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Interaction with other Functional Organizations

O

IT


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Competitiveness, Strategy,and Productivity

Strategy Terms


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Strategy Terms

Mission

The reason for existence for an organization

Mission Statement

States the purpose of an organization

Goals

Provide detail and scope of missionStrategies

Plans for achieving organizational goals

Tactics

The methods and actions taken to accomplishstrategies


How terms have meaning to the business


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How terms have meaning to the business

Mission

Goals

OrganizationalStrategies

Functional Goals

FinanceStrategies

MarketingStrategies

OperationsStrategies

Tactics Tactics Tactics

Operatingprocedures

Operatingprocedures

Operatingprocedures


Competitiveness


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Competitiveness

World Class Operations enable companies to gain aCOMPETITVE ADVANTAGE over others trying to servethe same customers and markets

The three biggest levers are:

Cost

Quality and Reliability

Assurance of Supply

How Operations impacts Competitiveness


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How Operations impacts Competitiveness

Cost

Quality

Product design

Response Time

Flexibility

Scalability

Service

Location

Factors that impact Operations Strategy


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Factors that impact Operations Strategy

Factor

PriceThe strategy is tied to where a COMPETITIVE EDGE

can be gained or maintained

Operations Strategies vary by mission of the Business (2 4)


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Operations Strategies vary by mission of the Business (2.4)

1 Product and Service design Costs, quali

2 Capacity Cost structu

3 Process selection and layout Costs, flexi

4 Work design Quality of w

5 Location Costs, visibi

6 Quality Ability to m

7 Inventory Costs, shor

Decision Area



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Productivity


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Productivity

Productivity is a RATIO of Inputs and Outputs

Productivity = OutputInput

Inputs and Outputs can be measured at different degrees

Output Output Output OutputLabor Machine Capital Energy

Goods or services produced

All inputs used to produce them

Partial Measures

Multifactor Measures

Total Measure

Output

Labor + Machine

Output

Labor + Capital + Energy

Additional Productivity Terms


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Additional Productivity Terms

Performance to a Standard (e.g. Time to assemble a Computer,

POs placed per hour, etc.) Emphasis is Value-Added activities

Efficiency

Per cent of time that is devoted to Value-Added activities

Utilization

Efficiency * Utilization

Productivity

The Contribution that the activity / departmentprovides to the overall mission of the business

Effectiveness

Steps for Improving Productivity


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Steps for Improving Productivity

Measure key outputs and indicators

Analyze the production system as a whole

Benchmark Best In Class processes within and across industries

Solicit ideas from everyone in the organization

Set achievable, stretch goals

Ensure executive supporrt

Measure the improvements

Publicize the improvements

ch1 intro to operations management

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