Operations, Competitiveness & Quality & Cost &Flexibility& Speed Respond Roberta Russell.
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Transcript of Operations, Competitiveness & Quality & Cost &Flexibility& Speed Respond Roberta Russell.
Operations, Competitiveness & Quality & Cost
&Flexibility& Speed Respond
Roberta Russell Roberta Russell
Ch 1 - 2© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
The Operations Function
• Operations as a transformation process
• Operations as a basic function
• Operations as the technical core
Ch 1 - 3© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Operations As A Transformation Process
OUTPUT
MaterialMachinesLaborManagementCapital
Goods or Services
INPUT Transformationprocess
Feedback
Ch 1 - 4© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Transformation Processes
• Physical (manufacturing)• Locational (transport/storage)• Exchange (retail)• Physiological (healthcare)• Psychological (entertainment)• Informational (communications)
Ch 1 - 5© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Operations As A Basic Function
MARKETING FINANCE
OPERATIONS
Ch 1 - 6© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Operations As The Technical Core
Operations
Finance
Capital Markets, Stockholders
Marketing
Customers
Wor
kers
Sup
plie
rs
Pur
chas
ing
Per
sonn
el
Ch 1 - 7© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Historical Events In Operations Manegement (OM)
• Industrial Revolution• Scientific Management• Human Relations• Management Science• Quality Revolution• Information Age• Globalization
Ch 1 - 8© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Historical Events In POM
Industrial RevolutionSteam engine 1769 James WattDivision of labor 1776 Adam SmithInterchangeable parts 1790 Eli Whitney
Scientific ManagementPrinciples 1911 Frederick W. TaylorTime / motion study 1911 Frank & Lillian GilbrethActivity scheduling chart 1912 Henry Gant
Ch 1 - 9© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Human RelationsHawthorne studies 1930 Elton MayoMotivation theories 1940s Abraham Maslow
1950s Frederick Hertzberg1960s Douglas McGregor
Management Science
Linear programming 1947 George DantzigDigital computer 1951 Remington RandSimulation, PERT/CPM, 1960 Research groupsWaiting line theoryMRP 1960s Joseph Orlicky, IBM
Ch 1 - 10© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Quality RevolutionJIT 1970s Taiichi Ohno, ToyotaTQM 1980s W. Edwards Deming,
Joseph Juran, et. al.Reengineering 1990s Hammer, Champy
Information AgeEDI, EFT, 1970s NumerousCIM 1980s individuals and
1990s companiesInternet, World Wide Web 1990s Tim Berners-Lee
Ch 1 - 11© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Globalization
Worldwide markets 1990s Numerous individualsand operations and companiesSupply chain managementElectronic commerceMass customization
Ch 1 - 12© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
TGW (Things Gone Wrong) In First Eight Months Per 100 Cars
Chrysler 285GM 256Ford 214Japanese 132
Toyota 55
Ch 1 - 13© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Quality Of Semiconductors
U.S.Japan
Defective on delivery 16% 0%
Failure after 1000 hrs 14% 1%
Ch 1 - 14© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Quality Of Room Air Conditioners
U.S.Japan
Fabrication defects 4.4% <0.1%Assembly line defects 63.5% 0.9%Service calls 10.5% 0.6%Warranty cost 2.2% 0.6%
(% of sales)
Ch 1 - 15© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Quality Of Color TVs
U.S.Japan
Assembly defects 1.4 0.01Service calls 1.0 0.09
(per set)
Ch 1 - 16© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Globalization
• Take advantage of favorable costs• Gain access to foreign markets• Reduced trade barriers• Changing markets
Ch 1 - 20© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Risks In Globalization
• Weak infrastructure• Distinct languages, customs, trade barriers• Inefficient distribution channels• Instability of governments• Poor economic conditions
Ch 1 - 21© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Competitiveness
The degree to which a nation, can, under demanding and rapidly changing market conditions, produce goods and services that meet the test of international markets while simultaneously maintaining or expanding the
real incomes of its citizens.
