Session 5: Operations Management and Logistics · Definition •Operations management –set of...
Transcript of Session 5: Operations Management and Logistics · Definition •Operations management –set of...
Definition
• Operations management – set of activities
that creates value in the form of goods and
services by transforming inputs into outputs.
In manufacturing firms, these are the
production (factory) activities.
OM and Services
• In organizations that do not create physical
goods, the production function may be less
obvious. Ex.: liver transplants, transfer of
funds from savings to checking account, the
education of a student
Organizing for Operations
These functions are the necessary ingredients:
• Marketing – generates the demand, or at least
takes the order for the product or service
• Production/operations – creates the product
• Finance/accounting – tracks how well the
organization is doing, pays the bills, collects
the money
So where does HR Management fit in? ☺
+Products vs. Services
Services
• Intangible
• Produced and consumed simultaneously
• No stored inventory
• Inconsistent product definition
Products
• Tangible
• Produced first
• With inventory
• Rigorous product definition
Trends in OM
• Global focus
• Just-in-time performance
• Supply-chain partnering
• Rapid product development
• Mass customization
• Empowered employees
• Environmentally sensitive production
Lexar Video
• Why do you think Lexar still has wafer
production in the US?
• What possible advantages does Lexar see in
having final assembly done in Asia?
Productivity
• Productivity – ratio of outputs (goods and
services divided by the inputs (resources, such
as labor and capital). The operations
manager’s job is to enhance or improve this
ratio of outputs to inputs
Measuring Productivity
Productivity = Units produced/Input used
Productivity = Output
-------------------------------------------------
Labor + Materials + Energy + Capital
+ Miscellaneous
Improving Productivity
• Reduction in inputs while output remains
constant
• Increase in output while inputs remain
constant
Note: High production DOES NOT imply high
productivity
Improving Productivity
Dependent upon three productivity variables:
• Labor – may be the result of a healthier,
better educated, and better-nourished work
force
• Capital – provides tools for labor to use
• Management – responsible for ensuring that
labor and capital are effectively used to
increase productivity
How can HR help here?
Globalizing Operations
• Reduce costs – ex. Maquiladoras in
Matamoros, Mexico ; BPOs in India and PH
• Improve the supply chain – ex. Athletic shoe
production in Guangzhou, China (production
competence); perfume production in Grasse,
France (supply of flowers)
• Provide better goods and services – reduction
of response time; production of more
culturally-fit products
Globalizing Operations
• Attract new markets –
expanding the life cycle
• Learn to improve
operations – ex. Joint
ventures with foreign
companies (GM-Daewoo,
Sony-Samsung, Nokia-
Siemens, LG-Philips)
• Attract and retain global
talent – offering more
employment, transfer and
promotion opportunities
Strategic OM Decisions: PEOPLE
• Management
• Labor
The issue here is about quality of work life
provided, talent and skills required. Costs of
these must be determined
Strategic OM Decisions:
STRUCTURE
– Layout design - material flows, capacity needs, personnel
levels, technology decisions and inventory requirements
influence layout
– Location selection
– Ergonomics
Rochester Mfg. Co.
Rochester Manufacturing Co. Is considering moving some of its
production from traditional numerically controlled machines to a
flexible machining system (FMS).
Its numerical control machines have been operating in a high-variety,
low-volume, intermittent manner. Machine utilization, as near as it
can determine, is hovering around 10%.
The machine tool salespeople and a consulting firm want to put the
machines together in an FMS.
They believe that a $3,000,000 expenditure on machine and the
transfer machines will handle about 30% of RMC work. There will,
of course, be transition and start-up costs in addition to this.
The firm has not yet entered all its parts into a comprehensive group technology system, but believes that the 30% is a good estimate of products suitable for the FMS.
This 30% should fit very nicely into a “family”. A reduction, because of higher utilization, should take place in the number of pieces of machinery. The firm should be able to go from 15 to about 4 machines and personnel should go from 15 to perhaps as low as 3.
