Thursday afternoon

Operations Management, HR, and MIS

PRODUCTION and PRODUCTION MANAGEMENT

• Production -- The creation of goods using land, labor, capital, entrepreneurship and knowledge (the factors of production).

• Production Management -- All the activities managers do to help firms create goods.

DEVELOPMENTS MAKING U.S. COMPANIES MORE COMPETITIVE

1. Computer-aided design and manufacturing

2. Flexible manufacturing

3. Lean manufacturing

4. Mass customization

CAD/CAM

• Computer-Aided Design (CAD) -- The use of computers in the design of products.

• Computer-Aided Manufacturing (CAM) -- The use of computers in the manufacturing of products.

Flexible Manufacturing

• Flexible Manufacturing -- Designing machines to do multiple tasks so they can produce a variety of products.

• Sample videos – FMS/CNC (first 70 seconds)

Lean Manufacturing

• Lean Manufacturing -- Using less of everything than in mass production.

• Compared to others, lean companies:• Take half the human effort.

• Have half the defects in finished products.

• Require one-third the engineering effort.

• Use half the floor space.

• Carry 90% less inventory.

Mass Customization

• Mass Customization -- Tailoring products to meet the needs of a large number of individual customers.

• More manufacturers are learning to customize.

• Mass customization exists in the service sector too.

• Nike ID (1:30)

OPERATIONS MANAGEMENT• Operations Management -- A specialized area in

management that converts or transforms resources into goods and services. Broader than production management, which usually refers to just manufacturing operations.

• Operations management includes:• Inventory management• Quality control• Production scheduling• Follow-up services

Operations Management• Operations management planning helps solve

problems like:

- Facility location

- Facility

- Materials requirement planning

- Purchasing

- Inventory control

- Quality control

OM Tools

• PERT• Gantt Charts

PERT

• Program Evaluation and Review Technique (PERT) -- A method for analyzing the tasks involved in completing a given project and estimating the time needed.

Steps Involved in PERT

1. Analyzing and sequencing tasks

2. Estimating the time needed to complete each task

3. Drawing a PERT network illustrating the first two steps

4. Identifying the critical path

• Critical Path -- The sequence of tasks that takes the longest time to complete. Any delay here delays the overall completion time…

PERT Chart for Music Video

Gantt Charts

• Gantt Chart – A bar graph that shows what projects are being worked on and how much has been completed.

GANTT CHART for a DOLL FACTORY (at end of week 3)

MRP and ERP

• Materials Requirement Planning (MRP) -- A computer-based operations management system that uses sales forecasts to make sure parts and materials are available when needed.

• Enterprise Resource Planning (ERP) -- A newer version of MRP, combines computerized functions into a single integrated software program using a single database. (includes operational and financial info)

Purchasing

• Purchasing -- The function that searches for high-quality material resources, finds the best suppliers and negotiates the best price for goods and services.

Inventory Management

• Just-in-Time (JIT) Inventory Control -- The production process in which a minimum of inventory is kept and parts, supplies and other needs are delivered just in time to go on the assembly line.

• To work effectively, the process requires excellent coordination with suppliers.

Quality Control

• Quality -- Consistently producing what the customer wants while reducing errors before and after delivery.

• Six Sigma Quality -- A quality measure that allows only 3.4 defects per million opportunities.

Quality of Performance, aka Quality of Design

• The quality of the materials, features, skill level, etc. that goes into a product.

• There is a direct relationship between costs and quality of performance.

• Example – McDonald’s vs. Le Bec Fin

Quality of Conformance

• When the overwhelming majority of products produced conform to design specifications and are free from defects.

• There is an indirect (inverse) relationship between costs and quality of conformance.

• Example – when you go to Chipotle, whether in Ardmore or Santa Barbara, you are confident that your vegetarian burrito will be the same in both places.

Costs of Quality

• Measures the costs associated poor quality; the goal is to minimize the total costs of quality as a percentage of sales

• There are four categories of quality costs:– Prevention– Appraisal– Internal failure– External failure

• There are tradeoffs between these categories

MANUFACTURING in the U.S.• From 2001 to 2009, manufacturing output in the

U.S. rose 4% each year.

• The U.S. is still the world’s leading manufacturer.

• Almost 25% of all goods produced each year come from the U.S.

Human Resource Management

HRM

• Human Resource Management -- The process of determining human resource needs and then recruiting, selecting, developing, motivating, evaluating, compensating and scheduling employees to achieve organizational goals.

• HRM’s role has grown because:1. Increased recognition of employees as a resource.

2. Changes in law that rewrote old workplace practices.

Minding the Law in HR

• Employers must know the law and act accordingly.

• Legislation affects all areas of HRM.

• Court cases highlight that sometimes it’s proper to go beyond providing equal rights.

• Changes in law and legislation occur regularly.

