00. Operations Management– Pre-Mid Term
In
By Prof. N. Narayanan
“OPERATIONS MANAGEMENT”(PGP – Term II, Pre-Mid Term, 2011)
Reference (Text Book):
J. Heizer, B. Render and J. Rajashekhar, Operations
Management, 9th Edition, Pearson Education, 2009
Course Evaluation Plan
• Assignments/Quizzes: Pre-Mid Term: 15%– 8% for Quizzes.
– 5% for Assignments.
– 2% for Class Participation
Post-Mid Term: 15%
• Mid Term Exam: 30%
• End Term Exam: 40%
Pre-Mid Term: By Prof. N. Narayanan
Post-Mid Term: By Prof. Sushil Kumar
Sessions Plan – Pre-Mid Term
Sn.1
Nos. Date Topic Text ; Exercise/ Case
1 21 Sep (Wed)
Operations Management: Function and its Role/ Significance
Ch. 1: Operations and Productivity (pp 1 – 27)
1. Global Co. Profile: OM at Hard Rock Café (pp 2 – 3) [15]
2. Example 1: Examining options for increasing contribution (pp 6 ) [43]
3. Case: The Faltering Factory (Handout – PDF file) 3. Case: The Faltering Factory (Handout – PDF file) [50 – 57]
4. OM in Action: Improving Productivity at Starbucks (pp 15) [72]
5. Example 2: Computing Productivity at Collins Title (pp 16) [77 – 79]
6. OM in Action: Taco Bell Improves Productivity to Lower Costs (pp 20) [95 – 97]
1 Each session is of 1½ hours duration.
Sessions Plan – Pre-Mid Term (Continued)
Sn. Nos. Date Topic Text ; Exercise/ Case
2 22 Sep (Thu)
Operations Strategy and Competitiveness
Ch. 2: Operations Strategy in a Global Environment (pp 29 –58)
1. Global Co. Profile: Boeing’s Global Strategy Yields Competitive Advantage (pp 30 – 31) [4]
2. OM in Action: Going Global to Compete (pp 34) [40] *
3. OM in Action: Videocon—A True Indian Multinational Company (pp 35) [41] *
4. OM in Action: India—A Major Destination for Outsourcing (pp 36) [42]*Outsourcing (pp 36) [42]*
5. Figure 2.3: Sample Missions for a Company, OM Function, and Major OM Departments (pp 38) [43]*
6. OM in Action: Low Cost Strategy Wins at Franz Colruyt(pp 40)[30 – 31]
7. OM in Action: Response Strategy at Hong Kong’s Johnson Electric (pp 41) [35]
8. OM in Action: US Cartoons Production at Home in Manila (pp 33) [39]
9. Example 1: Strategy Development at Pierre Alexander (pp 43) [54]*
10. Strategy at Pirelli SpA (pp 53) [55 – 56]
Sessions Plan – Product Design and Development
Sn. Nos. Date Topic Text ; Exercise/ Case
3 23 Sep.(Fri.)
Product Design and development
Ch. 4: Design of Goods and Services (pp 1111 – 148)
1. Global Company Profile: Regal Marine (pp 112) [4]2. OM in Action: The Kano Model (pp 118) [12]3. ‘Product-by-Value Analysis’, to Help in ‘Variety Control’ for
a Company’s Product Profile [26 – 30]4. Example 1: Great Cameras Inc.: Constructing a House of
Quality (pp 120) [37 – 45]5. OM in Action: Designing Trident Splash (pp 122) [85]5. OM in Action: Designing Trident Splash (pp 122) [85]6. OM in Action: Sona Koya Steering and Maruti Alto (pp
123) [89]7. OM in Action: Mudra’s Lifestyle’s Success Story (pp 126)
[92]8. OM in Action: Chasing Fads in the Cell Phone industry (pp
130) [150 – 152]9. Example 2: First Bank Corp. – Delivery of Service to Drive-in
Customers at the drive-up window (pp 138)[153 – 155]
10.Case Study: The ‘Future Bank’ concept (handout)[156 – 157]
11.Case: De Mar’s Product Strategy (pp 146) [158 – 161]
Session Plan: 04 – 05: Process Design (incl. of ‘Service Process Design’)
Sn. Nos. Date Topic Text ; Exercise/ Case
4 –5
Oct. (Fri)
Oct. (Thu)
Process Design (including Service Process Design)
Ch 6: Process Strategy (pp 213 – 245)1. Global Co. Profile: Dell Computer Corp. (pp 214 – 215) [3]2. Example 1: Job Shop Process Focus at Standard Register (pp
217) [8, 9]3. Example 2: Repetitive Manufacturing at Harley-Davidson (pp
218) [10, 11]4. Example 3: Product Focused Prodn. at Nucor Steel (pp 219)
[12, 13]5. OM in Acton: Mass Customization at ‘Borders Books’ and at
(Thu)5. OM in Acton: Mass Customization at ‘Borders Books’ and at
‘Smooth FM Radio’ (pp 221)[17 – 28]6. Example 4: Kieber Enterprises: Cross-Over Chart for process
choice (pp 224 – 225) [62 – 63]7. OM in Action: OM at the Barber Shop (pp 238 – 39)[65 – 72]8. OM in Action: Technology Changes in the Hotel Industry (pp
237) [77 – 78]9. Case: Rochester Manufacturing Corporation (pp 243) [80 – 82]10. Case: Process Strategy at Wheeled Coach (pp 244 – 45) [83 –
85]Oct (Thu): Quiz – I
Sessions Plan – Pre-Mid Term (Continued)Sn. Nos. Date Topic Text ; Exercise/ Case
6 – 8 Oct. (Fri)
Process Analysis & Work Systems Design (incl. Method Study & Work Measurement) (2.5 hours)
Ch. 6: Process Strategy (pp 226 – 230) revisited; Ch. 9: Human Resources and Job Design (pp 349 – 371)) & Supplement 9: Work Measurement (pp 585 – 589)1. Service Blue-printing for Registration Process at Southern
University [24 – 26]2. OM in Action: Using Incentives to Unsnarl Traffic Jams in the
OR (pp 358) [48 – 50]3. OM in Action: Saving steps on the B-2 Bomber (pp 363) [51 –
55]4. Case: Infosys—Challenge of Attrition (pp 369)[56 – 58]
Oct (Thu)
Oct (Fri) Facilities Layout(2 hours)
4. Case: Infosys—Challenge of Attrition (pp 369)[56 – 58]5. Case: Hard Rock’s Human Resource Strategy (pp 370) [59 – 61]6. Example S1: Determining Normal and Standard Time (pp 376 –
77) [83]7. Example S2: Computing Standard Time (pp 377 – 378) [89]8. Example S3: Computing sample size for time study (pp 379)
[95]9. OM in Action: UPS: The Tightest Ship in the Shipping Business
(pp 380) [109]
Ch. 8: Facilities Layout Strategies (pp 305 – 348)
1. McDonald’s Looks for Competitive Advantage through Layout (pp 308 – 09) [10 – 11]
Sessions Plan – Pre-Mid Term (Continued)
Sn. Nos.
