Definitions of Operations managementOperations management is an
area of business concerned with the production of goods and
services, and involves the responsibility of ensuring that business
operations are efficient in terms of using as little resource as
needed, and effective in terms of meeting customer requirements. It
is concerned with managing the process that converts inputs (in the
forms of materials, labor and energy) into outputs (in the form of
goods and services). Operations traditionally refer to the
production of goods and services separately, although the
distinction between these two main types of operations is
increasingly difficult to make as manufacturers tend to merge
product and service offerings. More generally, Operations
Management aims to increase the content of value-added activities
in any given process. Fundamentally, these value-adding creative
activities should be aligned with market opportunity (see
Marketing) for optimal enterprise performance. According to the
U.S. Department of Education, Operations Management [is the field
concerned with managing and directing] the physical and/or
technical functions of a firm or organization, particularly those
relating to development, production, and manufacturing. [Operations
Management programs typically include] instruction in principles of
general management, manufacturing and production systems, plant
management, equipment maintenance management, production control,
industrial labor relations and skilled trades supervision,
strategic manufacturing policy, systems analysis, productivity
analysis and cost control, and materials planning.
Various types of operations Purchasing Control and Coordinating
Function of Management Product and Service Management Quality
Management Inventory Management Logistics and Transportation
Management Facilities Management Configuration Management
Distribution Channels Enterprise Resource Planning
Task of operation managersWork Environment One of the duties an
operation manager has to perform is to provide a work environment
that engenders positive energy, creativity and teamwork among
employees. To ensure that this goal is achieved, operations
managers try to reach compromises with employees by conducting
meetings, listening to each department's issues and concerns, and
setting a professional example by showing leadership qualities.
Institute Rules In order for a department to run smoothly, an
operations manager has to set rules and procedures for employees to
follow. This includes setting policies in the workplace to ensure
effective implementation and adherence among each and every
employee in the organization. Manages Budget An operations manager
usually handles a companys operating budget to determine how much
the company has spent and what it can purchase in the near future.
Being an operations manager is all about serving customers;
therefore the individual needs to know how much money is in a
company's budget to provide the products and services that will
retain customers. Representative Operations managers are also
representatives at committee meetings and functions. The manager
will be a spokesperson for the company and discuss the various
objectives and plans the organization has in store to make its
business more successful. Decision-Maker Handling issues is also a
top priority among operations managers. Many issues that operations
managers have to face include risk management, shipment delays,
clients dissatisfaction and employee problems. This is when
leadership skills come into play, as operations managers have to
make effective decisions that will not only help the company run
smoothly but that also serve to prevent difficult situations in the
future. Recruiter/Supervisor Operation managers are also
responsible for hiring employees inside an organization, as well as
supervising and evaluating employees and their job performance. In
addition to being a recruiter, operations managers give directions
to employees on certain job tasks, resolve problems concerning
employees work performance, establish rules and procedures and
create work schedules.
Tasks of an operation manager
Oversee activities directly related to making products or
providing services. Direct and coordinate activities of businesses
or departments concerned with the production, pricing, sales, or
distribution of products. Review financial statements, sales and
activity reports, and other performance data to measure
productivity and goal achievement and to determine areas needing
cost reduction and program improvement. Manage staff, preparing
work schedules and assigning specific duties. Direct and coordinate
organization's financial and budget activities to fund operations,
maximize investments, and increase efficiency. Establish and
implement departmental policies, goals, objectives, and procedures,
conferring with board members, organization officials, and staff
members as necessary. Determine staffing requirements, and
interview, hire and train new employees, or oversee those personnel
processes. Plan and direct activities such as sales promotions,
coordinating with other department heads as required. Determine
goods and services to be sold, and set prices and credit terms,
based on forecasts of customer demand. Locate, select, and procure
merchandise for resale, representing management in purchase
negotiations.
Importance of operation management in an organizationTo be able
produce professional managers capable of fulfilling strategic roles
within business and government enterprises the need for the
practice of operations management cannot be forgone. Operations
management is very important in business operations since it forms
the heart of the organization by controlling the system of
operation. Operations management deals with the design, operation,
and improvement of the systems that create and deliver a firms
primary products and services. Like marketing and finance,
operations management is a functional field of business with clear
management responsibilities. Guinness Ghana limited is a company in
which produces alcoholic and nonalcoholic beverages such as
Guinness and Malta Guinness respectively. In a business entity like
Guineas Ghana limited the use of operations management is very
necessary in every fabric of the companys activities. Guinness
Ghana Limited uses operations management to ensure and sustain
efficiency and effectiveness in the organization. Efficiency in
Guinness Ghana is concerned with how well resources such as human
expertise and inputs are put in use irrespective of the purpose for
which they were deployed in the company. The company through its
activities ensures that the primary objective for its establishment
to
make profits and maximize shareholders value is realized. The
company reduces its cost of production by ensuring that tangible
and intangible resources are not over stretched or wasted in the
organization. This is a situation where the company carries out
effectively its objectives to be the market leader using minimum
resources to achieve maximum output. The measures of effectiveness
and efficiency in Guinness Ghana leads to labor productivity,
yield, capacity fill working capital utilization and the efficiency
of production systems. Guinness Ghana Limited also makes good use
of its products and services management through operations
management. Product (or service) management includes a wide range
of management activities, ranging from the time that there's a new
idea for a product to eventually provide ongoing support to
customers who have purchased the new product. Every organization
conducts product management, whether it's done intentionally or
unintentionally. Guinness Ghana through this module provides a wide
overview of considerations in developing and managing its product.
How a product is developed or managed depends very much on the
nature of the organization and its products, Guinness Ghana uses it
core competences in the areas of manufacturing, branding, marketing
through wholesale and retail outlets to gain competitive advantage
in the market place. Quality management is also a very important
aspect of operations management in every organization. Guinness
Ghana is very critical about its products developed for the
customer in the market place. Quality management is crucial to
effective operations management, particularly continuous
improvement to match the consumers taste and preference at all
times. More recent advancements in quality, such as benchmarking
and total quality management, outsourcing and reengineering have
resulted in advancements to operations management in Guinness Ghana
Limited. The company through its reengineering and benchmarking
activities has always earned the leadership in the market.
Benchmarking serves as a first class internal auditing process
which the company uses to diagnose its weaknesses and identify ways
of turning them into strength to increase its customer base in the
market place. Management Control and Coordinating Function cannot
be forgone in operations management especially in a company like
Guinness Ghana Limited. Management control and coordination
includes a broad range of activities to ensure that the companys
goals are consistently being met in an effective and efficient
fashion. Basically, organizational coordination and control is what
the company uses to take a systematic approach to figuring out if
it is actually doing what it wanted to be doing or not. Some of the
major approaches to the companys organizational control and
coordination include product evaluation, product distribution,
advertising and promotion, sales and service and product
development. For instance, product distribution in Guinness Ghana
is done through retailers and other small distribution outlets
organized by the company to ensure that its products reaches the
consumer within an arms length. The company also uses
advertisements as a major instrument to reach the customer and
reorient the perception of customers about its products. In this
increasingly expanding and competitive marketplace, the company
ensures its products and services are prominently in the minds of
their customers and clients. This occurs as a result of ongoing
advertising and promotion by the company. Facilities management is
also a necessary function and its importance on operations
management for Guinness Ghana is needed. Effective operations
management in the companys activities depends on a great deal of
effective
management of facilities, such as buildings, computer systems,
signage, lighting and plants and machinery. Facilities management
in Guinness Ghana is very important since the company may be
engaged in a batch or mass production depending on the demand
circumstances on the market. In a case high demand which Could
necessitate higher or mass production, facilities needs to be
managed in producing large quantities of products which must be
standardized to meet the market demand at specific period. Well
managed facilities like plants and machinery in the company help in
production speed, lower per unit cost, ease of manufacture and
control and the efficiency in the companys production process.
