Operations and Competitiveness

43
Copyright 2006 John Wiley & Sons, Copyright 2006 John Wiley & Sons, Inc. Inc. Beni Asllani Beni Asllani University of Tennessee at University of Tennessee at Chattanooga Chattanooga Operations and Competitiveness Operations and Competitiveness Operations Management - 5 th Edition Chapter 1 Chapter 1 Roberta Russell & Bernard W. Taylor, III Roberta Russell & Bernard W. Taylor, III

description

operations analysis

Transcript of Operations and Competitiveness

  • Operations and CompetitivenessBeni AsllaniUniversity of Tennessee at ChattanoogaOperations Management - 5th EditionChapter 1Roberta Russell & Bernard W. Taylor, III

    Copyright 2006 John Wiley & Sons, Inc.

  • Lecture OutlineWhat Do Operations Managers Do?Operations FunctionEvolution of Operations ManagementOperations Management and EbusinessGlobalization and CompetitivenessPrimary Topics in Operations ManagementLearning Objectives for this Course

    Copyright 2006 John Wiley & Sons, Inc.

  • What Do Operations Managers Do?What is Operations?

    a function or system that transforms inputs into outputs of greater valueWhat is a Transformation Process?

    a series of activities along a value chain extending from supplier to customer.activities that do not add value are superfluous and should be eliminatedWhat is Operations Management?

    design, operation, and improvement of productive systems

    Copyright 2006 John Wiley & Sons, Inc.

  • .

    Copyright 2006 John Wiley & Sons, Inc.

  • Transformation ProcessPhysical: as in manufacturing operationsLocational: as in transportation operationsExchange: as in retail operationsPhysiological: as in health carePsychological : as in entertainmentInformational: as in communication

    Copyright 2006 John Wiley & Sons, Inc.

  • Operations as a Transformation Process

    Feedback

    Copyright 2006 John Wiley & Sons, Inc.

  • Operations FunctionOperationsMarketingFinance and AccountingHuman ResourcesOutside Suppliers

    Copyright 2006 John Wiley & Sons, Inc.

  • How is Operations Relevant to my Major?Accounting

    Information Technology

    Management

    As an auditor you must understand the fundamentals of operations management.IT is a tool, and theres no better place to apply it than in operations. We use so many things you learn in an operations classscheduling, lean production, theory of constraints, and tons of quality tools.

    Copyright 2006 John Wiley & Sons, Inc.

  • How is Operations Relevant to my Major?Economics

    Marketing

    Finance

    Its all about processes. I live by flowcharts and Pareto analysis.How can you do a good job marketing a product if youre unsure of its quality or delivery status?Most of our capital budgeting requests are from operations, and most of our cost savings, too.

    Copyright 2006 John Wiley & Sons, Inc.

  • Evolution of Operations ManagementCraft production

    process of handcrafting products or services for individual customersDivision of labor

    dividing a job into a series of small tasks each performed by a different workerInterchangeable parts

    standardization of parts initially as replacement parts; enabled mass production

    Copyright 2006 John Wiley & Sons, Inc.

  • handcrafting

    Copyright 2006 John Wiley & Sons, Inc.

  • Evolution of Operations Management (cont.)Scientific management

    systematic analysis of work methodsMass production

    high-volume production of a standardized product for a mass marketLean production

    adaptation of mass production that prizes quality and flexibility

    Copyright 2006 John Wiley & Sons, Inc.

  • Copyright 2006 John Wiley & Sons, Inc.

  • Historical Events in Operations Management

    EraEvents/ConceptsDatesOriginatorIndustrialRevolutionSteam engine1769James WattDivision of labor1776Adam SmithInterchangeable parts1790Eli WhitneyScientific ManagementPrinciples of scientificmanagement1911Frederick W. TaylorTime and motion studies1911Frank and Lillian GilbrethActivity scheduling chart1912Henry GanttMoving assembly line1913Henry Ford

    Copyright 2006 John Wiley & Sons, Inc.

  • Historical Events in Operations Management (cont.)

    EraEvents/ConceptsDatesOriginatorHuman RelationsHawthorne studies1930Elton MayoMotivation theories1940sAbraham Maslow1950sFrederick Herzberg1960sDouglas McGregorOperations ResearchLinear programming1947George DantzigDigital computer1951Remington RandSimulation, waitingline theory, decisiontheory, PERT/CPM1950sOperations research groupsMRP, EDI, EFT, CIM1960s, 1970sJoseph Orlicky, IBMand others

    Copyright 2006 John Wiley & Sons, Inc.