Date Topic Text ; Exercise/ Case
6 – 8 Oct. (Fri)
Oct (Thu)
Oct
Process Analysis & Work Systems Design (incl. Method Study & Work Measurement) (2.5 hours)
[Continued]
Ch. 8: Facilities Layout Strategies (pp 305 – 348)Oct (Fri)
Facility Layout(2 hours)
1. McDonald’s Looks for Competitive Advantage through Layout (pp 308 – 09) [10 – 11]
2. Example 1: Walters Company: Designing a process layout (pp 319) [45 – 53]
3. OM in Action: Bengaluru International Airport—Modern and Functional Airport (pp 322) [56 – 58]
4. OM in Action: Work Cells at Rowe Furniture (pp 325) [69 – 70]5. Example 2: Staffing Work Cells (pp 326) [73]6. Examples 3, 4,and 5: Boeing: Assembly line design for assembly
of electrostatic wing component (pp 330 – 333) [85 – 92]
Oct (Thu): Quiz – II
Sessions Plan – Pre-Mid Term (Continued)
Sn. Nos. Date Topic Text ; Exercise/ Case
9 –10
Oct. (Thu)
Scale & Capacity Planning (including Service Capacity Planning)
Sup. 6: Capacity Planning (pp 247 – 273)
1. Examples S1 and S2: Sara James Bakery – Utilization and Efficiency (pp 249 – 50) [13, 14]
2. OM in Actn.: Too Little Capacity at Dalrymple Bay (pp 252);
3. OMA: Too Much Capacity at GM and Ford (pp 253) [33 – 37]4. BE Analysis: Single Product Case (pp 258) [56 – 58]5. BE Analysis: Multiproduct Case (pp 258 – 260) [59 – 65]6. Problem No. S6.22: A & Z Lettuce Products (pp 270) –
Breakeven analysis for single product [do as practice problem]
Oct. (Fri)
Breakeven analysis for single product [do as practice problem]
7. Problem No. S6.23: Carter Manufacturing (pp 270) –Breakeven analysis for single product [do as practice problem]
8. Problem No. S6.24: Red Rose Club (pp 271) – Breakeven analysis for multiple products [do as practice problem]
9. Example S6: Southern Hospital Supplies (pp 266 – 67) [66 – 69]
10.Problem No. 6.28 (pp 271) – Holtz Furniture – Capacity Planning by Decision Tree Analysis [do as practice problem]
11.Capacity Planning at Arnold Palmr Hosptl (pp 272)[82 – 88]12.HBSP Case: 9-687-045: Chaparral Steel (Abridged), 19 pages.
[89 – 92]
1. The Operations Management Function, its Role and Significance
By Prof. N. Narayanan
In
“OPERATIONS MANAGEMENT”
(PGP – Term II, 2011)
By Prof. N. Narayanan
Reference: Ch. 1: Operations and Productivity (pp 1 – 24)
In: J. Heizer, B. Render and J. Rajashekhar, Operations
Management, 8th Edition, Pearson Education, 2009
Sessions Plan – Pre-Mid Term
Sn. Nos. Date Topic Text ; Exercise/ Case
1 22 Sep (Thu)
Operations Management: Function and its Role/ Significance
Ch. 1: Operations and Productivity (pp 1 – 27)
1. Global Co. Profile: OM at Hard Rock Café (pp 2 – 3) [15]
2. Example 1: Examining options for increasing contribution (pp 6 ) [43]
3. Case: The Faltering Factory (Handout – PDF file) 3. Case: The Faltering Factory (Handout – PDF file) [45]
4. OM in Action: Improving Productivity at Starbucks (pp 15) [69]
5. Example 2: Computing Productivity at Collins Title (pp 16) [80]
6. OM in Action: Taco Bell Improves Productivity to Lower Costs (pp 20) [91]
OverviewGlobal Co. Profile: Hard Rock Café (pp 2)
1. Basicsa. Classification in Industrial development
b. Classification of Manufacturing Industries
c. Classification of Basic Industries
d. Classification of Manufacturing based on:“Volumes of Products, and corresponding Plant Layout and Material Flow Pattern”
2. Manufacturing vs. Service
3. Basic Functions of an Organization
4. Operations Management as a Function
5. Productivity Measurement
6. Ten Critical Decision Areas in Operations Management
7. Exciting New Trends in Operations Management
8. Priorities for Operations Management
Global Company Profile:
Hard Rock Café (pp 2)
1. Products take the form of ‘food’.
2. Over 35 million guests worldwide each year.
3. Theme restaurant: rock music memorabilia
4. OM at HRC provides more than 3500 custom
1
products (meals) everyday.
5. Products designed, tested and analyzed for cost, labor requirements and customer satisfaction.
6. Production process must be maintained to ensure a quality meal.
7. OM must ensure effective staff, layouts, etc.
1a. Classification in Industrial developmentdevelopment
Industrial Development over time,in three major steps
1. Primary industries (Extraction) – including Hunting, Agriculture, Fishing, Mining, Quarrying, Forestry, etc.
2. Secondary industries (Construction Manufacturing and public utility generation) –Manufacturing and public utility generation) –including Refinement, Conversion, Fabrication and Assembly
3. Tertiary Industries (Services) – including physical distribution, transportation, education, banking, health, retailing, catering, BPO, etc., etc.
1b. Classification of Basic IndustriesIndustries
Classification of Basic Industries
1. Process Industries – E.g., Beverages, Cement, Chemicals, Drugs, Food processing, Metals, Paper, Petroleum products, Textiles, Tires, etc.
2. Discrete Item Manufacturing Industries –E.g., Aerospace, Automobiles, Garments, Machinery, Computers, Appliances, etc. Computers, Appliances, etc.
3. Project Industries – E.g., Construction, Erection and Commissioning, Ship Building, etc.
4. Service and Other Industries – E.g., Advertising, Financial, Hospitality, Insurance, Mass Media, Retail, banking, BPO, Transportation, Utilities (Power, Gas, Telecommunications), etc.
