Wk1 Introduction Shared

8/12/2019 Wk1 Introduction Shared

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Operations

Management

Introduction


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Sylabus

Wk1 : Introduction

Wk2: Operation Strategy

Wk3: Basic Knowledge on Product and ProcessDesign

Wk4: Basic Knowledge on Layout, and Flow

Wk5: The Nature of Planning and Control Wk6: Capacity Planning and Control (inc. Forecasting)

Wk7: Aggregate Planning

Wk8 : Mid Test

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Sylabus (contd)

Wk9: Scheduling

Wk10: Inventory Planning and Control

Wk11: Supply Chain Planning and Control

Wk12: Material Requirement Planning

Wk13: Project Planning and Control

Wk14: Quality Control

Wk15: Production Improvement Wk16 : Final Test

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Outline

What is Operations Management?

Why Study OM?

Production vs. Service Organizations.

Operations Management Decisions.

Operations processes have differentcharacteristics


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What Is Operations Management?

Book definition (not as good): The set of activities

that creates goods and services by transforming

inputs into outputs.

Operations managementis about how to

organize the systems that produce goods and

provide services.

It includes planning, designing and operatingsystems to achieve goals of the organization.


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Transforming Inputs to Outputs

Production or Service

System

Land,

Labor,Capital,

Materials,

Equipment,

Management

Products

and

Services

Inputs Process Outputs


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They are all

operat ions

Retail

operation

Back office

operation

in a bank

Take-out /

restaurant

operation

Kitchen unit

manufacturing

operation


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ENVIRONMENT

ENVIRONMENT

INPUT OUTPUTPRODUCTS

AND

SERVICES

TRANSFORMED

RESOURCES

MATERIALS

INFORMATION

CUSTOMERS

FACILITIESSTAFF

TRANSFORMING

RESOURCES

TRANSFORMATION

PROCESS

Operations Management is About Managing

Processes - transformation processes


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Transformed resourcesresources that are treated,

transformed or converted in the process. They are a mixture

of

Materials

Information

Customers

Transforming resourcesthese are the resources which act

upon the transformed resources. They are two types: Facilities

Staff

Inputs to the Process


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Materials processingtransforms materials physical

properties, location, possession or materials are stored.

Information processingtransforms information properties,

possession, location or information is stored.

Customer processingtransforms customers physical

properties, location, physiological state, psychological stateor store (accommodate) customers.

Within the Process


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Outputs from process can be differentiate between products

and service based organizationtangibility of products and

intangibility of services

Most operations produce both products and services

Services and products are mergingall operations are

service providers who may produce products as a means ofserving customers.

Outputs from the Process


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Characteristics of Products

Tangible product.

Consistent inputs and

outputs.

Production separate from

consumption.

Can be inventoried and

transported

Low customer interaction.

Quality is evidence


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Characteristics of Service

Intangible product.

Variable inputs and outputs

(people!).

Production and consumption

at same place and time.

No inventories.

High customer interaction.

Quality is difficult to judged


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Examples

Auto factories

(assembly plants)

Job shops (printing)

Fast food restaurants

Hospitals

Airlines

Movie theaters

Grocery stores

Production Service


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The output from most types of operation is a

mixture of goods and services

Crudeoilproduction Pure goods Tangible

Can be storedProduction

precedesconsumption

Low customercontact

Can be transportedQuality is evident

IntangibleCannot be stored

Production andconsumption aresimultaneousHigh customer contactCannot be transportedQuality difficult to judge

Pure services

Aluminiumsmelting

Specialistmachinetool

manufac

turer

Restaurant

Com

putersystems

services

Mana

gement

cons

ultancy

Psychotherap

yclinic


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Why Study OM?

OM is one of three major functions of any

organization (Marketing, Finance, and

Operations).

We should know how goods and services are

produced.

OM is such a costly part of an organization.Jobs!


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Organizational Functions

Marketing.

Generates demand.

Operations. Creates product or service.

Finance/Accounting. Obtains funds &

tracks money.


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Table 1.1 The activities of core functions in some organization

Core functional

activities

Internet service

provider

Fastfood chain Furniture

manufacturerMarketing and

sales

- Promotes service

to users and get

registration

- Sell advertising

space

- Advertise on TV

- Device

promotional

materials

- Advertise in

magazines

- Determine pricing

policy

-Sell to stores

Product/service

development

- Device new

services and

commission new

information content

- Design

hamburgers, pizzas,

etc.

- Design dcor for

restaurants

- Design new

furniture

- Coordinate with

fashionable colours

Operations - Maintain hardware,software and content

- Make burgers,

pizzas, etc.

