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Introduction to Operation Management
Pertemuan 01
Mata kuliah : J0444 - Manajemen OperasionalTahun : 2010
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Multi Channel Learning Self Study Face to Face (On Class) eLearning “Binus Maya” GSLC (Off)
Mempersiapkan field trip Tugas :
Binus Maya (wajib dikerjakan) Lainnya (dosen bersangkutan)
Aturan keterlambatan masuk ruang kuliahTata Tertib di dalam kelas
Mekanisme PMekanisme Perkuliahanerkuliahan
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Learning Objectives
• Define the term operations management• Identify the three major functional areas of
organizations and describe how they interrelate• Compare and contrast service and manufacturing
operations• Describe the operations function and the nature of
the operations manager’s job• Identify and define productivity
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Operations Management
• Operations Management is:The management of systems or processes
that create goods and/or provide services
• Operations Management affects:– Companies’ ability to compete– Nation’s ability to compete internationally
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The Economic System Transforms Inputs to Outputs
The economic system transforms inputs to outputs at about an annual 2.5% increase in productivity (capital 38% of 2.5%), labor (10% of 2.5%), management (52% of 2.5%)
Land, Labor, Capital, Management
Goods and Services
Feedback loop
Inputs Process Outputs
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1-7
Automobile assembly, steel making
Home remodeling, retail sales
Automobile Repair, fast food
Goods-service ContinuumGoods-service Continuum
Computer repair, restaurant meal
Song writing, software development
Goods Service
Surgery, teaching
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Food ProcessorFood Processor
Inputs Processing Outputs
Raw Vegetables Cleaning Canned vegetables Metal Sheets Making cans
Water CuttingEnergy CookingLabor PackingBuilding LabelingEquipment
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Hospital ProcessHospital Process
Inputs Processing Outputs
Doctors, nurses Examination Healthy patientsHospital Surgery
Medical Supplies MonitoringEquipment MedicationLaboratories Therapy
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Manufacturing or Service?Manufacturing or Service?
Tangible Act
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Characteristics of Goods
Tangible product Consistent
product definition Production usually
separate from consumption
Can be inventoried
Low customer interaction
© 1995 Corel Corp.
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Characteristics of Service
Intangible product Produced & consumed at
same time Often unique High customer interaction Inconsistent product
definition Often knowledge-based Frequently dispersed
© 1995 Corel Corp.
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Key Differences1. Customer contact2. Uniformity of input3. Labor content of jobs4. Uniformity of output5. Measurement of productivity6. Production and delivery7. Quality assurance8. Amount of inventory9. Evaluation of work10. Ability to patent design
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Goods vs ServiceCharacteristic Goods Service
Customer contact Low High
Uniformity of input High Low
Labor content Low High
Uniformity of output High Low
Output Tangible Intangible
Measurement of productivity Easy Difficult
Opportunity to correct problems High Low
Inventory Much Little
Evaluation Easier Difficult
Patentable Usually Not usual
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• Operations Management includes:– Forecasting– Capacity planning– Scheduling– Managing inventories– Assuring quality– Motivating employees– Deciding where to locate facilities– Supply chain management
– And more . . .
Scope of Operations ManagementScope of Operations Management
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Types of OperationsTypes of Operations
Operations ExamplesGoods Producing Farming, mining, construction,
manufacturing, power generationStorage/Transportation Warehousing, trucking, mail
service, moving, taxis, buses,hotels, airlines
Exchange Retailing, wholesaling, banking,renting, leasing, library, loans
Entertainment Films, radio and television,concerts, recording
Communication Newspapers, radio and televisionnewscasts, telephone, satellites
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Key Decisions of Operations Managers
• WhatWhat resources/what amounts
• WhenNeeded/scheduled/ordered
• WhereWork to be done
• HowDesigned
• WhoTo do the work
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Organizational Functions
• Marketing– Gets customers
Operations creates product or service
Finance/Accounting Obtains funds Tracks money
© 1995 Corel Corp.
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Functions - Bank
Operations Finance/Accounting
Marketing
CheckClearing
TellerScheduling
Transactions
ProcessingSecurity
Commercial Bank
© 1984-1994 T/Maker Co.