1c. Classification of Manufacturing IndustriesManufacturing Industries
Classification of Manufacturing Industries
1. Basic Producer (Raw Material Extractor and Refiner) – E.g., steel ingots (from iron ore), rubber, glass –Usually involve heavy capital investment in specialized equipment
Natural Resources
Basic Producer
Converter FabricatorRaw Materials
Industrial Products
Consumer Goods
Consumer Goods
Usually involve heavy capital investment in specialized equipment
2. Converter (Material Processor) – E.g., bar stock from steel ingots, plastics from petroleum products – Usually involve uncomplicated physical products
3. Fabricator and Assembler – E.g., machined engine components (say bolts and nuts) from rods or bar stocks; assembled final products using the fabricated components –Usually involve complicated physical products—components or final products
1d. Classification of Manufacturing based on
“Volumes of Products, and “Volumes of Products, and corresponding
Plant Layout and Material Flow Pattern”
Increasing product
volumes
Classification of Manufacturing based on“Volumes of Products, and corresponding Plant Layout and Material Flow Patterns”
1. Job Sop Manufacturing – Usually engineer- or make-to-order items—High variety of low volume products—with general-purpose machines in process layouts
2. Batch (or Intermittent) Manufacturing – Usually for multiple products in continual demand—High variety
Increasing product
volumes
for multiple products in continual demand—High variety with low volume products may be with
—process layouts (for small batch production), or
—line layouts (for large-batch production)
3. Mass Production (‘Continuous Flow or ‘Discrete Repetitive’) – Usually for products in high continuous demand—with special purpose machines in line layouts
4. Cellular Production – Toward combining the best of Job Shop and Mass Manufacturing
Relevance of Cellular Production(Will be discussed in detail(Will be discussed in detailunder ‘Facilities Layout’)
From: To:
Process Layout Work Cell
SawSaw
Lathe
Lathe SawSaw
1
2
2SawSaw
PressPress
From Process Layout to Work Cell – For Flow
LatheLathe
GrinderGrinder
HeatHeatTreatTreat
LatheLatheHeatHeatTreatTreat
GrinderGrinder
GrinderGrinder
PressPress
PressPress 1
2
3
45
6
The traditional Organization of Operations
(with MRP-based Approaches)
Inventory (warehouse)
A storage of inventory in the warehouse may often be resorted to, with a “pond-draining” mindset!
Receiving Operation Operation Shipping
Suppliers
‘Lean’ Approach– The Relevance of Cellular Production
Cell 1 Cell 2 Cell 3
Point of use storage (Limited inventories)
Suppliers
2. Manufacturing vs. Service2. Manufacturing vs. Service
Characteristics of GoodsCharacteristics of Goods
�� Tangible productTangible product
�� Consistent product Consistent product definitiondefinition
�� Production usually Production usually �� Production usually Production usually separate from separate from consumptionconsumption
�� Can be inventoriedCan be inventoried
�� Low customer Low customer interactioninteraction
Characteristics of ServiceCharacteristics of Service
�� Intangible productIntangible product
�� Produced and consumed Produced and consumed at same timeat same time
��Often uniqueOften unique
��High customer High customer ��High customer High customer interactioninteraction
�� Inconsistent product Inconsistent product definitiondefinition
��Often knowledgeOften knowledge--basedbased
�� Frequently dispersedFrequently dispersed
Goods Versus ServicesGoods Versus Services
Can be resoldCan be resold
Can be inventoriedCan be inventoried
Some aspects of quality Some aspects of quality measurablemeasurable
Selling is distinct from Selling is distinct from
Attributes of GoodsAttributes of Goods(Tangible Product)(Tangible Product)
Attributes of Attributes of ServicesServices(Intangible (Intangible Product)Product)
Reselling unusualReselling unusual
Difficult to inventoryDifficult to inventory
Quality difficult to measureQuality difficult to measure
Selling is part of service Selling is part of service Selling is distinct from Selling is distinct from productionproduction
Product is transportableProduct is transportable
Site of facility important for costSite of facility important for cost
Often easy to automateOften easy to automate
Revenue generated primarily Revenue generated primarily from tangible productfrom tangible product
Selling is part of service Selling is part of service
Provider, not product, isProvider, not product, isoften transportableoften transportable
Site of facility important forSite of facility important forcustomer contactcustomer contact
Often difficult to automateOften difficult to automate
Revenue generated primarily Revenue generated primarily from the intangible servicefrom the intangible service
Differences Between ‘Goods’ and ‘Services’
1. Services are usually intangible (e.g., an empty airline seat, for travel between two cities)
2. Services are often produced and consumed simultaneously.
3. Services are often unique, for every individual customer.
3.customer.
4. Services have high customer interaction.
5. Services have inconsistent product definition.
6. Services are often knowledge-based.
7. Services are frequently dispersed.
Manufacturing Vs. Service S.
No. Manufacturing Services
1 Output is tangible Output is intangible
2 Output is inventoriable Output is not inventoriable
3 Time delay from production to consumption Simultaneous production and consumption
4 For standard products, ‘Mass Production’ is possible
Services more often unique, so ‘Mass Production’ may not be possible
5 Little or no interaction between manufacturer and customer
Lot of interaction between manufacturer and customer
6 Customers do not participate in Customers often participate in services6 Customers do not participate in manufacturing
Customers often participate in services
7 Factories are located away from customers Facilities located close to customers
8 Manufacturing may be largely automated Services are generally labour-intensive
9 Quality of goods is much easier to define and measure
Quality of services is more difficult to define and measure
10 Quality doesn’t depend upon a single person Quality often depends on a single person
11 The output can usually be measured or counted
Difficult to count or measure output
Even manufacturing is being required to assume many of the characteristics of service, to survive under the growing competition. The manufactured product may become just a part of the service offered.
Goods and ServicesGoods and Services
Automobile
Computer
Installed carpeting
Fast-food meal
Restaurant meal/auto repair
Hospital careHospital care
Advertising agency/investment management
Consulting service/teaching
Counseling
Percent of Product that is a GoodPercent of Product that is a Good Percent of Product that is a ServicePercent of Product that is a Service
100%100% 7575 5050 2525 00 2525 5050 7575 100%100%|| || || || || || || || ||
Goods Services
Most New ‘Creations’ and ‘Growth’ are in ‘Services’ Rather Than in ‘Products’
Automobiles
Computers
Installed carpeting
Fast-food mealFast-food meal
Restaurant meal/auto repair
Hospital care
Advertising agency/Investment management
Consulting Service/Teaching
Counseling
100% 75% 50% 25% 0% 25% 50% 75% 100%
Percent of product that is a good Percent of product that is a service
Similarities Between ‘Goods’ and ‘Services’
1. Even though ‘services’ differ from ‘goods’, the operation function continues to transform the input of resourcesinto the output of products.
