Operations Management An Introduction Learning objectives: -define operations management -define the role and function of operations management -list components of operations management -describe past/current/future challenges of operations management
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Volkswagen is setting out to build a plant in Chattanooga, Tennessee, where vehicle production will be
due to commence in early 2011. The supervisory board of Volkswagen AG approved the plans and aninvestment volume of up to 1 billion USD (around 620 million euro). The Group’s management board
had previously pinpointed Chattanooga as the site for its new plant. “The USA market,” said Prof Martin
Winterkorn, CEO of Volkswagen AG, “is an important part of our volume strategy and we are now very
resolutely accessing that market. Volkswagen will be extremely active there.”
In a 2008 survey of 100 senior manufacturing executives commissioned by Advanced TechnologyServices and conducted by Nielsen, 81 percent said they would be affected by the serious lack of skilled labor, costing an average $52 million each over the next five years. This figure reflects morethan just the cost of recruiting, training, and retaining workers; it includes the high price of lostproduction as well. http://www.qualitydigest.com/inside/metrology-article/the-cost-poor-calibration-and-quality.html
Cleaning products giant JohnsonDiversey has joined the U.S. EPA's Climate Savers program, pledging$19 million toward emissions reduction efforts that the company expects will save $31 million over thenext five years. http://vcr.csrwire.com/node/10389
Eight key forces are considered to influence quality:
Partnering
Learning systems
Adaptability and speed of change Environmental sustainability
Globalization
Knowledge focus
Customization and differentiation
Shifting demographics
Partnering Experience
Frank Galliers Ltd defines "partnering" as workingcollaboratively with clients and suppliers bringing togetherall requisite expertise in order to fulfil the contractrequirements achieving best value for money against theKey Performance Indicators:Cost - achieving or improving budgeted contract costsTiming - meeting the contract programme on timeQuality - meeting or improving pre-determined clientquality standards
There is continuing pressure to reduce direct costs (of producing and selling) and overheadcosts.
Cost-cutting measures being used include:
Moving production to low-labor-cost countries
Negotiating lower labor rates with union/workers
Automating processes to reduce the amount of labor needed
Reducing health care and retirement benefits
Washington, D.C. (AHN) - Soaring fuel price, the weak greenback and inflation are cutting the China price of U.S. manufacturers that had outsourced their production to Asia. The price advantage was 40 to 50 percent off.China and other Asian countries' export model, which worked for over 30 years, may no longer be viable if fuel pricescontinue to soar as cost of shipping finished product made in Asia eats up profit, according to Morgan Stanley.Because the Chinese model was premised on an oil price of $20 per barrel, some U.S. companies which outsourced
production in China are mulling transferring operations to Mexico, while others are planning to return to the U.S. As aresult steel exports from China to the U.S. dipped 38 percent from January to July, while production of steel in the U.S.went up 10 percent.Other sectors which had returned to the U.S. include furniture, electronic appliances and textiles. One of the mostprominent is Thomasville Furniture, which announced in June it was bringing back the production of upholstered andwood furniture to the U.S. and in the process create 100 jobs in North Carolina.
But not everyone will return to the U.S. Notwithstanding the high shipping bill, raw material and labor is considerablycheaper in China than in the U.S.
Raw materials like titanium, nickel, coal, natural gas, water,and petroleum products are periodically unavailable or inshort supply.
Southwest has locked in 80 percent of its fuel costs, equivalent to $24 per barrel for all of 2004. The remaining 20 percent will be bought at market value.
Ray Neidl, an analyst at Manhattan-based Blaylock & Partners, said Southwest is in a good
position by hedging its fuel costs, unlike most other airlines that are now paying marketprices for fuel.
1. The organizational unit of analysis is an operating unit(e.g., a factory, a company, or a division/business unitwithin a company).
2. Operations management is concerned primarily with
stable, well-specified "products" and "processes."
3. A major concern of operations managers is reducing thevariable cost of production.
4. Your competitors are your enemies, and the key toprevailing against them lies in differentiation (e.g., throughlower cost, superior performance, etc.).