operations management lec 1

7/28/2019 Operations Management Lec 1

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Operations Management

ZUBAIR ANWAR

SPRING 2013

LECTURE 1FEB 06, 2013


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What Is Operations Management?

Operations management (OM) is the set of activities that

creates value in the form of goods and services by transforming

inputs into outputs

Zubair Anwar UET - IBM


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Operations as a Transformation Process

INPUT

Material

Machines

Labor

Management

Capital

TRANSFORMATION

PROCESS

OUTPUT

Goods

Services

Feedback & Requirements



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Transformation Process

Physical: as in manufacturing operations

Locational: as in transportation or warehouse operations

Exchange: as in retail operations

Physiological: as in health care

Psychological: as in entertainment

Informational: as in communication



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Copyright 2011 John Wiley & Sons, Inc.Copyright 2011 John Wiley & Sons, Inc.

Operations Function

Operations

Marketing

Finance and

Accounting

Human Resources

Outside Suppliers


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Evolution of Operations Management

Craft production

process of handcrafting products or services for individual customers

Division of labor

dividing a job into a series of small tasks each performed by a

different worker

Interchangeable parts

standardization of parts initially as replacement parts; enabled massproduction



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Scientific management

systematic analysis of work methods

Mass production

high-volume production of a standardized product for a mass

market

Lean production

adaptation of mass production that prizes quality and flexibility



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Historical Events in Operations Management

Era Events/Concepts Dates Originator

Industrial

Revolution

Steam engine 1769 James Watt

Division of labor 1776 Adam Smith

Interchangeable parts 1790 Eli Whitney

Scientific

Management

Principles of scientificmanagement

1911 Frederick W.Taylor

Time and motion studies 1911Frank and Lillian

Gilbreth

Activity scheduling chart 1912 Henry Gantt

Moving assembly line 1913 Henry Ford



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Human

Relations

Hawthorne studies 1930 Elton Mayo

Motivation theories

1940s Abraham Maslow

1950s Frederick Herzberg

1960s Douglas McGregor

Operations

Research

Linear programming 1947 George Dantzig

Digital computer 1951 Remington Rand

Simulation, waiting

line theory, decision

theory, PERT/CPM

1950sOperations research

groups

MRP, EDI, EFT, CIM1960s,

1970s

Joseph Orlicky, IBM

and others




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QualityRevolution

JIT (just-in-time) 1970s Taiichi Ohno (Toyota)

TQM (total quality

management)1980s

W. Edwards Deming,

Joseph Juran

Strategy andoperations

1980s Wickham Skinner,Robert Hayes

Reengineering 1990sMichael Hammer,

James Champy

Six Sigma 1990s GE, Motorola




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Internet

Revolution

Internet, WWW, ERP, supply

chain management

1990s ARPANET, Tim

Berners-Lee SAP,

i2 Technologies,

ORACLE, Dell

E-commerce 2000s Amazon, Yahoo,

eBay, Google, and

others

Globalization WTO, European Union,

Global supply chains,

Outsourcing, Service

Science

1990s

2000s

China, India,

emerging economies




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Green

Revolution

Global warming, An

Inconvenient Truth, Kyoto

Today Numerous scientists,

statesmen and

governments




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Commercial BankOrganizational Charts

Operations

Teller SchedulingCheck Clearing

Collection

Transactionprocessing

Facilitiesdesign/layout

Vault operations

Maintenance

Security

Finance

InvestmentsSecurity

Real estate

Accounting

Auditing

Marketing

LoansCommercial

Industrial

Financial

Personal

Mortgage

Trust Department



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Operations

Ground supportequipment

Maintenance

Ground Operations

Facilitymaintenance

Catering

Flight OperationsCrew schedulingFlyingCommunicationsDispatching

Management science

Finance/ accounting

Accounting

PayablesReceivablesGeneral Ledger

Finance

Cash controlInternational

exchange

Marketing

Trafficadministration

ReservationsSchedulesTariffs (pricing)

Sales

Advertising

Airline Organizational Charts



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Marketing

Salespromotion

Advertising

Sales

Marketresearch

Operations

FacilitiesConstruction; maintenance

Production and inventory controlScheduling; materials control

Quality assurance and controlSupply chain management

ManufacturingTooling; fabrication; assembly

DesignProduct development and designDetailed product specifications

Industrial engineeringEfficient use of machines, space,

and personnel

Process analysisDevelopment and installation of

production tools and equipment

Finance/ accounting

Disbursements/credits

ReceivablesPayablesGeneral ledger

Funds Management

Money marketInternational

exchange

Capital requirements

Stock issueBond issue

and recall

Manufacturing Organizational Charts



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OM is one of major functions of any organization