Inventory control and management is one importance of operations
management that Guinness Ghana limited uses in its operations.
Managing and controlling the inventory of the company is very
critical. Innovative methods, such as Just-in-Time inventory
control, are some of the major instruments used by the company to
save costs and move products and services to customers more
quickly.
Key Forces in the Internal EnvironmentThe resource strength,
behavior, weakness, synergy and distinctive competences are major
components of the internal environment of an organization. An
organization uses different types of resources which leads to its
advantage (synergy) or disadvantage disynergy within an
organization. It is the effective use of these resources that leads
to synergistic advantage of the firm over another firm in the
industry (strengths) weakness of over a period of time.
Organizational capability in the design and implementation of
corporate policy and strategy rest on an organizations capacity and
ability to use its distinctive competences to excel in a particular
operation. Some of the constituents of internal environments of an
organization are:
Organizational ResourcesThese are all the inputs physical or
human used in the organization to create outputs in the firm of
product or services through a transformation process. Some other
resources of organizations are money, facilities, systems,
knowledge, materials and manpower. The cost and availability of
these resources are important factors that determine the success of
an organizations policy and strategy.
Organizational Behavior
These behaviors an organization demonstrates as a result of
influences and forces operating in the internal environment of
determine the ability or constraints in the usage of resources is
termed organizational behavior.
Synergistic AdvantageThis is a situation where the whole is
greater than the sum of its parts within an organization. 1 + 1 =
3. it is a situation where attributes do not add up mathematically
but combine to yield an enhanced or reduced impact i.e.
(synergistic effect). Two or more department could combine to
support each other, in order to realize higher output or to share
an impact within the organization. For instance, marketing,
distribution and promotion may support each other for higher level
of marketing strategy. Conversely, marketing inefficiency on the
other hand, reduces production efficiency (dysenergy) i.e. negative
synergy occurs.
Strengths and WeaknessesThe strength of an organization are the
attributes the organization has over another organization. The
strength gave the organization the competitive edge over another in
the same industry, while weaknesses are areas within the
organization where the competitors in the same industry can take
advantage of as their competitive edge.
Distinctive CompetenceThis is a comparative quality of one
organization over the other. A distinctive competence of an
organization is the ability of that firm to do what its competitors
cannot do or do better whet they can do. This concept is useful for
strategy formulation. Use of trained and qualified manpower could
be an organization distinct. Competences over the other who may
resolve o use the unskilled and low paid workers.
Key Forces in the External EnvironmentAdministrative/Legal
Environment The administrative and legal environment in a country
provides a framework within which an organization operates. In some
countries this environment is very restrictive and has significant
impact on all aspects of the organization; in other countries the
administrative/legal context is more permissive. Understanding the
administrative/legal environment is essential to determining if
organizational change can take place. The administrative context
within which the organization operates may be shaped by a unique
combination of forces, including international, governmental,
nongovernmental policy, legislative, regulatory, and legal
frameworks. An
organization is affected by the policy or regulatory context
that gave rise to it. This includes specific laws and regulations
that support or inhibit the institution's development. Several
specific dimensions of the administrative environment should be
examined: Whether there are constitutional restrictions on the
organization: An assessment should first determine whether the
organization is part of a government ministry or department, and
whether it is under federal or provincial jurisdiction. Whether
specific regulations govern the goals and structures of the
organization: It is important for IDRC to know if the organization
has a specific mandate and/or a specific structure that has been
imposed. Whether there is a legislative mandate that restricts
leadership of the organization: It is helpful to understand any
parameters that have been set around who can lead an organization.
This includes identifying the governing body of the organization,
and understanding how its members are selected, and further
understanding who has the mandate or authority to set goals for the
organization and develop curriculum.
Technology Environment Both the types and the level of
technology in the society give insight into understanding an
institution. Institutions dealing with Western paradigms are
dependent on the state of national infrastructure, e.g. power,
water, transport; those which concentrate on indigenous research
paradigms may have totally different dependencies. Thus, it is
important to understand the level of relevant technology in the
institutional context and whether such technology is defined by
computer literacy or by highly developed indigenous methods of
verbal and nonverbal communication. It might also be helpful for an
assessment to include a consideration of the process by which new
technology comes into use, both to understand how difficult it is
to acquire needed research technologies and to develop an
appreciation for the society's willingness to embrace both new
knowledge and change. Political Environment At a general level,
IDRC needs to understand the relationship between governmental
strategy or development plans and the institution. Several specific
dimensions of the political context should be scrutinized: The
extent to which government and its bureaucracy supports and
contributes resources to the institution: It is imperative that
IDRC and other funding agencies know whether significant
governmental inputs are anticipated to support increased staffing,
maintenance, or other recurring costs typical in research projects.
The political context usually entails resource trade-off decisions
at the government level.
The extent to which the political system is stable or poised to
undergo significant change: This factor is vital; the foreign
policy context and its effect on IDRC should also be considered.
Whether the political context of the institution directly involves
the legal context: Some institutions require specific legal status
to operate, to receive external funding, and to import equipment in
support of research.
Economic Environment In the economic environment, the
organizational analysis should centre on those aspects of the
economic system that directly impact the type of project being
considered. For example, inflation, labour laws, and opportunity
costs for researchers in public institutions directly impact
organizational activities. Clearly, a country under a structural
adjustment regime or one that is expecting to undergo restructuring
presents an investment context that IDRC needs to understand.
Countries with foreign currency restrictions represent different
environments for institutions than countries without them, for such
restrictions have ramifications for research, e.g. for equipment
procurement and maintenance. It is important for IDRC to know how
the organization the Centre is supporting is affected by these and
other economic forces. Social and Cultural Environments Social and
cultural forces at local, national, and often regional levels have
profound influence on the way organizations conduct their work and
on what they value in terms of outcomes and effects. For example,
the mores of an indigenous culture have a bearing on the work ethic
and on the way in which people relate to one another. Undoubtedly,
the most profound cultural dimension is language. The extent to
which organizational members can participate in the discourse of
the major scientific language will determine the extent to which
research efforts focus inwardly or contribute to regional and
global research agendas. Understanding the national/regional/local
values toward learning and research provides insight into the type
and nature of research that is valued. For example, what is the
relative priority placed on contract research in partnership with
local clients, e.g. testing products and procedures with indigenous
populations, as opposed to sharing information with academic peers
internationally, or generating biostatistical data that will shape
national or regional policy? Arriving at these priorities involves
culture-based decisions. Stakeholder Environment Although research
institutions tend to be driven by the research mission and the
process of achieving it, all institutions are dependent for their
survival on various groups of stakeholders. The stakeholder
environment consists of those people and organizations external to
the research institution who are directly concerned with the
organization and its performance. Examples of stakeholders are
suppliers, clients, sponsors, donors, potential target groups, and
other
institutions doing similar or complementary work. An
organizational analysis seeks to learn the identity of these groups
in order to assess their potential impact on the organization.
Because of its international interdependent dimension, contemporary
research relies on institutional relationships, and these need to
be understood. Thus formal and de facto relationships with
universities, government departments and agencies and other
research institutions both within and outside the country need to
be understood. Influences from these multiple environmental
contexts can become major facilitating or constricting forces on
the institution as it works to accomplish its mission. In the
extreme, these forces can keep an institution alive artificially;
conversely, they can thwart organizational survival.
