[PPT]Operations and Productivity - Welcome To Your … · Web viewIntroduction to Operations Management 1 PowerPoint presentation to accompany Heizer and Render Operations Management,

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1 Introduction to Operations Management

PowerPoint presentation to accompany PowerPoint presentation to accompany Heizer and Render Heizer and Render Operations Management, 10e, Global Edition Operations Management, 10e, Global Edition Principles of Operations Management, 8e, Global EditionPrinciples of Operations Management, 8e, Global Edition

PowerPoint slides by Jeff Heyl

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Organizing to Produce Organizing to Produce Goods and ServicesGoods and Services

Essential functions:1.1. MarketingMarketing – generates demand2.2. Production/operationsProduction/operations – creates

the product3.3. Finance/accountingFinance/accounting – tracks how

well the organization is doing, pays bills, collects the money

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Organizational ChartsOrganizational Charts

OperationsTeller SchedulingCheck ClearingCollectionTransaction processingFacilities design/layoutVault operationsMaintenanceSecurity

FinanceInvestmentsSecurityReal estate

Accounting

Auditing

MarketingLoans Commercial Industrial Financial Personal Mortgage

Trust Department

Commercial Bank

Figure 1.1(A)

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Organizational ChartsOrganizational Charts

OperationsGround support equipmentMaintenanceGround Operations Facility maintenance Catering Flight Operations Crew scheduling Flying Communications DispatchingManagement science

Finance/ accountingAccounting Payables Receivables General LedgerFinance Cash control International exchange

Airline

Figure 1.1(B)

MarketingTraffic administration Reservations Schedules Tariffs (pricing)SalesAdvertising

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MarketingSales promotionAdvertisingSalesMarket research

Organizational ChartsOrganizational Charts

OperationsFacilities Construction; maintenanceProduction and inventory control Scheduling; materials controlQuality assurance and controlSupply-chain managementManufacturing Tooling; fabrication; assemblyDesign Product development and design Detailed product specificationsIndustrial engineering Efficient use of machines, space, and personnelProcess analysis Development and installation of production tools and equipment

Finance/ accountingDisbursements/ credits Receivables Payables General ledgerFunds Management Money market International exchangeCapital requirements Stock issue Bond issue and recall

Manufacturing

Figure 1.1(C)

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Why Study OM?Why Study OM?1. OM is one of three major functions of

any organization, we want to study how people organize themselves for productive enterprise

2. We want (and need) to know how goods and services are produced

3. We want to understand what operations managers do

4. OM is such a costly part of an organization

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What Operations What Operations Managers DoManagers Do

Planning Organizing Staffing Leading Controlling

Basic Management FunctionsBasic Management Functions

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Ten Critical DecisionsTen Critical DecisionsTen Decision Areas Chapter(s)1. Design of goods and services 52. Managing quality 6, Supplement 63. Process and capacity 7, Supplement 7

design 4. Location strategy 85. Layout strategy 96. Human resources and 10

job design 7. Supply-chain 11, Supplement 11

management8. Inventory, MRP, JIT 12, 14, 169. Scheduling 13, 1510. Maintenance 17 Table 1.2

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The Critical DecisionsThe Critical Decisions1. 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?

Table 1.2 (cont.)

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The Critical DecisionsThe Critical Decisions3. 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?

Table 1.2 (cont.)

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The Critical DecisionsThe Critical Decisions5. 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?

Table 1.2 (cont.)

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The Critical DecisionsThe Critical Decisions7. 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?

Table 1.2 (cont.)

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The Critical DecisionsThe Critical Decisions9. Intermediate and short–term

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?

Table 1.2 (cont.)

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Where are the OM Jobs?Where are the OM Jobs? Technology/methods Facilities/space utilization Strategic issues Response time People/team development Customer service Quality Cost reduction Inventory reduction Productivity improvement

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OpportunitiesOpportunities

Figure 1.2

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CertificationsCertifications APICS, the American Production and

Inventory Control Society American Society of Quality (ASQ) Institute for Supply Management (ISM) Project Management Institute (PMI) Council of Supply Chain Management

Professionals Charter Institute of Purchasing and

Supply (CIPS)

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Significant Events in OMSignificant Events in OM

Figure 1.3

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The Heritage of OMThe Heritage of OM Division of labor (Adam Smith 1776;

Charles Babbage 1852) Standardized parts (Whitney 1800) Scientific Management (Taylor 1881) Coordinated assembly line (Ford/

Sorenson 1913) Gantt charts (Gantt 1916) Motion study (Frank and Lillian Gilbreth

1922) Quality control (Shewhart 1924; Deming

1950)

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The Heritage of OMThe Heritage of OM Computer (Atanasoff 1938) CPM/PERT (DuPont 1957, Navy 1958) Material requirements planning (Orlicky

1960) Computer aided design (CAD 1970) Flexible manufacturing system (FMS 1975) Baldrige Quality Awards (1980) Computer integrated manufacturing (1990) Globalization (1992) Internet (1995)

