2015_MBL912L SS1_Lesson 1.pdf

MBL912L

OPERATIONS MANAGEMENT

STUDY SCHOOL 1

Ozias Ncube

Email: [email protected]

[email protected]

Tel: +27 11 652 0331

PRESENTATION LAYOUT

Lesson 1: Introduction to

operations and

productivity

Chapters 1-2

Lesson 3: Quality and

Standardization

Chapter 6

Lesson 4: Forecasting

Chapters 4

Lesson 5: Project

Management

Chapters 3

Lesson 2: Development and

designing for effective

operations

Chapters 5,7,8,9,10

Design

Goods

Services

Strategy

Process

Location

layout

INTRODUCTION TO OPERATIONS IN

A GLOBAL ECONOMY

Lesson 1

Chapters 1, 2

What Is Operations Management?

Operations management is the activity of

managing the resources which are devoted to the

production and delivery of products and services.

Offer product of good value at low cost that is convenient

for the customer to buy and at the same time keeping a

regular contact with the customer and noting their needs, it is

likely that both customer and organisation will be satisfied.

OPERATIONS MANAGEMENT

Definition

Doing things that your customers want, at an

acceptable cost to the organisation

Operations mix Product

Cost

Convenience of purchase

Customer service

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Transformed resources Materials Information Customers

Transforming resources Facilities Staff

Customers

Output products

and services

Input resources

Some inputs are transformed resources

Some inputs are transforming resources

Outputs are products and services that add value

for customers

Transformation process

Operations system

System entity composed of interdependent parts

which contribute to the characteristics of the

whole

Operations function consists of those activities

that produce the goods and services

Operating system composed of three

subsystems:

Conversion or transformation subsystem

Support subsystem

Planning and control subsystem

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Operating system

Planning, control subsystem

Conversion or Transformation

subsystem

Support subsystem

External environment information

inputs

Human effort

Materials

Capital

Information

energy

System status information Plans, decisions, corrective actions

outputs

Products, services

internal environment information

Demand of output

Cost of inputs

Technological trends

Govt regulations

Objectives

Strategies

Policies

Tangibility

Storability

Transportability

Simultaneity

Customer contact

quality

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operating structures

Environment (domain)

Time, Quality, Quantity

Raw materials

Labour

Information

money

Services

Products

Sales

distribution

Customer

care

Policies

Rules

Plans

targets

Project

Batch

continuous

Equipment, facilities, capital

Control

management inputs

transformation

outputs market

support

The Value Chain and Its Support Functions

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Operations is not the same as operational

Operations are the resources that create products and services

Operational is the opposite of strategic, meaning day-to-day

and detailed

So, one can examine both the operational and the strategic

aspects of operations

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What Operations Managers Do

Planning

Organizing

Staffing

Leading

Controlling

Basic Management Functions

The Critical Decisions

1. Design of goods and services

What good or service should we offer?

How should we design these products and

services?

2. Managing quality

How do we define quality?

Who is responsible for quality?

3. Process and capacity design

What process and what capacity will these products require?

What equipment and technology is necessary for these processes?

4. Location strategy

Where should we put the facility?

On what criteria should we base the location decision?

5. Layout strategy

How should we arrange the facility?

How large must the facility be to meet our plan?

6. Human resources and job design

How do we provide a reasonable work environment?

How much can we expect our employees to produce?

7. Supply-chain management

Should we make or buy this component?

Who should be our suppliers and how can we integrate them into our strategy?

8. Inventory, material requirements planning, and JIT

How much inventory of each item should we have?

When do we re-order?

9. Intermediate and shortterm scheduling

Are we better off keeping people on the payroll during slowdowns?

Which jobs do we perform next?

10. Maintenance

How do we build reliability into our processes?

Who is responsible for maintenance?

The Operations function can provide a competitive advantage through its

performance at the five competitive objectives

Quality Being RIGHT

Speed Being FAST

Dependability Being ON TIME

Cost Being PRODUCTIVE

Being ABLE TO CHANGE Flexibility

What do the terms quality, speed, dependability, flexibility and

cost mean in the context of operations?

Which enables you to do things cheaply (cost advantage)?

Which enables you to change what you do (flexibility advantage)?

Which enables you to do things quickly (speed advantage)?

Which enables you to do things on time (dependability advantage)?

Which enables you to do things right (quality advantage)?

