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Transcript of Advance Production Management
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Chapter 1Chapter 1
Production and Operations
Management (POM):An Introduction
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Overview Introduction
Historical Milestones in POM
Factors Affecting POM Today
Different Ways of Studying POM
Wrap-Up: What World-ClassProducers Do
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Introduction Production and operations management
(POM) is the management of anorganizations production system.
A production system takes inputs and
converts them into outputs. The conversion process is the predominant
activity of a production system.
The primary concern of an operationsmanager is the activities of the conversionprocess.
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Organizational Model
POMPOM
MarketingMarketing
MISMISEngineeringEngineering
HRMHRM
QAQA
AccountingAccounting
SalesSalesFinanceFinance
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Organization Chart-MajorElements
Facilities
Production &
Inventory ontrol
Quality Assurance
& Control
Procurement
Engineering Design
Industrial Engineering
Process Engineering
Operations
Disbursements
& Credits
Funds Management
Capital Requirements
Finance/Accounting
Sales Promotion
Advertising
Sales
Market Research
Marketing
Manufacturing Organization
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Entry-Level Jobs in POM Purchasing planner/buyer
Production (or operations) supervisor
Production (or operations)scheduler/controller
Production (or operations) analyst
Inventory analyst
Quality specialist
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Historical Milestones in
POM The Industrial Revolution
Post-Civil War Period
Scientific Management
Human Relations and Behaviorism
Operations Research
The Service Revolution
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The Industrial Revolution
The industrial revolution developed inEngland in the 1700s.
The steam engine, invented by James Watt
in 1764
, largely replaced human and waterpower for factories.
Adam Smiths The Wealth of Nations in1776 touted the economic benefits of thespecialization of labor.
Thus the late-1700s factories had not onlymachine power but also ways of planning
and controlling the tasks of workers.
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The Industrial Revolution The industrial revolution spread from England to
other European countries and to the UnitedSates.
In 1790 an American, Eli Whitney, developed the
concept of interchangeable parts. The first great industry in the U.S. was the
textile industry.
In the 1800s the development of the gasoline
engine and electricity further advanced therevolution.
By the mid-1800s, the old cottage system ofproduction had been replaced by the factorysystem
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Post-Civil War Period During the post-Civil War period great
expansion of production capacityoccurred.
By post-Civil War the following
developments set the stage for the greatproduction explosion of the 20thcentury:
increased capital and production capacity the expanded urban workforce
new Western U.S. markets
an effective national transportationsystem
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Scientific Management
In the 1920s, Ford Motor Companysoperation embodied the key elementsof scientific management: standardized product designs mass production
low manufacturing costs
mechanized assembly lines specialization of labor
interchangeable parts
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Human Relationsand Behavioralism
In the 1927-1932 period, researchers inthe Hawthorne Studies realized thathuman factors were affecting production.
Researchers and managers alike wererecognizing that psychological andsociological factors affected production.
From the work of behavioralists came agradual change in the way managersthought about and treated workers.
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The Service Revolution The creation of services organizations
accelerated sharply after World War II. Today, more than two-thirds of the U.S.
workforce is employed in services.
About two-thirds of U.S. GDP is from services. There is a huge trade surplus in services.
Investment per office worker now exceeds theinvestment per factory worker.
Thus there is a growing need for serviceoperations management.
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Today's Factors
Affecting POM Global Competition
U.S. Quality, Customer Service, and
Cost Challenges Computers and Advanced Production
Technology
Growth of U.S. Service Sector Scarcity of Production Resources
Issues of Social Responsibility
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Different Ways to Study
POM Production as a System
Production as an OrganizationFunction
Decision Making in POM
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Production as a System
InputsInputs OutputsOutputs
ConversionConversion
SubsystemSubsystem
Production SystemProduction System
ControlControl
SubsystemSubsystem
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Conversion Subsystem Physical (Manufacturing)
Locational Services (Transportation)
Exchange Services (Retailing)
Storage Services (Warehousing)
Other Private Services (Insurance) Government Services (Federal,State, Local)
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Outputs of a Production
System Direct
Products
Services Indirect
Waste
Pollution Technological Advances
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Strategic Decisions
These decisions are of strategicimportance and have long-term
significance for the organization. Examples include deciding:
the design for a new products
production process where to locate a new factory
whether to launch a new-productdevelopment plan
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Operating Decisions These decisions are necessary if the
ongoing production of goods andservices is to satisfy market demandsand provide profits.
Examples include deciding: how much finished-goods inventory to
carry
the amount of overtime to use next week the details for purchasing raw materialnext month
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Control Decisions
These decisions concern the day-to-day activities of workers, quality of
products and services, productionand overhead costs, and machinemaintenance.
Examples include deciding: labor cost standards for a new product frequency of preventive maintenance
new quality control acceptance criteria
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What Controls the
Operations System? Information about the outputs, the
conversions, and the inputs is fed
back to management. This information is matched with
managements expectations
When there is a difference,management must take correctiveaction to maintain control of thesystem
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Wrap-Up: World Class
Practice POM important in any organization
Global competition forces rapid
evolution of POM Decision based framework focus of
course
Strategic, Operating, and Control