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Eli WhitneyEli Whitney Born 1765; died 1825 In 1798, received government

contract to make 10,000 muskets Showed that machine tools could

make standardized parts to exact specifications Musket parts could be used in any

musket

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Frederick W. TaylorFrederick W. Taylor Born 1856; died 1915 Known as ‘father of scientific

management’ In 1881, as chief engineer for

Midvale Steel, studied how tasks were done Began first motion and time studies

Created efficiency principles

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Taylor’s PrinciplesTaylor’s Principles

Matching employees to right job Providing the proper training Providing proper work methods and

tools Establishing legitimate incentives for

work to be accomplished

Management Should Take More Management Should Take More Responsibility for:Responsibility for:

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Frank & Lillian GilbrethFrank & Lillian Gilbreth Frank (1868-1924); Lillian (1878-1972) Husband-and-wife engineering team Further developed work

measurement methods Applied efficiency methods to their

home and 12 children! Book & Movie: “Cheaper by the

Dozen,” “Bells on Their Toes”

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Born 1863; died 1947 In 1903, created Ford Motor

Company In 1913, first used moving assembly

line to make Model TUnfinished product moved by

conveyor past work station Paid workers very well for 1911

($5/day!)

Henry FordHenry Ford

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W. Edwards DemingW. Edwards Deming Born 1900; died 1993 Engineer and physicist Credited with teaching Japan

quality control methods in post-WW2

Used statistics to analyze process His methods involve workers in

decisions

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New Challenges in OMNew Challenges in OM

Global focus Just-in-time Supply-chain

partnering Rapid product

development, alliances

Mass customization

Empowered employees, teams

ToToFromFrom Local or national focus Batch shipments Low bid purchasing

Lengthy product development

Standard products

Job specialization

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Characteristics of GoodsCharacteristics of Goods Tangible product Consistent product

definition Production usually

separate from consumption

Can be inventoried Low customer

interaction

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Characteristics of ServiceCharacteristics of Service Intangible product Produced and

consumed at same time Often unique High customer

interaction Inconsistent product

definition Often knowledge-based Frequently dispersed

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Goods and ServicesGoods and ServicesAutomobile

ComputerInstalled carpeting

Fast-food mealRestaurant meal/auto repair

Hospital careAdvertising agency/

investment managementConsulting service/

teachingCounseling

Percent of Product that is a Good Percent of Product that is a Service

100% 75 50 25 0 25 50 75 100%| | | | | | | | |

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Changing ChallengesChanging ChallengesTraditional Approach

Reasons for Change

Current Challenge

Ethics and regulations not at the forefront

Public concern over pollution, corruption, child labor, etc.

High ethical and social responsibility; increased legal and professional standards

Local or national focus

Growth of reliable, low cost communication and transportation

Global focus, international collaboration

Lengthy product development

Shorter life cycles; growth of global communication; CAD, Internet

Rapid product development; design collaboration

Figure 1.5

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Changing ChallengesChanging ChallengesTraditional Approach

Reasons for Change

Current Challenge

Low cost production, with little concern for environment; free resources (air, water) ignored

Public sensitivity to environment; ISO 14000 standard; increasing disposal costs

Environmentally sensitive production; green manufacturing; sustainability

Low-cost standardized products

Rise of consumerism; increased affluence; individualism

Mass customization

Figure 1.5

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Changing ChallengesChanging ChallengesTraditional Approach

Reasons for Change

Current Challenge

Emphasis on specialized, often manual tasks

Recognition of the employee's total contribution; knowledge society

Empowered employees; enriched jobs

“In-house” production; low-bid purchasing

Rapid technological change; increasing competitive forces

Supply-chain partnering; joint ventures, alliances

Large lot production

Shorter product life cycles; increasing need to reduce inventory

Just-In-Time performance; lean; continuous improvement

Figure 1.5

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New Trends in OMNew Trends in OM Ethics Global focus Environmentally sensitive production Rapid product development Environmentally sensitive production Mass customization Empowered employees Supply-chain partnering Just-in-time performance

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Productivity ChallengeProductivity Challenge

Productivity is the ratio of outputs (goods and services) divided by the inputs

(resources such as labor and capital)

The objective is to improve productivity!The objective is to improve productivity!

Important Note!Production is a measure of output

only and not a measure of efficiency

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Improving Productivity at Improving Productivity at StarbucksStarbucks

A team of 10 analysts A team of 10 analysts continually look for ways continually look for ways to shave time. Some to shave time. Some improvements:improvements:Stop requiring signatures on credit card purchases under $25

Saved 8 seconds per transaction

New espresso machines Saved 12 seconds per shot

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Measure of process improvement Through productivity increases can

our standard of living improve

ProductivityProductivity

Productivity =Units produced

Input used

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Productivity CalculationsProductivity Calculations

Productivity =Units produced

Labor-hours used

= = 4 units/labor-hour1,000250

Labor ProductivityLabor Productivity

One resource input single-factor productivity

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Measurement ProblemsMeasurement ProblemsQualityQuality may change while the quantity of inputs and outputs remains constant

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Key Variables for Improved Key Variables for Improved Labor ProductivityLabor Productivity

1. Basic education appropriate for the labor force

2. Diet of the labor force3. Social overhead that makes labor

available Challenge is in maintaining and

enhancing skills in the midst of rapidly changing technology and knowledge

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Service ProductivityService Productivity

1. Typically labor intensive2. Often difficult to evaluate for quality

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