We want to know how goods and services are produced

We want to understand what operations managers do

OM is such a costly part of an organization

Operations Management (OM)



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Planning

Organizing

Staffing

Leading

Controlling

What Operations Managers Do


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Design of goods and services

Managing quality

Process and capacity design

Location strategy

Layout strategy

Human resources and job design

Supply chain management

Inventory management

Scheduling

Maintenance

Critical Decision Areas



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Design of goods and services

What good or service should we offer?

How should we design these products and services?

Managing quality

How do we define quality?

Who is responsible for quality?




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Process and capacity design

What process and what capacity will these products require?

What equipment and technology is necessary for these

processes?

Location strategy

Where should we put the facility?

On what criteria should we base the location decision?




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Layout strategy

How should we arrange the facility?

How large must the facility be to meet our plan?

Human resources and job design

How do we provide a reasonable work environment?

How much can we expect our employees to produce?




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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 planning, and JIT

How much inventory of each item should we have?

When do we re-order?




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Intermediate and shortterm scheduling

Are we better off keeping people on the payroll during

slowdowns?

Which jobs do we perform next?

Maintenance

Who is responsible for maintenance?

When do we do maintenance?




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Technology/methods

Facilities/space utilization

Strategic issues

Response time

People/team development

Customer service

Quality

Cost reduction

Inventory reduction

Productivity improvement

What are OM Jobs?



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Positioning the Firm

Cost

Speed

Quality

Flexibility



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Waste elimination

relentlessly pursuing the removal of all waste

Examination of cost structure

looking at the entire cost structure for reduction potential

Lean production

providing low costs through disciplined operations

Positioning the Firm Cost



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Fast moves, Fast adaptations, Tight linkages Internet

Customers expect immediate responses

Service organizations

always competed on speed (McDonalds, LensCrafters, and Federal

Express)

Manufacturers

time-based competition: build-to-order production and efficient supply

chains

Fashion industry

two-week design-to-rack lead time of Spanish retailer, Zara

Positioning the Firm Speed



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Minimizing defect rates or conforming to design specifications

Ritz-Carlton - one customer at a time

Service system designed to move heaven and earth to satisfy

customer

Employees empowered to satisfy a guests wish

Teams set objectives and devise quality action plans

Each hotel has a quality leader

Positioning the Firm Quality



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Ability to adjust to changes in product mix, production volume, or

design

Mass customization: the mass production of customized parts

Positioning the Firm Flexibility



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Policy Deployment

Policy deployment

translates corporate strategy into measurable objectives

Hoshins

action plans generated from the policy deployment process



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Policy Deployment

Zubair Anwar UET - IBM Zubair Anwar UET - IBM


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Balanced Scorecard

Balanced scorecard

measuring more than financial performance

1. finances

2. customers

3. processes

4. learning and growing

Key performance indicators

set of measures to help managers evaluate performance in critical

areas



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Copyright 2011 John Wiley & Sons, Inc.Copyright 2011 John Wiley & Sons, Inc.

Operations Strategy

Products Services Process

and

Technology

Capacity Human

Resources

Quality

Facilities Sourcing Operating

Systems



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Global focus

Just-in-time

Supply chain partnering

Rapid product

development, alliances

Mass customization

Empowered employees,

teams

ToFrom

Local or national focus

Batch shipments

Low bid purchasing

Lengthy productdevelopment

Standard products

Job specialization

New Challenges in OM



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Organizing to Produce Goods and Services

Essential functions:

Marketing generates demand

Production/operations creates the product

Finance/accounting tracks how well the organization is doing,

pays bills, collects the money



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Tangible product

Consistent product definition

Production usually separate

from consumption

Can be inventoried

Low customer interaction

Characteristics of Goods



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Intangible product

Produced and consumed at same time

Often unique

High customer interaction

Inconsistent product definition

Often knowledge-based

Frequently dispersed

Characteristics of Service



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Developing and producing safe, quality products

Maintaining a clean environment

Providing a safe workplace

Honouring community commitments

Ethics and Social Responsibility



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THANK YOU

Z b i A UET IBM

operations management lec 1

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