2. The criteria for effective performance of activities of the operation function are often very similar for both goods and services. For example,
− Both goods and services must have quality standards established.
− Both must be designed and processed on a schedule, in a facility where human resources are employed.
3. In reality, almost all goods and all services are a mixture of a service and a tangible product. (There can be some instances of pure services, for example, ‘Counseling’.)
Relevance ofOperations Management and Operations Strategy,
Even in Service Industries
• What drives bottom-line performance in almost every industry—be it manufacturing or service—is “Competitive Advantages” through
– Quality,
– Cost,
– Delivery, and
– Service.
All these are ‘Operations’ issues.
Challenges to Improving Productivity in the Service Sector
1. Typically labour-intensive (for example, counseling, teaching).
2. Frequently focused on unique individual attributes or desires (for example, investment advice).
3. Often an intellectual task performed by professionals (for example, medical diagnosis).
4. Often difficult to mechanize and automate (for example, a 4. Often difficult to mechanize and automate (for example, a haircut).
5. Often difficult to evaluate for quality (for example, performance of a law firm).
Low productivity improvement in the service sector is also attributable to the growth low-productivity activities in the service sector (which may not have been part of the measured economy, such
as child care, food preparation, house cleaning, and laundry service).
3. Basic Functions of an 3. Basic Functions of an Organization
Organizing to Produce Goods and ServicesOrganizing to Produce Goods and Services
�Essential functions:
� Marketing – generates demand
� Production/operations – creates the product
Finance/accounting – tracks how well the � Finance/accounting – tracks how well the organization is doing, pays bills, collects the money. Also helps integrate the business with the rest of the economy,
� HRM
Basic Functions of an Organization
Finance
Operations
Marketing HRM
Organizational ChartsOrganizational Charts
Operations
Teller Scheduling
Check Clearing
Finance
Investments
Security
Marketing
Loans
Commercial
Commercial Bank
Check Clearing
Collection
Transaction processing
Facilities design/layout
Vault operations
Maintenance
Security
Security
Real estate
Accounting
Auditing
Commercial
Industrial
Financial
Personal
Mortgage
Trust Department
Example Examining options for Increasing Contribution
Doubling ‘Contribution’ at Fisher Technologies (all Figures in $)
Current
Marketing Option a
Increase Sales Revenue 50%
Financial/ Accounting
Option b
Reduce Finance Costs
50%
OM Option c
Reduce Production Costs 20%
Sales 100,000 150,000 100,000 100,000
Costs of goods – 80,000 – 120,000 – 80,000 – 64,000Costs of goods – 80,000 – 120,000 – 80,000 – 64,000
Gross Margin 20,000 30,000 20,000 36,000
Finance costs – 6000 – 6000 – 3000 – 6000
Subtotal 14,000 24,000 17,000 30,000
Taxes at 25% – 3,500 – 6,000 – 4,250 – 7,500
Contributiond 10,500 18,000 12,750 22,500a Increasing sales 50% increases contribution by $7,500, or 71% (7,500/10,500)b Reducing finance costs 50% increases contribution by $2,500 or 20% (2,250/10,500) c Reducing production costs 20% increases contribution by $12,000 or 114% (12,000/10,500)d Contribution to fixed cost (including finance costs) and profits
4. Operations Management as a 4. Operations Management as a Function
What Is Operations Management?What Is Operations Management?
Production/Operations is the creation of goods and services
Operations management (OM)Operations management (OM) is is Operations management (OM)Operations management (OM) is is the set of activities that creates value the set of activities that creates value in the form of goods and services by in the form of goods and services by transforming inputs into outputstransforming inputs into outputs
The Operations System (‘Manufacturing’ or ‘Service’) of an Organization – The Horizontal, “Value Stream ”
Monitor output
Adjustments needed?
Random Fluctuations
Inputs:
• Land• Labor• Capital• Management
Conversion Process
Outputs: xx
• Goods• Services
Feedback:Feedback:‘actual’ vs. ‘desired’
The ‘random fluctuations ’ above are the unplanned or uncontrollable influences that cause the actual output to differ from the expected
output. Reducing such fluctuations (or variations), and their effects, is a major management task.
The Horizontal ‘Input-Process-Output’ can be seen as made of multiple stages of ‘Value-Adding Stream’
The Vertical, ‘Macro-Micro’, Cyclical Management Process
A progressive1 sequence of
Purposes as processes, to be pursued at the ‘macro’ or ‘whole’ level, the ‘macro’ or ‘whole’ level,
followed by a matching progressive1
sequence of
Means as processes, to be pursued at the ‘micro’ or ‘parts’ level
1 Progressive in terms of fulfillment of ‘precedence requirements’ for each process.
Operations Management
• OM is focused on enabling ‘efficient’ and ‘effective’ processes for the creation of value, by right coordination of all the ‘inputs’, and by linking the ‘outputs ’ to actual customer requirements (which are the very basis for the definition of value).
• The conversion process is, by itself, assumed to be • The conversion process is, by itself, assumed to be determined by what is already available as inputs in the process technologies employed, or can be availablethrough R&D, and so can be treated as a ‘black box’ with its known design capacities, etc., and so as ‘not part of OM’.
• Thus OM is not determined by the technologies of products or processes, and is thus a common process for all kinds of operations.
Contributions FromContributions From
� Human factors
� Industrial engineering
� Management science� Management science
� Biological science
� Physical sciences
� Information science
Case: “The Faltering Factory”
3
Caselet: The Faltering Factory• Issues Faced
i. Customer complaints:o Prices not competitiveo Deliveries sometimes seriously lateo Quality not up to expected standards
ii. Slow working tempo, under present factory manager’s charge:o Worker productivity slipping due to delays and slowing down
3
o Worker productivity slipping due to delays and slowing down caused by uneven flow of work.• Uneven flow of work caused by substandard materials and
inadequate maintenance.• Misguided cost reduction efforts on purchases led to
deterioration in purchased materials • Further misguided efforts at cost reduction through cutback in
maintenance personnel.
iii. Owner’s failure to recognize need to and make distinct provision for effective ‘Operations Management, o When manufacturing competence still being established.
Caselet: The Faltering Factory (Continued)
• The common, underlying/ root cause:
Misguided/ undue/ excessive emphasis on cost-cutting alone, rather than first on the creation of
3
rather than first on the creation of customer value
Case 1: “The Vicious Cycle” at The Faltering Factoryand its conversion to “Virtuous Cycle”
The unbalanced, excessive emphasis placed at the factory on ‘Cost Cutting’ (i.e., without due attention to the primary purpose of “Creation of customer Value”) has been the trigger point that led to the operation of the vicious cycles at the company.