Strategic PlanningA strategic plan: 1) Is a road map to lead an
organization from its present state to its Strategic planning
involves determining the required actions to achieve a desired
vision considering the present state of an organization. desired
medium or long term future state 2) Specifies the mission, vision,
goals, strategies and objectives Strategic Planning Process Steps
include: a. Analyzing the present environment SWOT b. Providing a
vision statement c. Refining vision into goals d. Determining
strategies using the outcomes of SWOT analysis and specified goals
e. Formulating concrete and measurable objectives from strategies
f. Communicating and reviewing the strategic plan
The Value ChainTo analyze the specific activities through which
firms can create a competitive advantage, it is useful to model the
firm as a chain of value-creating activities. Michael Porter
identified a set of interrelated generic activities common to a
wide range of firms. The resulting model is known as the value
chain and is depicted below:
Primary Value Chain Activities Outboun d Logistics
Inbound Logistics
>
Operations
>
>
Marketing & Sales
>
Service
The goal of these activities is to create value that exceeds the
cost of providing the product or service, thus generating a profit
margin.
Inbound logistics include the receiving, warehousing, and
inventory control of input materials. Operations are the
value-creating activities that transform the inputs into the final
product. Outbound logistics are the activities required to get the
finished product to the customer, including warehousing, order
fulfillment, etc. Marketing & Sales are those activities
associated with getting buyers to purchase the product, including
channel selection, advertising, pricing, etc. Service activities
are those that maintain and enhance the product's value including
customer support, repair services, etc.
Any or all of these primary activities may be vital in
developing a competitive advantage. For example, logistics
activities are critical for a provider of distribution services,
and service activities may be the key focus for a firm offering
on-site maintenance contracts for office equipment. These five
categories are generic and portrayed here in a general manner. Each
generic activity includes specific activities that vary by
industry.
Support ActivitiesThe primary value chain activities described
above are facilitated by support activities. Porter identified four
generic categories of support activities, the details of which are
industry-specific.
Procurement - the function of purchasing the raw materials and
other inputs used in the value-creating activities. Technology
Development - includes research and development, process
automation, and other technology development used to support the
value-chain activities. Human Resource Management - the activities
associated with recruiting, development, and compensation of
employees. Firm Infrastructure - includes activities such as
finance, legal, quality management, etc.
Support activities often are viewed as "overhead", but some
firms successfully have used them to develop a competitive
advantage, for example, to develop a cost advantage through
innovative management of information systems.
Value Chain AnalysisIn order to better understand the activities
leading to a competitive advantage, one can begin with the generic
value chain and then identify the relevant firm-specific
activities. Process flows can be mapped, and these flows used to
isolate the individual value-creating activities. Once the discrete
activities are defined, linkages between activities should be
identified. A linkage exists if the performance or cost of one
activity affects that of another. Competitive advantage may be
obtained by optimizing and coordinating linked activities. The
value chain also is useful in outsourcing decisions. Understanding
the linkages between activities can lead to more optimal
make-or-buy decisions that can result in either a cost advantage or
a differentiation advantage.
The Value SystemThe firm's value chain links to the value chains
of upstream suppliers and downstream buyers. The result is a larger
stream of activities known as the value system. The development of
a competitive advantage depends not only on the firm-specific value
chain, but also on the value system of which the firm is a
part.
Micro and Macro OperationsA digital computer performs various
operations. These operations can be classified into two groupsmicro
operations and macro operations. Micro Operations: This is an
elementary operation during one clock pulse on the information
stored in one or more registers i.e., the operations executed on
data stored in registers are called micro operations. The result of
these micro operations may change the previous contents of the
registers or it may be transferred to the other registers. Macro
Operations: A set of micro operations specified by an instruction
is known as macro operation. For example when an instruction is
decoded, the necessary control signals are generated by the control
unit. To do this various operations are performed on registers. All
these operations are separately known as micro operations and
combined together are known as macro operation.
The addition of memory contents into accumulator is treated as
one macro operation. This is achieved with the instruction opcode
ADD. The above macro operation consists of the following set of
micro operations which are activated for every clock pulse. T1
State: Contents of program counter are transferred to memory
address register. T2 State: Program counter is incremented to point
to next instruction. T3 State: The instruction is transferred to
instruction register. T4 State: The instruction is decoded and
executed resulting in the addition of memory contents M to
accumulator.
Internal team factors to considerTask Structure: Is the team
task clear, consistent with the teams purpose, and aligned with
Important organizational goals? Does the team have a meaningful
piece of work to do for which members share responsibility and
accountability and that provides opportunities for the team to
learn how well it is doing? Is the outcome that the team is seeking
clearly understood by each of the members? Team Composition: Is the
team well staffed? Is it the right size, given the work to be done?
Do members have the expertise required to perform the task well? Do
they have sufficient interpersonal skill to function
collaboratively? Are team members so similar in background and
perspectives that there is little for them to learn from one
another? Or are they so different that they risk having difficulty
communicating and coordinating with one another? Core Norms:
Expectations of what is acceptable team behavior tend either to be
imported to the team by members or established very early in the
teams lifespan. Articulating these norms ahead of time via a team
charter or team vision statement can be very helpful, and should
cover areas such as how the team will make decisions, communicate
and evaluate itself. Decision Making: Does the team have an
appropriate process in place for making decisions, and does it in
fact adhere to that process?
External team factors to considerReward System: Does the
companys reward system provide recognition, reinforcement and
compensation that are contingent on team performance? Are rewards
administered to the team as
a whole or to individuals within the team? Does the reward
system truly encourage team members to work collaboratively?
Educational System: Is training or technical assistance available
to the team for any aspects of the work for which members do not
already have adequate knowledge, skill or experience? Information
System: Does the team have ready access to the data, tools and
other resources that enable superior performance? Organizational
Culture: Does the company for which the team works have a
collaborative culture that genuinely fosters and supports teams? Or
is it a culture that still promotes and recognizes individual
achievement? Do the companys top leaders really buy-into the
concept of teams? In summary, those who create, lead and evaluate
work teams in organizations should focus their efforts on these
internal and external factors that support effective team
performance. Operations performance objectives This first point
made in this section of the chapter is that operations objectives
are very broad. Operations management has an impact on the five
broad categories of stakeholders in any organization. Stakeholders
is a broad term but is generally used to mean anybody who could
have an interest in, or is affected by, the operation. The five
groups are: Customers These are the most obvious people who will be
affected by any business. What the chapter goes on to call the five
operations performance objectives apply primarily to this group of
people. Suppliers Operations can have a major impact on suppliers,
both on how they prosper themselves, and on how effective they are
at supplying the operation. Shareholders Clearly, the better an
operation is at producing goods and services, the more likely the
whole business is to prosper and shareholders will be one of the
major beneficiaries of this. Employees Similarly, employees will be
generally better off if the company is prosperous; if only because
they are more likely to be employed in the future. However
operations responsibilities to employees go far beyond this. It
includes the general working conditions which are determined by the
way the operation has been designed. Society Although often having
no direct economic connection with the company, individuals and
groups in society at large can be impacted by the way its
operations managers behave. The most obvious example is in the
environmental responsibility exhibited by operations managers.
After making this general point about operations objectives, the
rest of the part goes on to look at the five performance objectives
of quality, speed, dependability, flexibility, and cost.