Ch 1 - 22© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Measures Of Competitiveness
• Gross domestic product (GDP)
• Import/export ratio
• Productivity = output / input
Ch 1 - 23© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Productivity Increases When Firms
• Become more efficient• Downsize• Expand• Retrench • Achieve breakthroughs
Ch 1 - 26© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 2/e
Competitive Industries
• Relatively equal in size and resources
• Standardized products and services
• Slow or exponential growth
Ch 1 - 27© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Measuring Competitiveness
• Number of major players
• Average market share
• Average profit margin
Ch 1 - 28© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Barriers To Entry
• Economies of scale• Capital investment• Access to supply and distribution channels• Learning curves
Ch 1 - 29© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Issues & Trends In Operations
1. Intense competition2. Global markets, global sourcing,
and global financing3. Importance of strategy4. Product variety and mass customization5. More services
Ch 1 - 30© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Issues & Trends In Operations
6. Emphasis on quality7. Flexibility8. Advances in technology9. Worker involvement10. Environmental and ethical concerns
Ch 1 - 31©2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Primary Topics In Operations Management
• Deploying strategy• Assuring quality• Designing products & services• Planning the production process• Laying out the facility
Ch 1 - 32© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Primary Topics In Operations Management
• Designing jobs & work• Managing the supply chain• Forecasting demand for products & services• Production planning & scheduling
Ch 1 - 33© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Organization Of Book
Strategy of productive systems
Designing productive systems
Operating Productive systems
Ch 1 - 34©2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 2/e
Strategy Of Productive Systems
–1. Introduction to Operations & competitiveness–2. Operations strategy–3. Quality management–4. Statistical quality control
0
10
20
30
40
50
60
70
0 1 2 3 4 5 6 7
Ch 1 - 35© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Designing Productive Systems
–5. Product & service design–6. Process planning, analysis and reengineering–7. Facility layout–8. Human resources in operations management–9. Supply chain management
Ch 1 - 36©2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Operating Productive Systems–10. Forecasting–11. Capacity planning & aggregate production
planning–12. Inventory management–13. Materials requirements planning–14. Scheduling–15. Just-in-time systems–16. Waiting line models for service improvement–17. Project management
Ch 2 - 2© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Strategy Formulation
1. Define primary task2. Assess core competency3. Determine order winners & order qualifiers4. Position the firm
Ch 2 - 3© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Competing On Cost
• Eliminate all waste• Invest in
–updated facilities & equipment–streamlining operations–training & development
Ch 2 - 4© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Competing On Quality
Please the customer–Understand customer attitudes toward and expectations of quality
Ch 2 - 5© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Competing On Flexibility
• Produce wide variety of products• Introduce new products• Modify existing products quickly• Respond to customer needs
Ch 2 - 6© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Competing On Speed
• Fast moves
• Fast adaptations
• Tight linkages
Ch 2 - 7© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Process-Centered Strategies
• Processes cut across functional lines and departments
• Strategy is led by competencies
Ch 2 - 8© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Changing Focus from Function to Process
Ch 2 - 9© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Exploiting Core Competencies
• Enhance value a competency provides to customers
• Transform internal competence into salable item• Apply competencies to new products & services• Create new ways of working & finding markets
Ch 2 - 10© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 2/e
Policy Deployment
• Focuses employees on common goals & priorities
• Translates strategy into measurable objectives• Aligns day-to-day decisions with strategic plan
Ch 2 - 11© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 2/e
Strategic PlanningMission & Vision
Business Strategy
Marketing Strategy
Operations Strategy
Financial Strategy
Voice of the Business
Voice of the Customer
Ch 2 - 13© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Operations Role In Corporate Strategy
• Provide support for overall strategy of a firm• Serve as firm’s distinctive competence• Must be consistent• Must be consistent with overall strategy
Ch 2 - 14© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Operations Strategy
Products
Processes andTechnology
Capacity
Human Resources Quality
Facilities Sourcing
Services
Operating Systems
Ch 2 - 15© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Products & Services
• Make-to-order–made to customer specifications after order received
• Make-to-stock–made in anticipation of demand
• Assemble-to-order–add options according to customer specification
Ch 2 - 16© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Processes & Technology
• Project–one-time production of product to customer order
• Batch production–process many jobs at same time in batch
• Mass production–produce large volumes of standard product for mass market
• Continuous processes–very high volume commodity product
Ch 2 - 17© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Product-Process MatrixV
olu
me
LowLow High
High
Projects
Batchproduction
Massproduction
Continuousproduction
Standardization
Ch 2 - 17© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Product-Process MatrixL
abo
r In
ten
sity
LowLow High
High
Professional Service
ServiceShop
MassService
ServiceFactory
Customization
Ch 2 - 19© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Capacity & Facilities
• How much capacity to provide• Size of capacity changes• Handling excess demand• Hiring/firing workers• Need for new facilities
Ch 2 - 20© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Facilities
• Best size for facility?• Large or small facilities• Facility focus• Facility location• Global facility
Ch 2 - 21© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Human Resources• Skill levels required• Degree of autonomy• Policies• Profit sharing• Individual or team work• Supervision methods• Levels of management• Training
Ch 2 - 22© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Quality• Target level• Measurement• Employee involvement• Training• Systems needed to ensure quality• Maintaining quality awareness• Evaluating quality efforts• Determining customer perceptions
Ch 2 - 23© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Sourcing
• Degree of vertical integration• Supplier selection• Supplier relationship• Supplier quality• Supplier cooperation
Ch 2 - 24© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Operating Systems
• Execute strategy daily• Information technology support• Effective planning & control systems• Alignment of inventory levels, scheduling
priorities, & reward systems
Purpose Of Text• Gain an appreciation of the strategic importance
of operations and how operations can provide a competitive advantage in the marketplace
• Understand the relationship between operations and other business functions
• Develop a working knowledge of the concepts and methods related to designing and managing operations