Existing Vicious cycles:
Macro-level root cause problem: An unbalanced, excessive emphasis on ‘cost cutting1’, without due primary attention to “value creation2”
Micro-level root cause problem: A cost reduction1 accompanied by un-
3
Micro-level root cause problem: A cost reduction1 accompanied by un-acceptable ‘loss of value creation’, leading to also unanticipated cost increases
Possible Virtuous cycles:
Macro-level root cause solution: A balanced emphasis on ‘value creation’ as primary purpose, followed by emphasis on ‘cost reduction’
Micro-level root cause solution: Cost reduction in the long term to complement the uncompromised ‘value creation’, as the primary purpose.
1 Not incurring costs that don’t add customer value; 2 Giving customer what he requires.
Case 1: The Faltering FactoryOperations – A key functional area in the organization
Operations
Finance
Marketing H R M
Marketing – Emphasizes the viewpoint of ‘customer value’
3
Marketing – Emphasizes the viewpoint of ‘customer value’Finance – Emphasizes the viewpoint of ‘shareholder value’HRM – Emphasizes the viewpoint of employees’, i.e., ‘Quality of work life’
So, when ‘Operations’ emphasizes the productivity and hence cost reduction viewpoints, it must do so in harmony with the above viewpoints.
Operations must emphasize all the above values, but finally, in the long term, also, ‘Human Resource Value”.
Case 1: The Faltering Factory
Setting ‘precedence-wise priority’ in the pursuit of Purposes or Values,
from the ‘short term’ to ‘long term’
Shareholder Value
Human Resource
ValueCustomer
Value
‘Quality before
Productivity’
3
(Through Productivity of Operations, through
pursuit of ‘cost reduction’)
(Through Effectiveness of Operations—in
meeting customer needs)
(Through pursuit of ‘quality at source’—through prevention)
(Through emphasis of ‘employee
empowerment’ that wins their
involvement)
‘Customer Value’ must come before shareholder value can be realized. However, according to Vineet Nayar1 (2010), ‘employee value’ must come even before ‘customer value’.
1 Vineet Nayar, “Employees First, Customer Second”, Harvard Business School Press, 2011.
The Operation-to-Profit Chain
Revenue Growth
Profitability
Customer Loyalty
Customer Satisfaction
External Customer
ValueEmployee
Productivity
Employee Retention
Employee Satisfaction
Internal Operation Quality
Operations Strategy and Product Delivery System
3
• Retention
• Repeat business
• Referral• Product designed and delivered to meet customer needs
• Product concept results for customers
• Workplace design
• Job design
• Employee development
• Employee rewards & recognition
• Tools for serving customers
InputsTo, and by, the employees
ConsequencesFor the customers and the share-holders
Case 1: The Faltering Factory - Questions
The consultant’s in-depth investigation revealed a slippage in worker productivity caused by an uneven flow of work, caused, in turn, by a combination of substandard materials and inadequate maintenance, which were, in turn, caused by poor control of purchased materials (by usage of substitute materials to save on purchases, which were not up to standards). Further, to ‘compensate’ for this loss, a overhead cost reduction (inclusive of a cutback in maintenance personnel) ensued, resulting only in still more productivity loss.
Questions:
1. Draw a figure showing the two glaring errors in decision in ‘Operations’ at the
3
1. Draw a figure showing the two glaring errors in decision in ‘Operations’ at the company and the chain of consequences of these errors in decision, with causal interrelationships between them.
2. Do you see any vicious cycle/s operating? What are the triggers of such vicious cycles? Is it possible to manage such trigger points so as to convert from vicious to virtuous cycles? What new decision making processes may be required?
3. Looking at ‘Operations Management’ as a function involving decision making at the functional level of ‘Operations’ as against other functions such as ‘Marketing’, ‘HRM’, etc., discuss how it will accommodate these newer decision making processes.
The Heritage of The Heritage of Operations Management
The Heritage of OMThe Heritage of OM
�� Division of labor (Adam Smith 1776; Charles Division of labor (Adam Smith 1776; Charles Babbage 1852)Babbage 1852)
�� Standardized parts (Whitney 1800)Standardized parts (Whitney 1800)
�� Scientific Management (Taylor 1881)Scientific Management (Taylor 1881)
�� Coordinated assembly line (Ford/ Coordinated assembly line (Ford/ �� Coordinated assembly line (Ford/ Coordinated assembly line (Ford/ Sorenson/Avery 1913)Sorenson/Avery 1913)
�� Gantt charts (Gantt 1916)Gantt charts (Gantt 1916)
�� Motion study (Frank and Lillian Motion study (Frank and Lillian GilbrethGilbreth 1922)1922)
�� Quality control (Quality control (ShewhartShewhart 1924; Deming 1950)1924; Deming 1950)
The Heritage of OMThe Heritage of OM
�� Computer (Computer (AtanasoffAtanasoff 1938)1938)
�� CPM/PERT (DuPont 1957)CPM/PERT (DuPont 1957)
�� Material requirements planning (Material requirements planning (OrlickyOrlicky1960)1960)
�� Computer aided design (CAD 1970)Computer aided design (CAD 1970)�� Computer aided design (CAD 1970)Computer aided design (CAD 1970)
�� Flexible manufacturing system (FMS 1975)Flexible manufacturing system (FMS 1975)
�� BaldrigeBaldrige Quality Awards (1980)Quality Awards (1980)
�� Computer integrated manufacturing (1990)Computer integrated manufacturing (1990)
�� Globalization (1992)Globalization (1992)
�� Internet (1995)Internet (1995)
Frederick W. TaylorFrederick W. Taylor
�� Born 1856; died 1915Born 1856; died 1915
�� Known as ‘father of scientific Known as ‘father of scientific management’management’
�� In 1881, as chief engineer for Midvale In 1881, as chief engineer for Midvale �� In 1881, as chief engineer for Midvale In 1881, as chief engineer for Midvale Steel, studied how tasks were doneSteel, studied how tasks were done
�� Began first motion and time studiesBegan first motion and time studies
��Created efficiency principlesCreated efficiency principles
Taylor’s PrinciplesTaylor’s Principles
� Matching employees to right job
� Providing the proper training
Management Should Take More Management Should Take More Responsibility for:Responsibility for:
� Providing the proper training
� Providing proper work methods and tools
� Establishing legitimate incentives for work to be accomplished
Frank & Lillian Frank & Lillian GilbrethGilbreth
�� Frank (1868Frank (1868--1924); Lillian (18781924); Lillian (1878--1972)1972)
��HusbandHusband--andand--wife engineering teamwife engineering team
�� Further developed work measurement Further developed work measurement methodsmethodsmethodsmethods
�� Applied efficiency methods to their Applied efficiency methods to their home and 12 children! home and 12 children!