CostThe chapter makes two important points here. The first is
that the cost structure of different organizations can vary
greatly. Note how the different categories of cost vary in the four
examples given in the chapter. Second, and most importantly, the
other four performance objectives all contribute, internally, to
reducing cost. This has been one of the major revelations within
operations management over the last twenty years. "If managed
properly, high quality, high speed, high dependability and high
flexibility can not only bring their own external rewards, they can
also save the operation cost."
QualityQuality is placed first in our list of performance
objectives because many authorities believe it to be the most
important. Certainly more has been written about it than almost any
other operations performance objective over the last twenty years.
Later in the book we devote two whole chapters (Chapter 17 and
Chapter 20) which look at different aspects of quality. As far as
this introduction to the topic is concerned, quality is discussed
largely in terms of it meaning conformance. That is, the most basic
definition of quality is that a product or service is as it is
supposed to be. In other words, it conforms to its
specifications.
SpeedSpeed is a shorthand way of saying Speed of response. It
means the time between an external or internal customer requesting
a product or service, and them getting it. Again, there are
internal and external affects.
DependabilityDependability means being on time. In other words,
customers receive their products or services on time. In practice,
although this definition sounds simple, it can be difficult to
measure. What exactly is on time? Is it when the customer needed
delivery of the product or service? Is it when they expected
delivery? Is it when they were promised delivery? Is it when they
were promised delivery the second time after it failed to be
delivered the first time? Again, it has external and internal
affects.
FlexibilityThis is a more complex objective because we use the
word flexibility to mean so many different things. The important
point to remember is that flexibility always means being able to
change the operation in some way. The chapter identifies some of
the different types of flexibility (product/service flexibility,
mix flexibility, volume flexibility, and delivery flexibility). It
is important to understand the difference between these different
types of flexibility, but it is more important to understand the
affect flexibility can have on the operation. Guess what! There are
external and internal affects.
The Relationship between Manufacturing and Service Provision in
Operations ManagementOperations management is a large segment which
is concerned with the existence of any organization. Every
organization has an operations function to produce some type of
products and/or services. It is well-known that manufacturing
differs from service provision in many aspects. The main difference
between products and services would be tangibility. While the
outputs of manufacturing are tangible, the outputs of service
provision are intangible. Some industries are the mixture of both
manufacturing and service provision, which provide both products
and services. Likewise, the operations managements which different
industries apply are also very different. This article is
concerning these differences in different areas, providing some
industries and some companies for the analysis. Operations
management is a large segment which is concerned with the existence
of any organization. Every organization has an operations function
to produce some type of products and/or services. It is well-known
that manufacturing differs from service provision in many aspects.
The main difference between products and services might be the
tangibility. While the outputs of manufacturing are tangible, the
outputs of service provision are intangible. Some industries are
the mixture of both manufacturing and service provision, which
provide both products and services. Likewise, the operations
managements which different industries apply are also very
different. This essay is concerning these differences in different
areas. All operations are concerned with
input-transformation-output process. Such process in different
sorts of areas might be significantly different. Operations
management in manufacturing The principle role of the manufacturing
firm is to turn physical raw materials into tangible products. A
tangible product is one that can be physically touched, valued in
monetary terms, visualized, and described by dimensional terms such
as weight, length, height, volume, etc.
(D. L. Waller, 1999, p.6) According to the example of car
industry, it is clear that car industry just produce cars during
the entire transformation process. The activities of operations in
car industry are to make components to assemble the cars through
the product line, namely, to transform raw materials or components
into finished goods destined for final consumers. There is less
client contact in manufacturing. The clients only make an
appearance on delivery of the finished cars or perhaps at the start
of the operation if the car is of new design. Car manufacturing is
usually a higher proportion of technicians and engineers.
Operations management in mixed industry of manufacturing and
service provision As for mixed industry such as restaurant, it is
easily seen that such kind of industry combines the generic
characteristics of both the manufacturing and the service.
Restaurants produce food as well as provide service. So, operations
managers or manageress are responsible to pay attention to both the
products and the services on the running of the services. It is
concerned with the production of the food and the services the
waiter/waitress provide to the customers. Operations management in
services A service industry also provides a product but this
product is often (but not always) intangible and cannot be
described in the same dimensional terms as manufactured goods (D.
L. Waller, 1999, p.6). As the example of the clinic above given,
clinic just provides medical services, namely, the treatment which
is the pure service. Compared with manufacturing, there is
generally more client contact of the operating environment.
Furthermore, as opposed to car manufacturing, clinic is more people
oriented. As an organization develops plans and strategies to deal
with the opportunities and challenges that arise in its particular
operating environment, it should design a system that is capable of
producing quality services and goods in demanded quantities in
acceptable time frames.
Operations management design objectivesDESIGNING THE SYSTEM
Designing the system begins with product development. Product
development involves determining the characteristics and features
of the good (or service if engaged in a serviceoriented industry)
to be sold. It should begin with an assessment of customer needs
and eventually grow into a detailed product design. The facilities
and equipment that will produce the product, as well as the
information systems needed to monitor and control performance, are
part
of this system design process. In fact, manufacturing process
decisions are integral to a system's ultimate success or failure.
"Of all the structural decisions that the operations manager faces,
the one with the greatest impact on the manufacturing operation's
success is the process/technology choice, " said Thomas S. Bateman
and Carl P. Zeithaml in Management: Function and Strategy. "This
decision addresses the question 'How will the product be made?' "
Product development should be a cross-functional decision making
process that relies on teamwork and communication to install the
marketing, financial, and operating plans needed to successfully
launch a product. Product design is a critical task because it
determines the characteristics and features of the product, as well
as how the product functions. Product design determines a product's
cost and quality, as well as its features and performance. These
are important factors on which customers make purchasing decisions.
In recent years, new design models such as Design for Manufacturing
and Assembly (DFMA) have been implemented to improve product
quality and lower costs. DFMA focuses on operating issues during
product design. This can be critical even though design costs are a
small part of the total cost of a product, because, procedures that
waste raw materials or duplicate effort can have a substantial
negative impact on a business's operating profitability. Another
innovation similar to DFMA in its emphasis on design is Quality
Functional Deployment (QFD). QFD is a set of planning and
communication routines that are used to improve product design by
focusing design efforts on customer needs. Process design describes
how the product will be made. The process design decision has two
major components: a technical (or engineering) component and a
scale economy (or business) component. The technical component
includes selecting equipment and selecting a sequence for various
phases of operational production. The scale economy or business
component involves applying the proper amount of mechanization
(tools and equipment) to make the organization's work force more
productive. This includes determining: 1) If the demand for a
product is large enough to justify mass production; 2) If there is
sufficient variety in customer demand so that flexible production
systems are required; and 3) If demand for a product is so small or
seasonal that it cannot support a dedicated production facility.
Facility design involves determining the capacity, location, and
layout for the production acility. Capacity is a measure of an
organization's ability to provide the demanded services or goods in
the quantity requested by the customer in a timely manner. Capacity
planning involves estimating demand, determining the capacity of
facilities, and deciding how to change the organization's capacity
to respond to demand. Facility location is the placement of a
facility with respect to its customers and suppliers. Facility
location is a strategic decision because it is a long-term
commitment of resources that cannot
easily or inexpensively be changed. When evaluating a location,
management should consider customer convenience, initial investment
necessary to secure land and facilities, government incentives, and
operating transportation costs. In addition, qualitative factors
such as quality of life for employees, transportation
infrastructure, and labor environment should also be taken under
consideration. Facility layout is the arrangement of the work space
within a facility. It considers which departments or work areas
should be adjacent to one another so that the flow of product,
information, and people can move quickly and efficiently through
the production system.