The HR Planning Process

• Preparing a human resource inventory of employees.

• Preparing a job analysis.

• Assessing future human resource demand.

• Assessing future labor supply.

• Establishing a strategic plan.

HR Activities• Recruitment -- The set of activities for obtaining the

right number of qualified people at the right time. • Selection -- The process of gathering information and

deciding who should be hired, under legal guidelines, to fit the needs of the organization and individuals.

• Training (short-term skills) and Development (long-term abilities)-- All attempts to improve productivity by increasing an employee’s ability to perform.

• Performance Appraisal -- An evaluation that measures employee performance against established standards in order to make decisions about promotions, compensation, training or termination.

Developing Effective Managers• Management Development -- The process of training

and educating employees to become good managers and tracking the progress of their skills over time.

• Management training includes:- On-the-job coaching

- Understudy positions

- Job rotation

- Off-the-job courses and training

- GE’s FMP program

Using Networks and Mentors• Networking -- Establishing and maintaining contacts with key

managers in and out of the organization and using those contacts to develop relationships.

• Mentors -- Managers who supervise, coach and guide selected lower-level employees by acting as corporate sponsors.

• Networking and mentoring go beyond the work environment.

• When Jack Welch (former chairman of GE) gave a guest lecture at MIT's Sloan School of Management in 2005, someone in the crowd asked, "What should we be learning in business school?" Welch's reply: "Just concentrate on networking. Everything else you need to know, you can learn on the job." - The trouble with MBAs - www.fortune.com, April 23, 2007

Six Steps of Performance Appraisal

1. Establishing performance standards that are understandable, measurable and reasonable.

2. Clearly communicating those standards.

3. Evaluating performance against the standards.

4. Discussing the results with employees.

5. Taking corrective action.

6. Using the results to make decisions.

Compensation Programs• A managed and competitive compensation program

helps:- Attract the kinds of employees the business needs.

- Build employee incentive to work efficiently and productively.

- Keep valued employees from going to competitors or starting their own firm.

- Maintain a competitive market position by keeping costs low due to high productivity from a satisfied workforce.

- Provide employee financial security through wages and fringe benefits.

Fringe Benefits

• Fringe Benefits -- Sick leave, vacation pay, pension and health plans that provide additional compensation to employees beyond base wages.

• In 1929, Fringe benefits accounted for less than 2% of payroll cost. Today it’s about 30%.

• Healthcare has been the most significant increase in fringe benefit cost.

LET’S GO to the BEACH!Average Vacation Days by Country

Management Information Systems• Focuses on the Design & Development of Systems; How to

Link Users to Application Software & Other Technologies (like Multimedia); How to Solve Business Problems With Computing & Communications Technology …

MIS• Is “Applied Computer Science”

• Bridges the Gap Between Theory & Practice

• Focuses on the Users of Technology

• Is Close to Business Models & Processes

• Enables New Business Models – Like eBusiness

• Assumes Technology + Management …

Business Processes

• Managers now think in terms of business process - a collection of activities that takes one or more kinds of input and creates an output that is of value to the customer

• Take the customer’s perspective

ERP Systems

• Software to allow all business areas to be integrated -- finance, sales, production, etc.

• Interactive and real-time processing• Users interact with computer screen, not printed

data• Major advantage: access to common data across

business functions -- eliminated redundant data and communications lags

• SAP is a leader in ERP software

Contemporary Issues in Technology

• HR managers need to recruit workers who are tech savvy and can train others.

• Technology makes telecommuting available to almost all companies.

• Information Overload

• Is Technology Good or Bad? Yes.

New HOW DO YOU ORGANIZE DATA GLUT?

• A data warehouse stores data on a single subject for a firm over a specific period. eBay

• Petabyte or about 6500 Villanova student laptops

• Data mining is a technique for looking for hidden patterns and previously unknown relationships among the data. Beer and diapers

New Beyond the Internet

• Intranet -- A companywide network closed to public access that uses Internet-type technology. Novasis

• Extranet -- A semiprivate network that lets more than one company access the same information or allows people on different servers to collaborate. May use leased lines – expensive…

New Computer Networks

• Network Computing System -- Computer systems that allow personal computers to obtain needed information from databases on a server.

• Networks connect people to people and data to save time and money, provide links and let employees see complete information.

• Thin Client

Cloud Computing

• Cloud Computing -- A form of virtualization which stores a company’s data and applications at off-site data centers accessed over the Internet (the cloud). Google Docs, MozyBusiness Week

Social Networking and Web 2.0• Millions have developed online profiles on social networking

sites like Facebook and MySpace??.

• Web 2.0 -- The set of tools that allow people to build social and business connections, share information and collaborate on projects online.

• YouTube, Facebook, Wikipedia, and Twitter are among the largest Web 2.0 companies.

• Tomorrow – It’s Friday!

• Steve Jobs graduation speech