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Functions - Manufacturer
Operations Finance/Accounting
Marketing
ProductionControl
Manufacturing QualityControl
Purchasing
Manufacturing
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Business Operations OverlapBusiness Operations Overlap
Operations
FinanceMarketing
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Operations InterfacesOperations Interfaces
Public Relations
Accounting
IndustrialEngineering
Operations
Maintenance
Personnel
Purchasing
Distribution
MIS
Legal
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Trends in Business
• Major trends– The Internet, e-commerce, e-business– Management technology– Globalization– Management of supply chains– Outsourcing– Agility– Ethical behavior
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Other Important Trends
• Ethical behavior• Operations strategy• Working with fewer resources• Revenue management• Process analysis and improvement• Increased regulation and product liability• Lean production
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Why Study OM?
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• OM is one of three major functions (marketing, finance, and operations) of any organization.
• We want (and need) 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.
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What Operations Managers Do
Plan - Organize - Staff - Lead - Control
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The Critical Decisions
• Quality management– Who is responsible for quality?– How do we define quality?
• Service and product design– What product or service should we offer?– How should we design these products and
services?
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The Critical Decisions
• Process and capacity design– What processes will these products require and in
what order?– What equipment and technology is necessary for
these processes?
• Location– Where should we put the facility– On what criteria should we base this location
decision?
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The Critical Decisions
• Layout design– How should we arrange the facility?– How large a facility is required?
• 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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The Critical Decisions
• Supply chain management– Should we make or buy this item?– Who are our good suppliers and how many
should we have?
• Inventory, material requirements planning, – How much inventory of each item should we
have?– When do we re-order?
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The Critical Decisions
• Intermediate, short term, and project scheduling– Is subcontracting production a good idea?– Are we better off keeping people on the
payroll during slowdowns?
• Maintenance– Who is responsible for maintenance?– When do we do maintenance?
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New Challenges in OM
• Local or national focus
• Batch shipments• Low bid
purchasing• Lengthy product
development• Standard products• Job specialization
Global focus Just-in-time
Supply chain partnering
Rapid product development, alliances
Mass customization Empowered
employees, teams
FromFrom To
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The Challenge of Social Responsibility
Increasing emphasis on business and social responsibility
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Where are the OM Jobs
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Competitiveness:Competitiveness:
How effectively an organization meets the wants and needs of customers relative to others that offer similar goods or services
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Businesses Compete Using Marketing
• Identifying consumer wants and needs• Pricing• Advertising and promotion
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Businesses Compete Using Operations
• Product and service design• Cost• Location• Quality• Quick response
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Businesses Compete Using Operations
• Flexibility• Inventory management• Supply chain management• Service and service quality• Managers and workers
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Productivity
• Productivity– A measure of the effective use of resources,
usually expressed as the ratio of output to input
• Productivity ratios are used for– Planning workforce requirements– Scheduling equipment– Financial analysis
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• Partial measures– output/(single input)
• Multi-factor measures– output/(multiple inputs)
• Total measure– output/(total inputs)
Productivity = Outputs
Inputs
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Productivity GrowthProductivity Growth
Current Period Productivity – Previous Period ProductivityPrevious Period Productivity
Productivity Growth =
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Measures of ProductivityMeasures of Productivity
Partial Output Output Output Output
measures Labor Machine Capital Energy
Multifactor Output Output
measures Labor + Machine Labor + Capital + Energy
Total Goods or Services Produced
measure All inputs used to produce them
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Example :
7040 Units Produced
Cost of labor of $1,000
Cost of materials: $520
Cost of overhead: $2000
What is the multifactor productivity?
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Solution :
MFP = OutputLabor + Materials + Overhead
MFP = (7040 units)$1000 + $520 + $2000
MFP = 2.0 units per dollar of input
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Measurement Problems
• Quality may change while the quantity of inputs and outputs remains constant
• External elements may cause an increase or decrease in productivity
• Precise units of measure may be lacking
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Productivity Variables
• Labor - contributes about 10% of the annual increase
• Capital - contributes about 32% of the annual increase
• Management - contributes about 52% of the annual increase
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Key Variables for Improved Labor Productivity
• Basic education appropriate for the labor force• Diet of the labor force• Social overhead that makes labor available• Maintaining and enhancing skills in the midst of
rapidly changing technology and knowledge
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Service Productivity
• Typically labor intensive• Frequently individually processed• Often an intellectual task performed by
professionals• Often difficult to mechanize• Often difficult to evaluate for quality
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The End