PLANNING THE SYSTEM Planning the system describes how management
expects to utilize the existing resource base created as a result
of the production system design. One of the outcomes of this
planning process may be to change the system design to cope with
environmental changes. For example, management may decide to
increase or decrease capacity to cope with changing demand, or
rearrange layout to enhance efficiency. Decisions made by
production planners depend on the time horizon. Long-range
decisions could include the number of facilities required to meet
customer needs or studying how technological change might affect
the methods used to produce services and goods. The time horizon
for longterm planning varies with the industry and is dependent on
both complexity and size of proposed changes. Typically, however,
long-term planning may involve determining work force size,
developing training programs, working with suppliers to improve
product quality and improve delivery systems, and determining the
amount of material to order on an aggregate basis. Shortterm
scheduling, on the other hand, is concerned with production
planning for specific job orders (who will do the work, what
equipment will be used, which materials will be consumed, when the
work will begin and end, and what mode of transportation will be
used to deliver the product when the order is completed).
MANAGING THE SYSTEM Managing the system involves working with
people to encourage participation and improve organizational
performance. Participative management and teamwork are an essential
part of successful operations, as are leadership, training, and
culture. In addition, material management and quality are two key
areas of concern. Material management includes decisions regarding
the procurement, control, handling, storage, and distribution of
materials. Material management is becoming more important because,
in many organizations, the costs of purchased materials comprise
more than 50 percent of the total
production cost. Questions regarding quantities and timing of
material orders need to be addressed here as well when companies
weigh the qualities of various suppliers.
Environmental sensitivitiesThe term Environmental sensitivities
describes a variety of reactions to chemicals, electromagnetic
radiation and other environmental factors at exposure levels
commonly tolerated by many people. These phenomena are not yet
fully understood. In contrast, some toxic environmental agents such
as such as metals (e.g. lead, mercury), rock dusts (e.g. asbestos,
silica), chemicals (e.g. hydrogen sulphide, dioxin) and biological
agents (e.g. scorpion or snake venom) are better understood as to
their ill effects on people. "Environmental sensitivities" does not
describe a single, simple condition with a universal cause.
Environmentally sensitive individuals link their symptoms to
aspects of their environment such as being in a particular place or
being exposed to one or more factors such as chemicals, biological
materials or electromagnetic phenomena. Environmental exposures may
not contribute to all these conditions in all patients, but one
should be alert to the possibility that a range of factors may
contribute to an individuals ill health.
Evaluation Design
The first step in any project is to develop a plan for the work
to be done. The plan for an evaluation project is called a "design"
and is a particularly vital step to provide an appropriate
assessment. A good design offers an opportunity to maximize the
quality of the evaluation, helps minimize and justify the time and
cost necessary to perform the work, and increases the strength of
the key findings and recommendations by ensuring that threats to
valid results are minimized. When you wish to have your program
evaluated, be prepared to engage in this planning process to ensure
that your questions will be answered and your needs met. An
evaluation design consists of the evaluation questions under study,
the methodological strategies for answering these questions, a data
collection plan that anticipates and addresses problems that may be
encountered, an analysis plan that will ensure that questions are
answered appropriately, and a product description (usually a
report). Taking the time to adequately define the evaluation
questions is perhaps the most important task, one the evaluator
will need to perform with the client to ensure that the client's
needs and concerns are met. Selecting an appropriate methodological
approach is probably the most important scientific task the
evaluator will perform, taking into consideration resource and time
constraints as well as scientific issues.
Providing a product description shows the client what to expect
from the evaluation and ensures that results will be useful. Each
of these sections is expanded upon below. Evaluation Questions
Evaluators help clients develop the "correct" questions for study,
because how questions are posed has immense implications for the
evaluation approach taken, the data collected, etc.-in other words,
for the entire evaluation design. This is so because evaluators
want to properly answer client questions. Therefore, evaluators
will work with clients to ensure that the wording of questions
accurately reflects what the client really wishes to know. To
ensure optimal results, you, as the client, must devote time during
this phase of the evaluation. Methodological Strategies There are
various general types of evaluations to meet one or more basic
client needs. "Normative" evaluation aims to determine the extent
to which programs are implemented in the way they were meant to be;
"process" evaluation aims to describe how the program is actually
functioning; and "outcome" or "impact" evaluation aims to assess
what effect the program had. Evaluators also use the terms
"formative" versus "summative" evaluation to refer to work that
focuses on forming/planning/improving a program, versus assessing
the end result or summary effects of the program. Evaluation
questions will fall into these types of categories and evaluators
will ensure that the methodological strategy selected will allow an
answer based on the type of question. For example, merely
describing the program implementation requires a simple, less
scientifically rigorous approach than attempting to claim that the
program had a certain effect on the intended targets. The latter
requires a method that assesses changes over time, and perhaps
comparisons among targets or control groups who did not participate
in the program. Evaluators are trained to recognize what sort of
approaches various types of evaluation questions require. Data
Collection and Analysis From the evaluation questions, the
evaluator will determine the kinds of information needed, the
sources of this information (e.g., employees, customers, clients),
methods of collecting the information (e.g., questionnaires,
interviews, observations), and the timing and frequency of data
collection. All the while, the evaluator will keep in mind the
resources available to collect information, and the time period in
which this information is needed, adjusting the plan accordingly.
To be truly efficient, any plan will require only the work actually
needed to complete a project. So it is with the data collection and
analysis sections of the evaluation plan. Only those data needed to
address the evaluation questions should be collected and a plan
will be ready to manipulate and use those data. You, as the client,
would not be expected to devote time to this phase.
Product Not only will evaluators know exactly what data are
needed and be ready to analyze them, but they will also have a plan
for presentation of those data and results that will simply and
accurately report the answers to the evaluation questions. The
design will show the product plans, customized for various
audiences if necessary. An in-depth evaluation design as described
above is the responsibility of the PEIS evaluation staff to create
and use. Once this in-depth evaluation plan has been prepared, PEIS
provides a short, summary evaluation plan for client review to
ensure that the plan captures their concerns and meets their needs
and interests. It includes the following components: evaluation
purpose, study questions, methodology, and deliverables. The
deliverables section makes it clear what product is expected from
the evaluation and when.
Effective Design of Office Space The layout of an office is a
crucial element in overall safety. Central to layout is ease of
navigation around the office and ease with which staff and
volunteers can complete tasks in a setting where desks, chairs,
computer stations, electronic equipment and file cabinets are
placed in a way that avoids overcrowding. The office layout should
be efficient, yet suitably comfortable so that staff and volunteers
can concentrate on work and clients. The most common safety hazards
associated with office design are falls, noise, inadequate
pathways, and placement of furniture/equipment. Falls A fall occurs
when a person loses his/her balance and footing. Once of the most
common causes of office falls is tripping over an open desk or file
drawer. Bending while seated in an unstable chair, and tripping
over electrical cords or wires are other common hazards. Office
falls are frequently caused by using a chair or stack of boxes in
place of a ladder and by slipping on wet floors. Loose carpeting,
objects stored in halls or walkways, and inadequate lighting are
other hazards that invite accidental falls. Fortunately, all of
these fall hazards are preventable. Noise Noise can be defined very
simply as unwanted sound. Office workers are subjected to many
noise sources including video display terminals, high-speed
printers, telephones, fax machines, human voices, outside traffic,
vendors, musicians and bullhorns. Noise can produce tension and
stress, as well as damage to hearing at high noise levels. For
noise levels in offices, the most common effects are interference
with speech communication, annoyance, and distraction from mental
activities, as well as tension headaches, clenching and grinding of
teeth, and neck and
shoulder muscle strain. The annoying effect of noise can
decrease performance or increase errors. If tasks require a great
deal of mental concentration, noise can be detrimental to
performance. Additionally, excessive noise can prevent staff,
volunteers and other from hearing emergency warnings, such as fire
alarms or sirens, or cries for help. Government standards have set
limits for exposure to noise to prevent hearing loss in employees.