  • Historical Events in Operations Management (cont.)

    EraEvents/ConceptsDatesOriginatorQualityRevolutionJIT (just-in-time)1970sTaiichi Ohno (Toyota)TQM (total qualitymanagement)1980sW. Edwards Deming, Joseph JuranStrategy andoperations1990sWickham Skinner, Robert HayesBusiness processreengineering1990sMichael Hammer,James Champy

    Copyright 2006 John Wiley & Sons, Inc.

  • Historical Events in Operations Management (cont.)

    EraEvents/ConceptsDatesOriginatorGlobalizationWTO, European Union, and other trade agreements1990s2000sNumerous countriesand companiesInternet RevolutionInternet, WWW, ERP, supply chain management1990sARPANET, TimBerners-Lee SAP,i2 Technologies,ORACLE,PeopleSoftE-commerce2000sAmazon, Yahoo, eBay, and others

    Copyright 2006 John Wiley & Sons, Inc.

  • Continuum from Goods to Services

    Copyright 2006 John Wiley & Sons, Inc.

  • Operations Management and E-Business

    Copyright 2006 John Wiley & Sons, Inc.

  • An Integrated Value ChainValue chain: set of activities that create and deliver products to customer

    Copyright 2006 John Wiley & Sons, Inc.

  • Impact of E-Business on Operations ManagementComparison shopping by customers

    Direct contact with customers

    Business processes conducted online

    Customer expectations escalate; quality must be maintained and costs loweredNo more guessing about demand is necessary; inventory costs go down; product and service design improves; build to-order products and services is made possibleTransaction costs are lower; customer support costs decrease; e-procurement saves big bucks

    Benefits of E-BusinessImpact on Operations

    Copyright 2006 John Wiley & Sons, Inc.

  • Impact of E-Business on Operations Management (cont.)Access to customers worldwide

    Middlemen are eliminated

    Access to suppliers worldwide

    Demand increases; order fulfillment and logistics become major issues; production moves overseasLogistics change from delivering to a store or distribution center to delivering to individual homes; consumer demand is more erratic and unpredictable than business demandOutsourcing increases; more alliances and partnerships among firms are formed; supply is less certain; global supply chain issues arise

    Benefits of E-BusinessImpact on Operations

    Copyright 2006 John Wiley & Sons, Inc.

  • Impact of E-Business on Operations Management (cont.)Online auctions and e-marketplacesBetter and faster decision making

    Competitive bidding lowers cost of materials; supply needs can be found in one locationMore timely information is available with immediate access by all stakeholders in decision-making process; customer orders and product designs can be clarified electronically; electronic meetings can be held; collaborative planning is facilitated

    Benefits of E-BusinessImpact on Operations

    Copyright 2006 John Wiley & Sons, Inc.

  • Impact of E-Business on Operations Management (cont.)IT synergy

    Expanded supply chains

    Productivity increases as information can be shared more efficiently internally and between trading partnersOrder fulfillment, logistics, warehousing, transportation and delivery become focus of operations management; risk is spread out; trade barriers fall

    Benefits of E-BusinessImpact on Operations

    Copyright 2006 John Wiley & Sons, Inc.

  • Globalization and CompetitivenessFavorable costAccess to international marketsResponse to changes in demandReliable sources of supply14 major trade agreements in 1990sPeak: 26% in 2000

    Copyright 2006 John Wiley & Sons, Inc.

  • Globalization and Competitiveness (cont.)

    Germany: $26.18USA: $21.33Taiwan: $5.41Mexico: $2.38China: $0.50

    Copyright 2006 John Wiley & Sons, Inc.

  • Globalization and Competitiveness (cont.)Trade with China: Percent of each countrys trade Source: Share of China in Exports and Imports of Major Traders, 2000 and 2002, International Trade Statistics 2003, World Trade Organization, www.wto.org

    Copyright 2006 John Wiley & Sons, Inc.

  • Risks of GlobalizationCultural differencesSupply chain logisticsSafety, security, and stabilityQuality problemsCorporate image Loss of capabilities

    Copyright 2006 John Wiley & Sons, Inc.