�� Book & Movie: “Cheaper by the Dozen,” Book & Movie: “Cheaper by the Dozen,” book: “Bells on Their Toes”book: “Bells on Their Toes”
�� Born 1863; died 1947Born 1863; died 1947
�� In 1903, created Ford Motor CompanyIn 1903, created Ford Motor Company
�� In 1913, first used moving assembly In 1913, first used moving assembly line to make Model Tline to make Model T
Henry FordHenry Ford
line to make Model Tline to make Model T
�� Unfinished product moved by conveyor Unfinished product moved by conveyor past work stationpast work station
�� Paid workers very well for 1911 Paid workers very well for 1911 ($5/day!)($5/day!)
W. Edwards DemingW. Edwards Deming
�� Born 1900; died 1993Born 1900; died 1993
�� Engineer and physicistEngineer and physicist
�� Credited with teaching Japan quality Credited with teaching Japan quality control methods in postcontrol methods in post--WW2WW2control methods in postcontrol methods in post--WW2WW2
�� Used statistics to analyze processUsed statistics to analyze process
�� His methods involve workers in His methods involve workers in decisionsdecisions
Eli WhitneyEli Whitney
��Born 1765; died 1825Born 1765; died 1825
��In 1798, received government In 1798, received government contract to make 10,000 musketscontract to make 10,000 muskets
��Showed that machine tools could Showed that machine tools could make standardized parts to exact make standardized parts to exact specificationsspecifications
�� Musket parts could be used in any Musket parts could be used in any musketmusket
5. Productivity Measurement5. Productivity Measurement
Productivity ChallengeProductivity Challenge
Productivity is the ratio of outputs (goods Productivity is the ratio of outputs (goods and services) divided by the inputs and services) divided by the inputs
(resources such as (resources such as laborlabor and capital)and capital)
The objective is to improve this The objective is to improve this measure of efficiencymeasure of efficiency, over time., over time.
Important Note!
‘Production’ is a measure of output only, and not a measure of efficiency
OM in Action: Improving Productivity at Starbucks – case date: 2005
(pp 15)
1. Pursuit of productivity improvements as “a game of saving seconds” from various operations at Starbuck’s outlets.
2. Three examples:
a. Stop requiring signatures on credit card purchases under $25. This sliced 5 seconds off the transaction time at the cash register.
b. Redesign of scoop for ice for beverage helped reduce the number
4
b. Redesign of scoop for ice for beverage helped reduce the number of scoops required to one, saving 14 seconds in the operation involving one minute.
c. New espresso machine, grinding and brewing coffee with push of a button, helped free the server to do other things, saving 12 seconds per espresso shot.
3. These improvements helped increase average yearly volume at the outlets from $740,000 by $200,000 in 6 years (i,e., by 27%, or, by 4.5% per year).
ProductivityProductivity
Productivity =Productivity =Units producedUnits produced
Input usedInput used
��Measure of process improvementMeasure of process improvement
�� Represents output relative to inputRepresents output relative to input
��Only through productivity increases Only through productivity increases can our standard of living improvecan our standard of living improve
Productivity
• Partial measures– output/(single input)
Productivity = Units produced/Input (a single resource) used
• Multi-factor measures
Inputs
Outputs =ty Productivi
• Multi-factor measures– output/(multiple inputs)
Productivity = Output/(Labur + Material + Energy + Capital + Miscellaneous),
where the individual inputs (the denominator) can be expressed in Rs. and summed.
• Total measure– output/(total inputs)
Productivity CalculationsProductivity Calculations–– Single Factor (or, ‘Partial’) ProductivitySingle Factor (or, ‘Partial’) Productivity
Labor Productivity =Labor Productivity =Units producedUnits produced
LaborLabor--hours usedhours used
1,0001,000= = 4 units/labor= = 4 units/labor--hourhour
1,0001,000
250250
Single factor or Partial Productivities do not measure the efficiency of use of the factor considered; it only measures how much the particular factor has been leveraged – which is contributed to by all the factors involved.
Example – Labor Productivity
10,000 Units Produced
Sold for $10/unit
500 labor hours What is the 500 labor hours
Labor rate: $9/hr
Cost of raw material: $5,000
Cost of purchased material: $25,000
What is the labor productivity?
10,000 units/500hrs = 20 units/hour ...
... or we can arrive at a unit-less figure
Example--Labor Productivity
(10,000 unit*$10/unit)/(500hrs*$9/hr) =
22.22
Can you think of any advantages or disadvantages of each approach?
Multi-Factor Productivity
OutputOutput
Labor + Material + Energy Labor + Material + Energy + Capital + Miscellaneous+ Capital + Miscellaneous
Productivity =Productivity =
� Also known as total factor productivity, when all � Also known as total factor productivity, when all the resources that cost a company are included in the calculation
� Inputs are expressed, in a common unit for all factors, often in dollars
� If Outputs are multiple products, they also need to be in common units, which can be in dollars.
Service ProductivityService Productivity
�� Typically labor intensiveTypically labor intensive
�� Frequently focused on unique Frequently focused on unique individual attributes or desiresindividual attributes or desires
��Often an intellectual task performed Often an intellectual task performed by professionalsby professionals
��Often difficult to mechanizeOften difficult to mechanize
��Often difficult to evaluate for qualityOften difficult to evaluate for quality
A Case Example: “Collins Titles”(Example 2 – pp 26)
5
(Example 2 – pp 26)
(Evaluation of productivity before and after introduction of
a proposed new computerized search system)
Collins Titles – Labor Productivity
Staff of 4 works 8 hrs/dayStaff of 4 works 8 hrs/day 8 titles/day8 titles/dayPayroll cost = $640/dayPayroll cost = $640/day Overhead = $400/dayOverhead = $400/day
With the Old System at Collins Titles:With the Old System at Collins Titles:
14 titles/day14 titles/day Overhead = $800/dayOverhead = $800/day
With the New System at Collins Titles:With the New System at Collins Titles:
5
8 titles/day8 titles/day
32 32 laborlabor--hrshrs
==New New laborlabor
productivityproductivity
= .25 titles/= .25 titles/laborlabor--hrhr
14 titles/day14 titles/day
32 32 laborlabor--hrshrs= .4375 titles/= .4375 titles/laborlabor--hrhr
The introduction of the new system lead to higher overhead, and the labor productivity has improved, but what about the multi-factor productivity?