The level of noise one can safely be exposed to depends on the
intensity of the noise and its duration of exposure. Problems could
arise in areas with a high concentration of noisy machines, such as
high-speed printers or photocopying machines. Halls and Pathways
Hallways should be kept free from furnishings, storage
compartments, and/or any unnecessary equipment. The halls and
pathways should be positioned where people naturally walk.
Shortcuts from one section of the office to another should be
recognized as possible new pathways. Cutting through office spaces
that are not considered pathways can be hazardous because of the
potential for tripping and falls. Placement of furniture/equipment
Office furniture and equipment should be placed so that staff and
volunteers can conduct tasks without having to stretch, strain or
reach. The setup of every workplace station should be customized to
fit the ergonomic needs of the user. File cabinets should be
located in areas which are not normally a footpath. Care should
also be taken to avoid the placement of furnishings to avoid the
following types of injuries:
Bumping into doors, desks, file cabinets, open drawers and
shelving. Walking into other people while moving about the office.
Striking open file drawers while bending down or straightening up.
Striking against sharp objects, such as office machines, spindle
files, staples, and pins.
Employees and volunteers need to be conditioned to pay attention
to where they are walking at all times, properly storing materials
in their work areas and never carrying objects that prevent the
individual from seeing ahead.
Work measurementApplication of time and motion study and
activity sampling techniques to determine the time for a qualified
worker to complete a specific job at a defined level of
performance. Work measurement is used in budgeting, manpower
planning, scheduling, standard costing, and in designing worker
incentive schemes.
The reason for measuring performanceFundamental purpose behind
measures is to improve performance. Measures that are not directly
connected to improving performance (like measures that are directed
at communicating better with public to build trust) are measures
that are means to achieving that ultimate purpose (Behn 2003). Behn
2003 gives 8 reasons for adapting performance measurements:1. To
evaluate
How well is public agency performing. To evaluate performance,
managers need to determine what agency supposed to accomplish.
(Kravchuk & Schack 1996). To formulate a clear, coherent
mission, strategy, and objectives. Then based on this information
choose how you will measure those activities. (You first need to
find out what are you looking for). Evaluation process consists of
two variables: organizational performance data and a benchmark that
creates framework for analyzing that data. For organizational
information focus on outcome of agencys performance, but also
including input/ environment/ process/ output- to have a
comparative framework for analysis. Its helpful to ask 4 essential
question in determining organizational data: Outcome should be
directly related to public purpose of the organization.
Effectiveness Q: did they produce required results (determined by
outcomes). Cost-effective: efficiency Q (outcome divided by input).
Impact Q: what value organization provides. Best-practice Q:
evaluating internal operations (compare core process performance to
most effective and efficient process in the industry). As in order
for organization to evaluate performance its requires standards
(benchmark) to compare its actual performance against past
performance/ from performance of similar agencies/ industry
standard/political expectations.2. To Control
How can managers ensure their subordinates are doing the right
thing. Today managers do not control their workforce mechanically
(measurement of time-andmotion for control as during Taylor)
However managers still use measures to control, while allowing some
space for freedom in the workforce. (Robert Kaplan & David
Norton) Business has control bias. Because traditional
measurement system sprung from finance function, the system has a
control bias. Organization creates measurement systems that specify
particular actions they want execute- for branch employees to take
a particular ways to execute what they wantbranch to spend money.
Then they want to measure to see whether the employees have in fact
taken those actions. Need to measure input by individual into
organization and process. Officials need to measure behavior of
individuals then compare this performance with requirements to
check who has and has not complied. Often such requirements are
described only as guidelines. Do not be fooled. These guidelines
are really requirements and those requirement are designed to
control. The measurement of compliance with these requirements is
the mechanism of control. 3. To Budget Budgets are crude tools in
improving performance. Poor performance not always may change after
applying budgets cuts as a disciplinary action. Sometimes budgets
increase could be the answer to improving performance. Like
purchasing better technology because the current ones are outdated
and harm operational processes. So decision highly influenced by
circumstance, you need measures to better understand the situation.
At the macro level, elected officials deciding which purpose of
government actions are primary or secondary. Political priorities
drive macro budgetary choices. Once elected officials have
established macro political priorities, those responsible for micro
decisions may seek to invest their limited allocation of resources
in the most cost-effective units and activities. In allocating
budgets, managers, in response to macro budget allocations (driven
by political objectives), determine allocations at the micro level
by using measures of efficiency of various activities, which
programs or organizations are more efficient at achieving the
political objectives. Why spend limited funds on programs that do
not guarantee exceptional performance? Efficiency is determined by
observing performance- output and outcome achieved considering
number of people involved in the process (productivity per person)
and costdata (capturing direct cost as well as indirect) 4. To
Motivate Giving people significant goals to achieve and then use
performance measures- including interim targets- to focus peoples
thinking and work, and to provide periodic sense of
accomplishment.
Performance targets may also encourage creativity in developing
better ways to achieve the goal (Behn) Thus measure to motivate
improvements may also motivate learning. Almost-real-time output
(faster, the better) compared with production targets. Quick
response required to provide fast feed-back so workforce could
improve and adapt. Also it is able to provide how workforce
currently performing. Primary aim behind the measures should be
output, managers can not motivate people to affect something over
which they have little or no influence. Once an agencys leaders
have motivated significant improvements using output targets, they
can create some outcomes targets. Output- focuses on improving
internal process. Outcome- motivate people to look outside the
agency (to seek way to collaborate with individuals &
organizations may affect the outcome produced by the agency) 5. To
Celebrate Organizations need to commemorate their accomplishments-
such ritual tie their people together, give them a sense of their
individual and collective relevance. More over, by achieving
specific goals, people gain sense of personal accomplishment and
selfworth (Locke & Latham 1984). Links from measurement to
celebration to improvement is indirect, because it has to work
through one of the likes- motivation, learning... Celebration helps
to improve performance because it brings attention to the agency,
and thus promotes its competence- it attracts resources. Dedicated
people who want to work for successful agency. Potential
collaborators. Learning-sharing between people about their
accomplishments and how they achieved it. Significant performance
targets that provide sense of personal and collective
accomplishment. Targets could ones used to motivate. In order for
celebration to be a success and benefits to be a reality managers
need to ensure that celebration creates motivation and thus
improvements. By leading the celebration.
6. To Promote How can public managers convince political
superiors, legislators, stakeholders, journalists, and citizens
that their agency is doing a good job. (National Academy of Public
Administrations center for improving government performance- NAPA
1999) performance measures can be used to: validate success;
justifying additional resources; earn customers, stakeholder, and
staff loyalty by showing results; and win recognition inside and
outside the organization. Indirectly promote competence and value
of government in general. To convince citizens their agency is
doing good, managers need easily understood measures of those
aspects of performance about which many citizens personally care.
(National Academy of Public Administration-NAPA in its study of
early performancemeasurement plans under the government performance
and results Act) most plans recognized the need to communicate
performance evaluation results to higher level officials, but did
not show clear recognition that the form and level of data for
these needs would be different than that for operating managers.