Similarly, floor space reduction will go from 20,000 square feet to about 6,000. Throughput of orders should also improve with this family of part being processed in 1 to 2 days rather than 7 to 10, and annual labor savings should be in the neighborhood of $300,000.
Rochester Mfg. Co.
Rochester Mfg. Co.
Although the projections all look very positive,
an analysis of the project’s return on
investment showed it to be between 10% to
15% per year. The company has traditionally
had an expectation that projects should yield
well over 15% and have payback periods of
substantially less than 5 years.
Questions: As a production manager for RMC,
what do you recommend? Why?
Motivation by Job Design:
The JCM
• Job Characteristics Model (JCM)
– Hackman and Oldham’s concept that any job can be described through
five core job dimensions:
• Skill variety – Requirements for different tasks in the job.
• Task identity – Completion of a whole piece of work.
• Task significance – The job’s impact on others.
• Autonomy – Level of discretion in decision making.
• Feedback – Amount of direct and clear information on
performance.
– The way elements in a job are organized (job design) impacts
motivation, satisfaction and performance.
The Job Characteristics
Model
Core job dimensions affect
→ CriMcal Psychological States,
which affect
→ Personal and Work
Outcomes
Employee growth-need strength
moderates the relationships.
Core Job
Characteristics
Core Job
Characteristics
Psychological
States
Psychological
States
Personal & Work
Outcomes
Personal & Work
Outcomes
Alternative Work
Arrangements
Flextime – “flexible work time” allows
employees some discretion over when they
arrive at work and when they leave, as long as
they work a specific number of hours a week.
• Benefits of flextime include reduced
absenteeism and improved work productivity
• However, it’s not applicable to every job.
It’s better with clerical type positions but
not for jobs with significant service
demands.
Alternative Work
Arrangements
Job sharing – this allows two or more individuals to
split a traditional work week between the
sharers.
• Company gets to draw on the talents of more
than one person in a given job.
• Opens up the possibility of acquiring skilled
workers who might otherwise have not been
available on a full-time basis.
• Drawback is it’s very difficult to find
compatible pairs of employees who can
coordinate the intricacies of one job.
Another Alternative:
Telecommuting
• Telecommuting
– Employees do their work at home at least two
days a week on a computer that is linked to their
office.
• The Virtual Office
– Employees work out of their home on a relatively
permanent basis.
• Typical Telecommuting Jobs
– Professional and other knowledge-related tasks
– Routine information-handling tasks
– Mobile activities
Ergonomics and Work Methods
• Worker performance depends on
– Motivation
– Ability
– Work environment
• Foundation laid by Frederick Taylor
– Match employees to task
– Develop work methods
– Establish work standards
Ergonomics
• Study of work
• Also called ‘human factors’
• Involves human-machine interface
• Examples
– Mouse
– Keyboard
Methods Analysis
• Focuses on how task is performed
• Used to analyze
– Movement of body, people, or material
– Activities of people & machines
• Tools
– Process chart
– Flow diagram
– Activity chart
– Operations chart (right-hand, left-hand)
Methods Used to Study
• Movement of individuals or materials (Flow
diagrams or process charts)
• Activity of human and machine and crew
activity (Activity charts)
• Body movement (primarily arms and legs)
(Micro-motion charts)
Cause Maps and Social Network
Analysis ModelCause Maps – mathematical representations of
perceived causal relationships among
variables.
Example of Cause Map:
Sprained Ankle
Sprained
Ankle
Tripped on
Wire
Didn’t See
Wire
Tried to
Step Over
Wire
Carrying
Cartons
Going to
Dept. A
Wire in
Path
AND
Process Control Chart
• Diagrammatic view of the various steps in
sequential order that form an overall process
in an organization
• Flow charts are used in organizations for
depicting the processes in an easily
understandable form.
KidsParentsBed Time
Initiate Bed Time
Procedures
Are Kids
Ready For
Bed?
Begin Bed
Time Routine
Brush Teeth
Pee
Put On PJs
NO
Meet Need So
Kids Are Ready
For Bed
Read Story
Say Prayers
Tuck In Kids
Get Into Bed
Questions to ask after
Process Flow Chart is made:
Macro level:
– Are all the steps necessary?