Collins Titles – Multi-factor Productivity
Staff of 4 works 8 hrs/dayStaff of 4 works 8 hrs/day 8 titles/day8 titles/dayPayroll cost = $640/dayPayroll cost = $640/day Overhead = $400/dayOverhead = $400/day
With the Old System at Collins Titles:With the Old System at Collins Titles:
14 titles/day14 titles/day Overhead = $800/dayOverhead = $800/day
With the New System at Collins Titles:With the New System at Collins Titles:
5
8 titles/day8 titles/day
$640 + 400$640 + 400
14 titles/day14 titles/day
$640 + 800$640 + 800
==Old Old
multifactor multifactor productivityproductivity
==New New
multifactor multifactor productivityproductivity
= .0077 titles/dollar= .0077 titles/dollar
= .0097 titles/dollar= .0097 titles/dollar
The Multifactor Productivity has also improved.
Productivity Variables(as found to happen over a period of time
in the U.S. economy)
� Labor - contributes about 10% of the annual increase
� Capital - contributes about 32% of the annual increase
�Management - contributes about 52% of the annual increase
Applying Productivity Figures
You’ve just told your boss that the plant labor productivity is better than that of a plant in a related than that of a plant in a related business.
Why might he not be pleased with you (from this information)?
Item Checkpoints
Productivity(P)
Has the production output been lower lately? Can it be raised? Has the worker productivity been up to par?
Quality (Q) Has quality been declining? Has the defect rate risen? Can the yield be raised? Has there been an increase in customer complaints?
Cost (C) Have costs gone up? Have the units of materials and fuels
PQCDSM Checklist – Another form of evaluation of ‘Operations Management’ performance
risen?
Delivery (D) Have late delivery increased? Can the production lead times be shortened?
Safety (S) Have there been any safety problems? Has the number of accidents increased? Are people engaging in unsafe work practices?
Morale (M) Is morale up or down? Are there any interpersonal problems? Are people getting getting appropriate job assignments?
6. Ten Critical Decision Areas in 6. Ten Critical Decision Areas in Operations Management
Ten Critical DecisionsTen Critical Decisions
Ten Decision AreasTen Decision Areas Chapter (s)Chapter (s)
1.1. Service and product designService and product design 55
2.2. Quality managementQuality management 666 Supplement6 Supplement
3.3. Process and capacity Process and capacity 77design design 7 Supplement7 Supplement
4.4. LocationLocation 884.4. LocationLocation 88
5.5. Layout designLayout design 99
6.6. Human resources, Human resources, 1010job design job design 10 Supplement10 Supplement
7.7. SupplySupply--chain chain 1111managementmanagement 11 Supplement11 Supplement
8.8. Inventory managementInventory management 12, 14, 1612, 14, 16
9.9. SchedulingScheduling 13, 1513, 15
10.10.MaintenanceMaintenance 1717
The Critical DecisionsThe Critical Decisions
�Service and product design
� What good or service should we offer?
� How should we design these � How should we design these products and services?
�Quality management
� How do we define quality?
� Who is responsible for quality?
The Critical DecisionsThe Critical Decisions
�Process and capacity design
� What process and what capacity will these products require?
� What equipment and technology is necessary for these processes?What equipment and technology is necessary for these processes?
�Location
� Where should we put the facility?
� On what criteria should we base the location decision?
The Critical DecisionsThe Critical Decisions
�Layout design
� How should we arrange the facility and material flow?
� How large must the facility be to meet our plan?our plan?
�Human resources and job design
� How do we provide a reasonable work environment?
� How much can we expect our employees to produce?
The Critical DecisionsThe Critical Decisions
�Supply-chain management
� Should we make or buy this component?
� Who are our suppliers and who can integrate into our e-commerce program?
� Inventory, material requirements � Inventory, material requirements planning, and JIT
� How much inventory of each item should we have?
� When do we re-order?
The Critical DecisionsThe Critical Decisions
� Intermediate and short–term scheduling
� Are we better off keeping people on the payroll during slowdowns?
� Which jobs do we perform next?� Which jobs do we perform next?
�Maintenance
� Who is responsible for maintenance?
� When do we do maintenance?
Significant Events in OMSignificant Events in OM
Figure 1.3Figure 1.3
6. Case: The LA Motor Pool6. Case: The LA Motor Pool(pp 15 in the 8th Edition of the book)
OM in Action:
Increasing Productivity in the L.A. Motor Pool (p 15 in the 8th Edn.)
The newly elected mayor of Los Angeles faced many problems. One of them was a 21,000 vehicle motor pool with bloated expenses and poor vehicle availability. On any given day, as many as 30% of the city’s 900 trash trucks and 11% of the police department cars were in the repair shop. The problems included too many vehicles in some agencies, vehicle sabotage and abuse, missed repairs, vehicles never serviced. The L.A. motor pool and its $120 million-a-year maintenance operation needed improved productivity.
The mayor implemented seven simple operations management interventions: (1) individual drivers were turned into team players who helped complete each other’s routes; (2) trucks were assigned specific parking places so they could easily be routes; (2) trucks were assigned specific parking places so they could easily be located each morning; (3) tire pressure was checked on every truck every night to avoid flat tires during the working hours; (4) all trucks were emptied every night to avoid such dangers as left over cinders igniting a fire; (5) standard customer pickups were established (this alone saved the city $12 million per year); (6) the utility department installed a computerized fleet management system (to track vehicle use and to charge departments); and (7) mechanics were moved to night shifts so the vehicles were not in the shop during the day.
As a result of these management changes, the department cut its total fleet by 500 vehicles; its inventory of parts dropped 20%, freeing up $5.4 million dollars a year; and out-of-service garbage trucks dropped from that embarrassing 30% to 18%.