- Serve customers

- Maintain

equipments

- Make components

- Assemble furniture

- Deliver furniture


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OM Jobs


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Operations Management - Bank

OperationsFinance/

AccountingMarketing

Check

Clearing

Teller

Scheduling

Transactions

ProcessingSecurity

Commercial Bank 1984-1994

T/Maker Co.

Operations Management for an


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Operations Management for an

Airline

OperationsFinance/

AccountingMarketing

Ground

Support

Flight

Operations

Facility

MaintenanceCatering

Operations Management for a


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Operations Management for a

Manufacturer

OperationsFinance/

AccountingMarketing

Production

ControlManufacturing

Quality

ControlPurchasing


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OM Across the Organization

Marketing is not fully capable of meeting customer needs ifthey do not understand what operations can produce

Finance cannot judge the need for capital investments if

they do not understand operations concepts and needs Information systems enables the information flow

throughout the organization

Human resources must understand job requirements andworker skills

Accounting needs to consider inventory management,capacity information, and labor standards


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OMs Transformation Role

To add value

Increase product value at each stage

Value added is the net increase between output product value

and input material value

Provide an efficient transformation Efficiencyperform activities well at lowest possible cost


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Manufacturing Cycle

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Cost + Profit = Selling Pricethere is no need for improvement

there is no competing procedure

consumer may have no choice

Profit = Selling PriceCostthe price is determined by the market profit is what remains after subtracting

cost from pricemaximizing profit means that cost is to

be minimized

Cost = PriceProfitsetting a target costthe price is determined by the

marketprofit required is determined by

the company

The Cost Substraction Formula

Operations Management is


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Operations management can

Reduce costs of producing products and service by being

efficient. Increase revenue by increasing customer satisfaction

through good quality and service.

Reduce need for investment by increasing the effective

capacity of the operation and by being innovative in how ituses its physical resources

Enhance innovation by building a solid base of operations

skills and knowledge within the business.

Operations Management is

Important


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Changing in Business Management are


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Changing in Business Management are

prompting operations responses

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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

From To

Changing Challenges for the


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Changing Challenges for theOperations Manager

Past Causes FutureLocal ornationalfocus

Low-cost, reliable worldwidecommunication andtransportation networks

Global Focus

Batch (large)

shipments

Cost of capital puts pressure on

reducing investment ininventory

Just-in-time

shipments

Low-bidpurchasing

Quality emphasis requires thatsuppliers be engaged in productimprovement

Supply-chainpartners

Lengthyproductdevelopment

Shorter life cycles, rapidinternational communication,computer-aided design, andinternational collaboration

Rapid productdevelopment,alliances,collaborativedesigns

Changing Challenges for the


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Changing Challenges for theOperations Manager

Past Causes FutureStandardizedproducts

Affluence and worldwide markets;increasingly flexible productionprocesses

Masscustomization

Jobspecialization

Changing sociocultural milieu.Increasingly a knowledge andinformation society.

Empoweredemployees,teams, and leanproduction

Low costfocus

Environmental issues, ISO 14000,increasing disposal costs

Environmentallysensitive

production,Greenmanufacturing,recycledmaterials,remanufacturing

Operations Processes


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The Volumeof their output

The Varietyof their output

The Variation in the demand for theiroutput

The degree of Visibilitywhich customers

have of the production of their output


Characteristic



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Thevolume dimension

High volume means high repeatabilitypeople can

specialize

High volume leads to systemization of workSOP High volume gives lower unit costs

The variety dimension

High variety of products and services offered High variety increases cost of goods and services

High variety operations must be flexible

Standardization minimizes cost


Characteristic



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The variationdimension

Demand for goods and services can change depending on

the external environmentseasonal factor

Creates change in resources needed Activities must be planned effectivelyforecasting

Variation in demand can increase cost

The visibilitydimension Visibility means process exposure

Customers in a high visibility operation may judge the

operation by their perceptionscustomer contact skill is

important


Characteristic

A Typology of Operations


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A Typology of Operations

IMPLICATIONS IMPLICATIONS

High LowVisibility

High LowVariation in demand

High LowVariety

Low HighVolume

Time lag betweenproduction andconsumption

Standardized

Low contact skills

High staff utilization

Centralization

Low unit costs

Short waiting tolerance

Satisfaction governed bycustomer perception

Customer contact skillsneeded

Received variety is high

High unit cost

Changing capacity

Anticipation

Flexibility

In touch with demand

High unit cost

Flexible

Complex

Match customerneeds

High unit cost

Low repetition

Each staff member

performs more of jobLess systemization

High unit costs

Stable

Routine

Predictable

High utilization

Low unit costs

Well defined

Routine

Standardized

Regular

Low unit costs

High repeatability

Specialization

SystemizationCapital intensive

Low unit cost

A Q ti


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Any Questions

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Wk1 Introduction Shared

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