operations management lec 01 - intro

8/18/2019 Operations Management Lec 01 - Intro

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Operations

Management

Operations and ProductivityChapter 1



Organizing to Produce Goods and

ervices



Organizing to Produce Goods andervices

♦Essential functions:♦ Marketing – generates demand

♦ Operations –creates the product

♦ Finance/accounting – tracks organizational

performance, pays bills, collects money



Organizational !unctions

♦Mar"eting♦ Gets customers

♦Operations♦ creates product or service

♦!inance#$ccounting♦ Obtains funds

♦ %rac"s money© 1995 Corel Corp.



Sample Organization Chart s



!unctions & 'an"

Operations!inance#

$ccountingMar"eting

Chec"

Clearing

%eller

cheduling

%ransactions

Processingecurity

Commercial 'an"© 1984-1994

T/Maker Co.



!unctions & $irline

Operations!inance#

$ccountingMar"eting

Ground

upport

!light

Operations

!acility

MaintenanceCatering

$irline© !"#$!!# %/Maker &o'



!unctions & Manufacturer

Operations!inance#

$ccountingMar"eting

Production

ControlManufacturing

(uality

ControlPurchasing

Manufacturing



Organizational Charts

&ommercial (ank

Operations

%eller )cheduling&heck &learing

%ransactionsprocessing

Facilities

design/layout*ault operations

Maintenance

)ecurity

Finance

+nestments)ecurity

-eal Estate

.ccounting

.uditing

Marketing

oans &ommercial

+ndustrial

Financial

0ersonal

Mortgage

%rust 1epartment



Organizational Charts.irline

Operations2round supporte3uipment

Maintenance

2round Operations Facility maintenance &atering

Flight Operations

&re4 scheduling Flying &ommunications 1ispatching

Management science

Finance 5

.ccounting

.ccounting0ayables

-eceiables

2eneral edger

Finance

&ash control+nternational e6change

rates

Marketing%raffic administration-eserations)chedules%ariffs 7pricing8)ales.dertising



Organizational ChartsManufacturing

OperationsFacilities: &onstruction:maintenance

0roduction 5 inentory control )cheduling: materials control

)upply$chain management

Manufacturing %ooling, fabrication,assembly

1esign 0roduct deelopment and design

1etailed product specifications+ndustrial engineering

Efficient use of machines, space, and personnel

0rocess analysis

1eelopment and installation of production tools ande3uipment

Finance 5 .ccounting1isbursements/credits

-eceiables

0ayables

2eneral ledgerFunds Management

Money market

+nternational e6change

&apital re3uirements

)tock issue (ond issues and recall

Marketing)alespromotions.dertising)alesMarketresearch



Why tudy OM?



Why tudy OM?

♦OM is one of three ma)or functions

*marketing, finance, and operations+ of any

organization,

♦We -ant *and need + to "no- ho- goods andservices are produced,

♦We -ant to understand -hat operations

managers do,♦OM is such a costly part of an organization,



What Operations Managers .o

Plan & Organize & taff & /ead & Control



%en Critical .ecisions

♦ ervice0 product design,,♦ (uality management

♦ Process0 capacity design,,

♦ /ocation ,

♦ /ayout design ,,

♦ 2uman resources0 )ob design,,

♦ upply&chain management

♦ Inventory management ,♦ cheduling

♦ Maintenance ,



%he Critical .ecisions

♦Quality management ♦ Who is responsible for 3uality?

♦ 2o- do -e define 3uality?

♦Service and product design♦ What product or service should -e offer?

♦ 2o- should -e design these products and

services?



%he Critical .ecisions & Continued

♦Process and capacity design♦ What processes -ill these products re3uire and in

-hat order?

♦ What e3uipment and technology is necessary forthese processes?

♦Location♦

Where should -e put the facility♦ On -hat criteria should -e base this location

decision?




♦Layout design♦ 2o- should -e arrange the facility?

♦ 2o- large a facility is re3uired?

♦Human resources and jo design♦ 2o- do -e provide a reasonable -or"

environment?

♦ 2o- much can -e e4pect our employees toproduce?




♦Supply chain management ♦ hould -e ma"e or buy this item?

♦ Who are our good suppliers and ho- many should

-e have?

♦ !nventory, material re"uirements planning,♦ 2o- much inventory of each item should -e have?

♦

When do -e re&order?




♦ !ntermediate, short term, and projectscheduling♦ Is subcontracting production a good idea?

♦ $re -e better off "eeping people on the payrollduring slo-do-ns?

♦#aintenance♦ Who is responsible for maintenance?♦ When do -e do maintenance?



Where are the OM 5obs



Where $re the OM 5obs?