  • Competitiveness and ProductivityCompetitiveness

    degree to which a nation can produce goods and services that meet the test of international marketsProductivity

    ratio of output to inputOutput

    sales made, products produced, customers served, meals delivered, or calls answeredInput

    labor hours, investment in equipment, material usage, or square footage

    Copyright 2006 John Wiley & Sons, Inc.

  • Competitiveness and Productivity (cont.)Measures of Productivity

    Copyright 2006 John Wiley & Sons, Inc.

  • Changes in Productivity for Select CountriesInternet-enabled productivity- Dot com bust- 9/11 terrorist attacksSource: International Comparisons of Manufacturing Productivity and Unit Labor Cost Trends, 2002, Bureau of Labor Statistics, U.S. Department of Labor, September 2003. U.S. figures for 20022003 from Major Sector Productivity and Costs Index, Bureau of Labor Statistics, U.S. Department of Labor, March 2004

    Copyright 2006 John Wiley & Sons, Inc.

  • Productivity IncreaseBecome efficient

    output increases with little or no increase in inputExpand

    both output and input grow with output growing more rapidlyAchieve breakthroughs

    output increases while input decreasesDownsize

    output remains the same and input is reducedRetrench

    both output and input decrease, with input decreasing at a faster rate

    Copyright 2006 John Wiley & Sons, Inc.

  • Competitiveness and ProductivityBreakthrough PerformanceMore EfficientRetrench

    Copyright 2006 John Wiley & Sons, Inc.

  • Global Competitiveness Ranking FinlandUnited StatesSwedenDenmarkTaiwanSingaporeSwitzerlandIcelandNorwayAustraliaSource: Global Competitiveness Report 20032004, World Economic Forum, January 2004, www.weforum.org

    Copyright 2006 John Wiley & Sons, Inc.

  • Operationsoriented Barriers to Entry Economies of ScaleCapital InvestmentAccess to Supply and Distribution ChannelsLearning Curve

    Copyright 2006 John Wiley & Sons, Inc.

  • Primary Topics in Operations Management

    Copyright 2006 John Wiley & Sons, Inc.

  • Primary Topics in Operations Management (cont.)

    Copyright 2006 John Wiley & Sons, Inc.

  • Operations StrategyStrategy: Chapter 2

    Maintaining an operations strategy to support firms competitive advantageQuality: Chapters 3 and 4

    Focusing on quality in operational decision makingProduct and Services: Chapter 5

    Designing quality products and servicesProcesses, Technologies, and Capacity: Chapter 6

    Setting up process so that it works smoothly and efficiently

    Copyright 2006 John Wiley & Sons, Inc.

  • Operations Strategy (cont.)Facilities: Chapter 7

    Setting up facility so that it works smoothly and efficientlyHuman Resources: Chapter 8

    Designing jobs and work to produce quality productsProject Management: Chapter 9

    Managing complex projects

    Copyright 2006 John Wiley & Sons, Inc.

  • Supply Chain ManagementSupply Chain: Chapter 10

    Managing supply chainForecasting: Chapter 11

    Predicting customer demandAggregate Planning: Chapter 12

    How much to produce and when to produce it Inventory Management: Chapter 13

    How much to order and when to order

    Copyright 2006 John Wiley & Sons, Inc.

  • Supply Chain Management (cont.)Resource Planning: Chapter 14

    Planning capacity and other resourcesLean Production: Chapter 15

    Designing efficient production linesScheduling: Chapter 16

    Job and task assignmentsWaiting Lines: Chapter 17

    Minimizing waiting time of customers and products

    Copyright 2006 John Wiley & Sons, Inc.

  • Learning Objectives of this CourseGain an appreciation of strategic importance of operations in a global business environmentUnderstand how operations relates to other business functionsDevelop a working knowledge of concepts and methods related to designing and managing operationsDevelop a skill set for quality and process improvement

    Copyright 2006 John Wiley & Sons, Inc.

  • Copyright 2006 John Wiley & Sons, Inc.All rights reserved. Reproduction or translation of this work beyond that permitted in section 117 of the 1976 United States Copyright Act without express permission of the copyright owner is unlawful. Request for further information should be addressed to the Permission Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information herein.

    Copyright 2006 John Wiley & Sons, Inc.