Different needs: Department head/ Executive Office of President/
Congress. NAPA suggested for those needs to be more explicitly
defined- (Kaplan & Nortan 1994) stress that different customers
have different concerns (1992). 7. To Learn Learning Is involved
with some process, of analysis information provided from evaluating
corporate performance (identifying what works and what does not).
By analysing that information, corporation able to learn reasons
behind its poor or good performance. However if there is too many
performance measures, managers might not be able to learn anything.
(Neves of National Academy of Public Administration 1986) Because
of rapid increase of performance measures there is more confusion
or noise than useful data. Managers lack time or simply find it too
difficult to try to identify good signals from mass of numbers.
Also there is an issue of black box enigma (data can reveal that
organisation is performing well or poorly, but they dont
necessarily reveal why). Performance measures can describe what is
coming out of black box as well as what is going in, but they do
not reveal what is happening inside. How are various inputs
interacting to produce the output? What more complex is outcome
with black box being all value chain?
Benchmarking is a traditional form of performance measurement
which facilitates learning by providing assessment of
organizational performance and identifying possible solutions for
improvements. Benchmarking can facilitate transfer of knowhow from
benchmarked organisations. (Kouzmin et al. 1999) Identifying core
process in organization and measuring their performance is basic to
benchmarking. Those actions probably provide answer to issue
presented in purpose section of the learning. Measurements that are
used for learning act as indicators for managers to consider
analysis of performance in measurements related areas by revealing
irregularities and deviations from expected data results. What to
measure aiming at learning (the unexpected- what to aim for?)
Learning occurs when organization meets problems in operations or
failures. Then corporations improve by analyzing those faults and
looking for solutions. In public sector especially, failure usually
punished severely- therefore corporations and individuals hide it.
8. To Improve What exactly should who- do differently to improve
performance? In order for corporation to measure what it wants to
improve it first need to identify what it will improve and develop
processes to accomplish that. Also you need to have a feedback loop
to assess compliance with plans to achieve improvements and to
determine if those processes created forecasted results
(improvements). Improvement process also related to learning
process in identifying places that are need improvements. Develop
understanding of relationships inside the black box that connect
changes in operations to changes in output and outcome.
Understanding black box processes and their interactions. How to
influence/ control workforce that creates output. How to influence
citizens/ customers that turn that output to outcome (and all
related suppliers)
They need to observe how actions they can take will influence
operations, environment, workforce and which eventually has an
impact on outcome. After that they need to identify actions they
can take that will give them improvements they looking for and how
organization will react to those actions ex. How might various
leadership activities ripple through the black box. Principles of
performance measurement All significant work activity must be
measured. Work that is not measured or assessed cannot be managed
because there is no objective information to determine its value.
Therefore it is assumed that this work is inherently valuable
regardless of its outcomes. The best that can be accomplished with
this type of activity is to supervise a level of effort. Unmeasured
work should be minimized or eliminated. Desired performance
outcomes must be established for all measured work. Outcomes
provide the basis for establishing accountability for results
rather than just requiring a level of effort. Desired outcomes are
necessary for work evaluation and meaningful performance appraisal.
Defining performance in terms of desired results is how managers
and supervisors make their work assignments operational.
Performance reporting and variance analyses must be accomplished
frequently. Frequent reporting enables timely corrective action.
Timely corrective action is needed for effective management
control.
Design and competitive advantageQuantitative Benefits Reduced
(avoided) costs spent on technical development and R&D of new
chemicals. Decreased resources spent on laboratory tests for human
health and environmental testing.
Qualitative Benefits A greater number of product combinations
and product alternatives can be evaluated early in concept
development. This allows for greater technology innovation and is
due to the quick and cost-effective nature of the P2 Framework.
Better and early information on environmental and health (E&H)
impacts allows the product development team to focus resources on
technical performance. Knowing the E&H profile early allows the
team to anticipate any additional E&H lab testing that may be
required for PMN submittal to EPA. Such information may also alert
the team to a chemical candidate that it wants to screen out from
the selection process based on E&H concerns before significant
resources have been spent on investigating its technical
performance. Better information allows companies to compare
competing product alternatives and helps them identify
environmentally sound technologies. Greater awareness of green
design.
AdvantagesIn the absence of an ERP system, a large manufacturer
may find itself with many software applications that cannot
communicate or interface effectively with one another. Tasks that
need to interface with one another may involve: ERP systems connect
the necessary software in order for accurate forecasting to be
done. This allows inventory levels to be kept at maximum efficiency
and the company to be more profitable. Integration among different
functional areas to ensure proper communication, productivity and
efficiency Design engineering (how to best make the product) Order
tracking, from acceptance through fulfillment The revenue cycle,
from invoice through cash receipt Managing inter-dependencies of
complex processes bill of materials Tracking the three-way match
between purchase orders (what was ordered), inventory receipts
(what arrived), and costing (what the vendor invoiced) The
accounting for all of these tasks: tracking the revenue, cost and
profit at a granular level. ERP Systems centralize the data in one
place. Benefits of this include:
Eliminates the problem of synchronizing changes between multiple
systems consolidation of finance, marketing and sales, human
resource, and manufacturing applications Permits control of
business processes that cross functional boundaries Provides
top-down view of the enterprise (no "islands of information"), real
time information is available to management anywhere, anytime to
make proper decisions. Reduces the risk of loss of sensitive data
by consolidating multiple permissions and security models into a
single structure. Shorten production leadtime and delivery time
Facilitating business learning, empowering, and building common
visions
Some security features are included within an ERP system to
protect against both outsider crime, such as industrial espionage,
and insider crime, such as embezzlement. A data-tampering scenario,
for example, might involve a disgruntled employee intentionally
modifying prices to below-the-breakeven point in order to attempt
to interfere with the company's profit or other sabotage. ERP
systems typically provide functionality for implementing internal
controls to prevent actions of this kind. ERP vendors are also
moving toward better integration with other kinds of information
security tools.
DisadvantagesProblems with ERP systems are mainly due to
inadequate investment in ongoing training for the involved IT
personnel - including those implementing and testing changes - as
well as a lack of corporate policy protecting the integrity of the
data in the ERP systems and the ways in which it is used.
Disadvantages
Customization of the ERP software is limited. Re-engineering of
business processes to fit the "industry standard" prescribed by the
ERP system may lead to a loss of competitive advantage. ERP systems
can be very expensive (This has led to a new category of "ERP
light" solutions) ERPs are often seen as too rigid and too
difficult to adapt to the specific workflow and business process of
some companiesthis is cited as one of the main causes of their
failure. Many of the integrated links need high accuracy in other
applications to work effectively. A company can achieve minimum
standards, and then over time "dirty data" will reduce the
reliability of some applications.
Once a system is established, switching costs are very high for
any one of the partners (reducing flexibility and strategic control
at the corporate level). The blurring of company boundaries can
cause problems in accountability, lines of responsibility, and
employee morale. Resistance in sharing sensitive internal
information between departments can reduce the effectiveness of the
software. Some large organizations may have multiple departments
with separate, independent resources, missions, chains-of-command,
etc, and consolidation into a single enterprise may yield limited
benefits.
Inventory capacity and control situationManufacturers make
production decisions and carry inventory to satisfy uncertain
demand. When holding and shortage costs are high, carrying
inventory could be even more expensive for a capacitated production
system. Recent developments in information technology and sales
strategies enabled firms to acquire, collect, or induce advance
demand information. We address a periodic-review, stochastic,
capacitated, finite and infinite horizon production system faced by
a manufacturer who has the ability to obtain advance demand
information. We establish optimal policies and characterize their
behavior with respect to capacity, fixed costs, advance demand
information, and the planning horizon. With a numerical study, we
quantify the value of advance demand information and additional
capacity for specific problem instances. We illustrate how advance
demand information can be a substitute for capacity and inventory.
