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Operations Management: Managing Vital

Operations and Processes

Chapter Fourteen

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Operations Management

Operations Management

The management of any aspect of the production system that transforms inputs into finished goods and services

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Operations Management

Production System

The system that an organization uses to acquire inputs, convert inputs into outputs, and dispose of the outputs

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Operations Management

Operations Manager

Manager who is responsible for managing an organization’s production system and for determining where operating improvements might be made

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Question?

What is action taken to meet the demands and needs of customers?

A. Quality

B. Efficiency

C. Responsiveness to customers

D. Effectiveness

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Operations Management

Quality goods and services that are reliable, dependable,

or psychologically satisfying

Efficiency amount of inputs required to produce a given

output

Responsiveness to customers action taken to meet the demands and needs of

customers

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The Purpose of Operations Management

Figure 14.1

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Improving Responsiveness to Customers

Without customers, organizations would cease to exist.

Non-profit and for-profit firms all have customers.

Managers need to identify who the customer is and their wants or needs.

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What do customers want?

Most customers prefer:

A lower price to a higher price

High-quality products to low-quality products

Quick service to slow service

Many features over few features.

Products that are customized or tailored to their specific needs

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Designing Production Systems to BeResponsive to Customers

The attributes of an organization’s outputs—their quality, cost, and features—are determined by the organization’s production system

Since the ability of an organization to satisfy the demands of its customers derives from its production system, managers need to devote considerable attention to constantly improving production systems

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Customer Relationship Management

Customer relationship management (CRM)

technique that uses IT to develop an ongoing relationship with customers to maximize the value an organization can deliver to them over time

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Improving Quality

A firm that provides higher quality than others at the same price is more responsive to customers.

Higher quality can also lead to better efficiency through lower waste levels and operating costs.

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Impact of Increased Quality on Organizational Performance

Figure 14.2

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Improving Efficiency

The fewer the inputs required to produce a given output, the higher the efficiency of a production system

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Improving Efficiency

Total factor productivity

looks at how well an organization utilizes all of its resources—such as labor, capital, materials, or energy—to produce its outputs

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Improving Efficiency

Partial productivity

specific measure of productivity that measures the efficiency of an individual unit.

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Facilities Layout, Flexible Manufacturing, and Efficiency

Facilities Layout

The operations management technique whose goal is to design the machine-worker interface to increase production system efficiency.

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Facilities Layout, Flexible Manufacturing, and Efficiency

Flexible Manufacturing

Operations management techniques that attempt to reduce the setup costs associated with a production system.

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Figure 14.3

Three Facilities Layouts

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Discussion Question

Which facilities layout is best?

A. Product layout

B. Process Layout

C. Fixed-Position Layout

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Facilities Layout

Product layout

Machines are organized so that each operation is performed at work stations arranged in a fixed sequence.

Example: mass production systems where workers are stationary and a belt moves work to them.

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Facilities Layout

Process Layout

Self contained work stations not organized in a fixed sequence.

Provides flexibility in making a wide variety of products tailored to customers.

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Facilities Layout

Fixed-Position Layout

The product stays in a fixed spot and components produced at remote stations are brought the product for to final assembly.

Large jet aircraft assembly uses this type of layout.

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Changing a Facilities Layout

Figure 14.4

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Flexible Manufacturing

Flexible manufacturing aims to reduce the time required to set up production equipment.

Redesigning the manufacturing process so that production equipment geared for manufacturing one product can be quickly replaced with equipment geared to make another product can dramatically reduce setup times and costs.

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Flexible Manufacturing

Flexible manufacturing increases a company’s ability to be responsive to its customers.

Increasingly, organizations are experimenting with new designs for production systems that not only allow workers to be more productive but also make the work process more flexible, thus reducing setup costs

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Just-in-Time Inventory and Efficiency

Inventory

the stock of raw materials, inputs, and component parts that an organization has on hand at a particular time

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Just-in-Time Inventory and Efficiency

Just-in-Time (JIT) Inventory

A system in which parts or supplies arrive at an organization when they are needed, not before

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Just-in-Time Inventory and Efficiency

One drawback of JIT systems is that they leave an organization without a buffer stock of inventory.

Although buffer stocks of inventory can be expensive to store, they can help an organization when it is affected by shortages of inputs brought about by a disruption among suppliers

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Self-Managed Work Teams

The use of empowered self-managed teams can increase productivity and efficiency.

Cost savings arise from eliminating supervisors and creating a flatter organizational hierarchy, which further increases efficiency.

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Question

What is the rethinking and redesign of the business process to achieve dramatic improvement in critical measures of performance?A. Corporate efficiency

B. Process redesign

C. Process re-qualification

D. Process reengineering

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Process Reengineering and Efficiency

Process Reengineering

The fundamental rethinking and radical redesign of the business process to achieve dramatic improvement in critical measures of performance such as cost, quality, service, and speed

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Process Reengineering and Efficiency

Process reengineering can boost efficiency because it eliminates the time devoted to activities that do not add value.

Top management’s role is to encourage efficiency improvements by emphasizing the need for continuous improvement or reengineering.