Source: The Wall Street Journal (July 6, 1995)
Increasing Productivity Increasing Productivity –– The LA Motor PoolThe LA Motor Pool(pp 15 in the 8(pp 15 in the 8thth Edition of the book)Edition of the book)
Before:Before:
�� Cost $120 million annuallyCost $120 million annually
�� 21,000 vehicles21,000 vehicles
�� 30% of the 900 trash trucks were in repair30% of the 900 trash trucks were in repair
�� 11% of police cars were in repair11% of police cars were in repair
Actions:Actions:Actions:Actions:
�� Created team assignmentsCreated team assignments
�� Assigned parking places for trucksAssigned parking places for trucks
�� Tires checked and trucks emptied each nightTires checked and trucks emptied each night
�� Standard customer pickups establishedStandard customer pickups established
�� Computerized fleet managementComputerized fleet management
�� Mechanics moved to night shiftMechanics moved to night shift
Increasing Productivity Increasing Productivity –– The LA Motor PoolThe LA Motor Pool(pp 15 in the 8(pp 15 in the 8thth Edition of the book)Edition of the book)
Before:Before:
�� Cost $120 million annuallyCost $120 million annually
�� 21,000 vehicles21,000 vehicles
�� 30% of the 900 trash trucks were in repair30% of the 900 trash trucks were in repair
�� 11% of police cars were in repair11% of police cars were in repair
Actions:Actions:
Results:
�Total fleet reduced by 500 vehicles
�Parts inventory dropped 20% reducing cost by $5.4 million annuallyActions:Actions:
�� Created team assignmentsCreated team assignments
�� Assigned parking places for trucksAssigned parking places for trucks
�� Tires checked and trucks emptied each nightTires checked and trucks emptied each night
�� Standard customer pickups establishedStandard customer pickups established
�� Computerized fleet managementComputerized fleet management
�� Mechanics moved to night shiftMechanics moved to night shift
cost by $5.4 million annually
�Standardized pickups reduced costs by $12 million annually
�Out of service garbage trucks dropped to 18%
Case: Productivity at Taco Bell
6
Case: Productivity at Taco Bell
Case: Case: Productivity at Taco Bell Productivity at Taco Bell (pp 20)(pp 20)
Improvements:Improvements:
1)1) Revised the menu Revised the menu
6
2)2) Designed meals for easy preparationDesigned meals for easy preparation
3)3) Shifted some preparation to suppliersShifted some preparation to suppliers
4)4) Efficient layout and automationEfficient layout and automation
5)5) Training and employee empowermentTraining and employee empowerment
Case: Case: Productivity at Taco BellProductivity at Taco Bell(pp 20)(pp 20)
Results:
�Preparation time cut to 8 seconds
�Management span of control increased from 5 to 30
�In-store labor cut by 15
6
�In-store labor cut by 15 hours/day
�Stores handle twice the volume with half the labor
�Fast-food low-cost leader
The Economic SystemThe Economic System
OutputsOutputs
Goods andservices
ProcessesProcesses
The U.S. economic system transforms inputs to outputs at about an annual 2.5% increase
in productivity per year. The productivity increase is the
result of a mix of capital (38%
InputsInputs
Labor,capital,
management
FeedbackFeedback looploop
result of a mix of capital (38% of 2.5%), labor (10% of
2.5%), and management (52% of 2.5%).
7. Exciting New Trends in 7. Exciting New Trends in Operations Management
New Challenges in OMNew Challenges in OM
�� Global focusGlobal focus
�� JustJust--inin--timetime
�� Supply chain Supply chain partneringpartnering
ToToFromFrom
�� Local or national focusLocal or national focus
�� Batch shipmentsBatch shipments
�� Low bid purchasingLow bid purchasingpartneringpartnering
�� Rapid product Rapid product development, development, alliancesalliances
�� Mass customizationMass customization
�� Empowered Empowered employees, teamsemployees, teams
�� Lengthy product Lengthy product developmentdevelopment
�� Standard productsStandard products
�� Job specializationJob specialization
New Trends in OMNew Trends in OM
Local or Local or national national focusfocus
LowLow--cost, reliable cost, reliable worldwide communication worldwide communication and transportation networksand transportation networks
Global focusGlobal focus
Batch (large) Batch (large) Short product life cycles Short product life cycles JustJust--inin--time time
PastPast CausesCauses FutureFuture
Batch (large) Batch (large) shipmentsshipments
Short product life cycles Short product life cycles and cost of capital put and cost of capital put pressure on reducing pressure on reducing inventoryinventory
JustJust--inin--time time shipmentsshipments
LowLow--bid bid purchasingpurchasing
Quality emphasis requires Quality emphasis requires that suppliers be engaged in that suppliers be engaged in product improvementproduct improvement
SupplySupply--chain chain partners, partners, Enterprise Enterprise Resource Resource Planning, Planning, ee--commercecommerce
New Trends in OMNew Trends in OM
Lengthy Lengthy product product developmentdevelopment
Shorter life cycles, Shorter life cycles, Internet, rapid international Internet, rapid international communication, computercommunication, computer--aided design, and aided design, and international collaborationinternational collaboration
Rapid product Rapid product development, development, alliances, alliances, collaborative collaborative designsdesigns
Standardized Standardized Affluence and worldwide Affluence and worldwide Mass Mass
PastPast CausesCauses FutureFuture
Standardized Standardized productsproducts
Affluence and worldwide Affluence and worldwide markets; increasingly markets; increasingly flexible production flexible production processesprocesses
Mass Mass customization customization with added with added emphasis on emphasis on qualityquality
Job Job specializationspecialization
Changing socioculture Changing socioculture milieu; increasingly a milieu; increasingly a knowledge and information knowledge and information societysociety
Empowered Empowered employees, employees, teams, and teams, and lean lean productionproduction
New Trends in OMNew Trends in OM
LowLow--cost cost focusfocus
Environmental issues, ISO Environmental issues, ISO 14000, increasing disposal 14000, increasing disposal costscosts
Environmentally Environmentally sensitive sensitive production, production, green green manufacturing, manufacturing, recycled recycled
PastPast CausesCauses FutureFuture
recycled recycled materials, materials, remanufacturingremanufacturing
Exciting New Trends in Operation Management
1. Global focus, particularly because of the rapid decline in
communication and transport costs
2. Just-in-Time performance
3. Supply chain partnering
4. Rapid product development
5. Mass customization
6. Empowered employees
7. Environmentally sensitive production
8. Ethics
8. Priorities for Operations 8. Priorities for Operations Management
Ethics and Social ResponsibilityEthics and Social Responsibility
Challenges facing Challenges facing operations managers:operations managers:
�� Developing safe quality productsDeveloping safe quality products�� Developing safe quality productsDeveloping safe quality products
�� Maintaining a clean environmentMaintaining a clean environment
�� Providing a safe workplaceProviding a safe workplace
�� Honoring community commitmentsHonoring community commitments
Priorities for Operations Management
1. Acquire Capabilities to Tolerate Product Proliferation
2. Relate the Operations System to Customer/Market2. Relate the Operations System to Customer/Market
3. Develop Systems and Procedures that Promote Learning
The End: The End: The End: The End: AAAAnnnnyyyy QQQQuuuueeeessssttttiiiioooonnnnssss????The End: The End: The End: The End: AAAAnnnnyyyy QQQQuuuueeeessssttttiiiioooonnnnssss????