– Is any step missing?
– Which are the points of delay?
– Can the process be simplified?
Points to be checked for every input:
– Are there specified, clear, and agreed standards?
– Is there adequate feedback?
Questions to ask after
Process Flow Chart is made:
Points to be checked for every process step
– Is the step necessary?
– Are facilities/equipment adequate?
– Do the operators have necessary skills?
– Is it possible to measure performance?
– What impact will a defect in the process have?
Questions to ask after
Process Flow Chart is made:
Points to be checked for
every output:
– Are there specified,
clear and agreed
standards?
– Is there adequate
feedback?
Operations Chart (Left Hand/Right Hand)
� = operation; ⇒ = transport; � = inspect; D = delay; ∇ = storage
Left Hand Right Hand
Present Method Symbol Symbol Present Method
1 Reach for bolt Idle
2 Grasp bolt Idle
3 Hold bolt Reach for washer
4 Hold bolt Assemble
� ⇒ � D ∇
� ⇒ � D ∇
� ⇒ � D ∇
� ⇒ � D ∇
� ⇒ � D ∇
� ⇒ � D ∇
� ⇒ � D ∇
� ⇒ � D ∇
Analyzing Processes
• Is this process designed to create a
competitive advantage in terms of
differentiation, response or low cost?
• Does the process eliminate steps that do not
add value?
• Does the process maximize customer value as
perceived by the customer?
• Will the process win orders?
Group Practice
• Use the same groups as before. Identify at
least one process in your company that can be
improved.
• Use either the cause map and the process
flow chart to analyze it.
• Make recommendations.
What is Work Measurement?
• Determining the amount of worker time
required to generate one unit
of output
• Provides labor standards
– Target amount of time required to perform
a job under normal working conditions
Uses of Labor Standards
• Costing labor content of products
• Planning staffing needs
• Cost & time estimates for bids
• Planning production
• Wage-incentive plans
• Employee efficiency
Sources of Labor Standards
• Historical experience
• Time studies
• Predetermined time
standards (MTM)
• Work sampling
Labor Standards - Historical
Experience
• Labor standards are based on how many
labor-hours were needed in past
• Least preferred method
• Advantages
– Easy and inexpensive to obtain standard
• Disadvantages
– Unknown accuracy due to unusual occurrences,
unknown pace etc.
Strong Memorial Hospital:
Caselet
Amy Katherine is a thirty-year-old registered nurse. She has been employed by Strong Memorial Hospital in Rochester, NY for eight years. For the first six years, Amy Katherine worked as a nurse on the neurological surgery floor. She enjoyed this job but after a few years of sporadic schedules and long shifts she decided to switch gears and began working as a nurse in the operating room.
In the beginning, Amy Katherine was excited for the change of pace, as well as the more structured scheduled that was offered while working in the operating room. One year into her job in the operating room however, Amy Katherine began to find her work monotonous and less interesting. She dreaded going to work, and looked forward to her days off. Amy Katherine began to miss her years of work on the neurological surgery floor and longed for a way to integrate the knowledge, skills and abilities she enjoyed by being a nurse to the job that suited her best.
https://wikispaces.psu.edu/display/PSYCH484/Job+Design+Case+Study
Strong Memorial Hospital:
Questions
• Describe what you as HR manager would do in
this case.
• How would you approach this problem with
the operations head (in this case, the director
of nursing)?
Plenary Discussion
• What are the OM principles that can be used
in strategic HR?
• How can HR people help improve operations
and productivity?
Group Report
(For PhD and MA Students)
• Download the latest stockholders’ report of Globe Telecom or PLDT/Smart. (Optional: interview corporate and/or marketing people at these companies)
• Analyze the products, target markets, and the corporate personas.
• What were the opportunities and threats within the industry?
• What were the strategies employed? What were the marketing programs that were done?
• Evaluate the effectiveness of the corporate strategies and the marketing programs.