♦%echnology#methods♦!acilities#space utilization♦trategic issues♦

6esponse time♦People#team development♦Customer service♦(uality♦Cost reduction♦ Inventory reduction♦Productivity improvement



%he 2eritage of Operations Management

ignificant 7vents in Operations



ignificant 7vents in OperationsManagement

%he 2eritage of



%he 2eritage ofOperations Management

.ivision of labor *$dam mith 1889 and Charles 'abbage 1:;<+

tandardized parts *Whitney 1:==+

cientific Management *%aylor 1::1+

Coordinated assembly line *!ord#orenson#$very 1>1+Gantt charts *Gantt 1>19+

Motion study *!ran" and /illian Gilbreth 1><<

(uality control *he-hart 1><@A .eming 1>;=+

Computer *$tanasoff 1>:+

CPM#P76% *.uPont 1>;8+

%he 2eritage of Operations



%he 2eritage of OperationsManagement & Continued

Material re3uirements planning *Orlic"y 1>9=+

Computer aided design *C$. 1>8=+

!le4ible manufacturing system *!M 1>8;+

'aldrige (uality $-ards *1>:=+

Computer integrated manufacturing *1>>=+

Globalization*1>><+

Internet *1>>;+



7li Whitney

♦ 'orn 189;A died 1:<;

♦ In 18>:0 received government

contract to ma"e 1=0===

mus"ets

♦ ho-ed that machine toolscould ma"e standardized parts

to e4act specifications♦ Mus"et parts could be used in any

mus"et© 1995 Corel Corp.



%aylorF Management hould %a"e



%aylorF Management hould %a"eMore 6esponsibility for

♦Matching employees to right )ob

♦Providing the proper training

♦Providing proper -or" methods and tools

♦7stablishing legitimate incentives for -or"

to be accomplished



♦ 'orn 1:9A died 1>@8♦ In 1>=0 created !ord

Motor Company

♦ In 1>10 first usedmoving assembly line

to ma"e Model %♦ Jnfinished product

moved by conveyorpast -or" station

♦ Paid -or"ers very -ell for 1>11 *K;#day+

2enry !ord

‘#ake them all

alikeD

© 1995 Corel

Corp.



W, 7d-ards .eming

♦ 'orn 1>==A died 1>>

♦ 7ngineer E physicist

♦ Credited -ith teaching 5apan

3uality control methods inpost&WW<

♦ Jsed statistics to analyze

process♦ 2is methods involve -or"ers

in decisions

i ifi i O



ignificant 7vents in OM

♦.ivision of labor *mith0 1889+

♦ tandardized parts *Whitney0 1:==+

♦ cientific management *%aylor0 1::1+♦Coordinated assembly line *!ord 1>1+

♦Gantt charts *Gantt0 1>19+

♦Motion study *the Gilbreths0 1><<+♦(uality control *he-hart0 1><@+

i ifi 7 C i d



ignificant 7vents & Continued

♦CPM#P76% *.upont0 1>;8+

♦ M6P *Orlic"y0 1>9=+

♦C$.♦ !le4ible manufacturing systems *!M+

♦Manufacturing automation protocol *M$P+

♦Computer integrated manufacturing *CIM+

L Ch ll i OM



Le- Challenges in OM

♦ /ocal or national focus

♦ 'atch shipments

♦ /o- bid purchasing

♦ /engthy product

development

♦ tandard products

♦ 5ob specialization

♦ Global focus♦ 5ust&in&time

♦ upply chain

partnering

♦ 6apid product

development0

alliances♦ Mass customization

♦ 7mpo-ered

employees0 teams

From %o



Operations in the ervice ector

Ch t i ti f G d



Characteristics of Goods

♦ %angible product

♦ Consistent product

definition

♦ Production usuallyseparate from

consumption

♦ Can be inventoried♦ /o- customer

interaction© 1995 Corel Corp.

Characteristics of er ice



Characteristics of ervice

♦ Intangible product

♦ Produced E consumed at

same time

♦ Often uni3ue♦ 2igh customer interaction

♦ Inconsistent product

definition♦ Often "no-ledge&based

♦ !re3uently dispersed© 1995 Corel Corp.

ervice 7conomies



ervice 7conomiesProportion of 7mployment in the ervice ector

0

10

20

30

40

50

60

70

80

Country

Goods ersus ervices



Goods ersus ervices

♦Can be resold

♦Can be inventoried

♦ome aspects of

3uality measurable

♦elling is distinctfrom production

♦6eselling unusual

♦.ifficult to

inventory♦(uality difficult to

measure

♦elling is part ofservice

Goods ervice

Goods ersus ervices &



Continued

♦Product istransportable

♦ite of facilityimportant for cost

♦Often easy to

automate♦6evenue generated

primarily fromtangible product

♦Provider0 not productis transportable

♦ite of facilityimportant forcustomer contact

♦Often difficult to

automate♦6evenue generated

primarily fromintangible service,

Goods ervice Goods ervice

operations management lec 01 - intro

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