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Significant Events in OM

Figure 1.3

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New Challenges in OM

Global focus

Just-in-time

Supply-chain partnering

Rapid product development, alliances

Mass customization

Empowered employees, teams

To From

Local or national focus

Batch shipments

Low bid purchasing

Lengthy product development

Standard products

Job specialization

Characteristics

Goods

Tangible product

Consistent product definition

Production usually separate from consumption

Can be inventoried

Low customer interaction

Service

Intangible product

Produced and consumed at same time

Often unique

High customer interaction

Inconsistent product definition

Often knowledge-based

Frequently dispersed

Good

Concept of product

Service Product

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Products: Bundles of Goods and Services

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New Trends in OM Ethics

Global focus

Rapid product development

Environmentally sensitive production

Mass customization

Empowered employees

Supply-chain partnering

Just-in-time performance

2011 Pearson Education, Inc. publishing as Prentice Hall

Ethics and Social Responsibility

Challenges facing operations managers:

Developing and producing safe, quality products

Maintaining a clean environment

Providing a safe workplace

Honouring stakeholder commitments

2011 Pearson Education, Inc. publishing as Prentice Hall

Reasons to Globalize

Reasons to Globalize

1. Reduce costs (labor, taxes, tariffs, etc.)

2. Improve supply chain

3. Provide better goods and services

4. Understand markets

5. Learn to improve operations

6. Attract and retain global talent

Tangible Reasons

Intangible Reasons

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Cultural and Ethical Issues

Cultures can be quite different

Attitudes can be quite different towards

Punctuality

Lunch breaks

Environment

Intellectual property

Thievery

Bribery

Child labor

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Mission

Mission - where are you going?

Organizations purpose for being

Answers What do we provide society?

Provides boundaries and focus

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Benefit to Society

Mission

Factors Affecting Mission

Philosophy and Values

Profitability and Growth Environment

Customers Public Image

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Sample Missions

Sample Company Mission

To manufacture and service an innovative, growing, and profitable worldwide microwave communications business that exceeds our customers expectations.

Sample Operations Management Mission

To produce products consistent with the companys mission as the worldwide low-cost manufacturer.

Figure 2.3

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Strategic Process

Marketing Operations Finance/

Accounting

Functional Area

Missions

Organizations Mission

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Strategy

Action plan to achieve mission

Functional areas have strategies

Strategies exploit opportunities and strengths, neutralize threats, and avoid weaknesses

Operations strategy

1. How?

2. Where?

3. When?

Pattern of decisions and actions

Set the role, objectives, activities

Contribute to and support

Business strategy (macro level)

Operations strategy of the business (micro level)

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Strategies for Competitive Advantage

Differentiation better, or at least different Uniqueness can go beyond both the physical characteristics and service

attributes to encompass everything that impacts customers perception of value

Cost leadership cheaper Uniqueness can go beyond both the physical characteristics and service

attributes to encompass everything that impacts customers perception of value

Response rapid response Flexibility is matching market changes in design innovation and volumes

Reliability is meeting schedules

Timeliness is quickness in design, production, and delivery

2011 Pearson Education, Inc. publishing as Prentice Hall

OMs Contribution to Strategy

Product

Quality

Process

Location

Layout

Human resource

Supply chain

Inventory

Scheduling

Maintenance

DIFFERENTIATION Innovative design Broad product line After-sales service Experience COST LEADERSHIP Low overhead Effective capacity use Inventory management RESPONSE Flexibility Reliability Quickness

Figure 2.4

10 Operations Competitive Decisions Approach Example Advantage

Response

(faster)

Cost

leadership

(cheaper)

Differentiation

(better)

Top-down Approach to OM Strategy

Operations Strategy Decisions

Strategic (long-range)

Needs of customers

(capacity planning)

Tactical (medium-range)

Efficient scheduling of

resources

Operational planning

and control (short-range)

Immediate tasks and

activities

Top-down perspective

What the business wants operations to

do

Operations resources

perspective

What operations resources can do

What day-to-day experience suggests operations should do

Bottom-up perspective

Market requirement perspective

What the market position requires operations to do

Operations strategy

The four perspectives on operations strategy

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Product Life Cycle

Product design and development critical

Frequent product and process design changes

Short production runs

High production costs

Limited models

Attention to quality

Introduction Growth Maturity Decline

OM

Str

ate

gy/I

ssu

es

Forecasting critical

Product and process reliability

Competitive product improvements and options

Increase capacity

Shift toward product focus

Enhance distribution

Standardization

Fewer product changes, more minor changes

Optimum capacity

Increasing stability of process

Long production runs

Product improvement and cost cutting

Little product differentiation

Cost minimization

Overcapacity in the industry

Prune line to eliminate items not returning good margin

Reduce capacity

Figure 2.5

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Strategy

Analysis

SWOT Analysis

Internal

Strengths

Internal

Weaknesses

External

Opportunities

External

Threats

Mission

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Four International Operations Strategies

Co

st R

edu

ctio

n C

on

sid

era

tio

ns

High

Low

High Low

Local Responsiveness Considerations (Quick Response and/or Differentiation)

Standardized product Economies of scale Cross-cultural learning Examples: Texas Instruments Caterpillar Otis Elevator

Global Strategy Transnational Strategy

Move material, people, ideas across national boundaries

Economies of scale Cross-cultural learning Examples Coca-Cola Nestl

International Strategy

Import/export or license existing product

Examples U.S. Steel Harley Davidson

Multidomestic Strategy

Use existing domestic model globally

Franchise, joint ventures, subsidiaries

Examples Heinz The Body Shop McDonalds Hard Rock Cafe

Figure 2.9