Subject classifications: inventory/production: stochastic, optimal
policies, no station.
ApproachesThere are a number of approaches to managing project
activities including agile, interactive, incremental, and phased
approaches. Regardless of the methodology employed, careful
consideration must be given to the overall project objectives,
timeline, and cost, as well as the roles and responsibilities of
all participants and stakeholders. The traditional approach A
traditional phased approach identifies a sequence of steps to be
completed. In the "traditional approach", we can distinguish 5
components of a project (4 stages plus control) in the development
of a project:
Typical development phases of a engineering project
Project initiation stage; Project planning and design stage;
Project execution and construction stage; Project monitoring and
controlling systems; Project completion.
Not all the projects will visit every stage as projects can be
terminated before they reach completion. Some projects do not
follow a structured planning and/or monitoring stages. Some
projects will go through steps 2, 3 and 4 multiple times. Many
industries use variations on these project stages. For example,
when working on a brick and mortar design and construction,
projects will typically progress through stages like PrePlanning,
Conceptual Design, Schematic Design, Design Development,
Construction Drawings (or Contract Documents), and Construction
Administration. In software development, this approach is often
known as the waterfall model, i.e., one series of tasks after
another in linear sequence. In software development many
organizations have adapted the Rational Unified Process (RUP) to
fit this methodology, although RUP does not require or explicitly
recommend this practice. Waterfall development works well for
small, well defined projects, but often fails in larger projects of
undefined and ambiguous nature. The Cone of Uncertainty explains
some of this as the planning made on the initial phase of the
project suffers from a high degree of uncertainty. This becomes
especially true as software development is often the realization of
a new or novel product. In projects where requirements have not
been finalized and can change, requirements management is used to
develop an accurate and complete definition of the behavior of
software that can serve as the basis for software development.
While the terms may differ from industry to industry, the actual
stages typically follow common steps to problem solving "defining
the problem, weighing options, choosing a path, implementation and
evaluation." Critical Chain Project Management Critical Chain
Project Management (CCPM) is a method of planning and managing
projects that puts more emphasis on the resources (physical and
human) needed in order to execute project tasks. The most complex
part involves engineering professionals of different fields
(Civil,
Electrical, Mechanical etc) working together. It is an
application of the Theory of Constraints (TOC) to projects. The
goal is to increase the rate of throughput (or completion rates) of
projects in an organization. Applying the first three of the five
focusing steps of TOC, the system constraint for all projects is
identified as are the resources. To exploit the constraint, tasks
on the critical chain are given priority over all other activities.
Finally, projects are planned and managed to ensure that the
resources are ready when the critical chain tasks must start,
subordinating all other resources to the critical chain. Regardless
of project type, the project plan should undergo Resource Leveling,
and the longest sequence of resource-constrained tasks should be
identified as the critical chain. In multi-project environments,
resource leveling should be performed across projects. However, it
is often enough to identify (or simply select) a single "drum"
resourcea resource that acts as a constraint across projectsand
stagger projects based on the availability of that single resource.
Planning and feedback loops inExtreme Programming (XP) with the
time frames of the multiple loops.
Extreme Project Management In critical studies of Project
Management, it has been noted that several of these fundamentally
PERT-based models are not well suited for the multi-project company
environment of today. Most of them are aimed at very large-scale,
one-time, non-routine projects, and nowadays all kinds of
management are expressed in terms of projects. Using complex models
for "projects" (or rather "tasks") spanning a few weeks has been
proven to cause unnecessary costs and low maneuverability in
several cases. Instead, project management experts try to identify
different "lightweight" models, such as Agile Project Management
methods including Extreme Programming for software development and
Scrum techniques.
The generalization of Extreme Programming to other kinds of
projects is extreme project management, which may be used in
combination with the process modeling and management principles of
human interaction management. Event chain methodology Event chain
methodology is another method that complements critical path method
and critical chain project management methodologies. Event chain
methodology is an uncertainty modeling and schedule network
analysis technique that is focused on identifying and managing
events and event chains that affect project schedules. Event chain
methodology helps to mitigate the negative impact of psychological
heuristics and biases, as well as to allow for easy modeling of
uncertainties in the project schedules. Event chain methodology is
based on the following principles. Probabilistic moment of risk: An
activity (task) in most real life processes is not a continuous
uniform process. Tasks are affected by external events, which can
occur at some point in the middle of the task. Event chains: Events
can cause other events, which will create event chains. These event
chains can significantly affect the course of the project.
Quantitative analysis is used to determine a cumulative effect of
these event chains on the project schedule. Critical events or
event chains: The single events or the event chains that have the
most potential to affect the projects are the critical events or
critical chains of events. They can be determined by the analysis.
Project tracking with events: Even if a project is partially
completed and data about the project duration, cost, and events
occurred is available, it is still possible to refine information
about future potential events and helps to forecast future project
performance. Event chain visualization: Events and event chains can
be visualized using event chain diagrams on a Gantt chart.
PRINCE2 PRINCE2 is a structured approach to project management,
released in 1996 as a generic project management method. It
combined the original PROMPT methodology (which evolved into the
PRINCE methodology) with IBM's MITP (managing the implementation of
the total project) methodology. PRINCE2 provides a method for
managing projects within a clearly defined framework. PRINCE2
describes procedures to coordinate people and activities in a
project, how to design and supervise the project, and what to do if
the project has to be adjusted if it does not develop as planned.
In the method, each process is specified with its key inputs and
outputs and with specific goals and activities to be carried out.
This allows for automatic control of any deviations from the
plan.
Divided into manageable stages, the method enables an efficient
control of resources. On the basis of close monitoring, the project
can be carried out in a controlled and organized way. PRINCE2
provides a common language for all participants in the project. The
various management roles and responsibilities involved in a project
are fully described and are adaptable to suit the complexity of the
project and skills of the organization.
Process-
based management
Capability Maturity Model, predecessor of the CMMI Model Also
furthering the concept of project control is the incorporation of
process-based management. This area has been driven by the use of
Maturity models such as the CMMI (Capability Maturity Model
Integration) and ISO/IEC15504 (SPICE - Software Process Improvement
and Capability Estimation). Agile Project Management approaches
based on the principles of human interaction management are founded
on a process view of human collaboration. This contrasts sharply
with the traditional approach. In the agile software development or
flexible product development approach, the project is seen as a
series of relatively small tasks conceived and executed as the
situation demands in an adaptive manner, rather than as a
completely preplanned process.
Capacity ManagementYou cant always get what you want. No, you
cant always get what you want. But if you try sometimes, you just
might find you get what you need.
Long-Term Capacity Management
Efficient long-term capacity management is vital to any
manufacturing firm. It has implications on competitive performance
in terms of cost, delivery speed, dependability and flexibility. In
a manufacturing strategy, capacity is a structural decision
category, dealing with dynamic capacity expansion and reduction
relative to the long-term changes in demand levels. Sales and
operations planning (S&OP) is the long-term planning of
production levels relative to sales within the framework of a
manufacturing planning and control system. Within the S&OP,
resource planning is used for determining the appropriate capacity
levels in order to support the production plan. Manufacturing
strategy and sales and operations planning provide two perspectives
on long-term capacity management, raising and treating different
issues. In this paper, we compare and link them in a framework for
long-term capacity management. Equipment additions Facility
expansions Workforce policies