Slides 2015 for contact 2

Operations ManagementPBSB 813 Contact 2

Johan Jordaan

[email protected]

Note on the use of these slides

• These slides provide the basic theory that I would like you to know. There are many more techniques on the slides that came with the textbook, which are also available on eFundi. As I talk you through this slide show, please stop where you don't understand, go to either the textbook (Heizer and Render) or the Heizer & Render slides and make sure you understand them. If you still do not understand, on the first page that you have to submit is space for you to tell me what you do not understand so that I can cover it in class.

• Once you have gone through the slides, go to the template on eFundiand prepare your submissions for the next contact session.

Operations &

productivity (1)

Topics covered: Contact 2

Global envi-

ronment &

strategy (2)

Managing

projects (3)

Forecasting

demand (4)

Product

design (5)

Quality

management

(6)

Process

design (7)

Location

decisions (8)

Layout

decisions(9)

Job design &

work mea-

surement (10)

Supply chain

management

(11)

Inventory

management

(12)

Scheduling

(13 & 15)

MRP & ERP

(14)

JIT & Lean

operations

(16)

Maintenance

& reliability

(17)

Study school

Contact 1

Contact 2

Contact 3

Contact 4

Contact 5

Contact 6

Contact 7

Outcomes for today's contact

OUTCOMES OF THEME E

• Analyse the product design process for a specific product or service

• Distinguish between the design process for products and services

• Demonstrate a thorough understanding of the concepts by applying the theory to a real-life organisation

OUTCOMES OF THEME F

• Critically distinguish between final product quality and total quality.

• Effectively demonstrate their understanding of the principles of total quality in a case study

• Comprehensively analyse variation in production or service processes through statistical techniques such as Six Sigma

• Demonstrate a thorough understanding of the concepts by applying the theory to a real-life organisation.

Chapter 5 Theory

Product and Service Design

Why? - Product Life Cycle

Time

Sale

s vo

lum

e

Growth

Maturity

Decline

Introduction

Revive cycle

60

20

4.32.0 1.0

0

10

20

30

40

50

60

70

1990 1995 2000 2005 2010

Average time between new cell phone innovations 1992-2009 (in months)

Year

Ave time between

innovations1991 60.01992 20.01993 15.01994 20.01995 20.01996 10.01997 15.01998 12.01999 5.52000 4.32001 3.52002 2.62003 2.12004 2.12005 2.02006 1.82007 1.52008 1.22009 1.0

New Product Opportunities

1. Understanding the customer

2. Economic change

3. Sociological and demographic change

4. Technological change

5. Political/legal change

6. Market practice, professional standards, suppliers, distributors

Scope of

product

development

team

Product Development Stages

Scope for design and engineering

teams

Evaluation

Introduction

Test Market

Functional Specifications

Design Review

Product Specifications

Customer Requirements

Feasibility

Concept

The challenges of new product design

• Does it really fulfil customer need?

• Can I build quality in at the design step?

• How can I "idiot-proof" the product design process?

• Trade-offs: time, cost, quality, etc.

• Capacity issues

Quality Function

Deployment

Value Analysis/

Value Engineering

Ideal Customer Product

House of Quality

Designing for the Customer

• Does the item have any design features that are not necessary?

• Can two or more parts be combined into one?

• How can we cut down the weight?• Are there nonstandard parts that

can be eliminated?

QFD House of Quality

Relationshipmatrix

How to satisfycustomer wants

Interrelationships

Co

mp

eti

tive

assessm

en

t

Technicalevaluation

Target values

What the customer

wants

Customer importance

ratings

Weighted rating

House of Quality Example: Camera

Completed House of Quality

Lightweight 3

Easy to use 4

Reliable 5

Easy to hold steady 2

Color correction 1

Our importance ratings

Lo

w e

lectr

icit

y r

eq

uir

em

en

ts

Alu

min

um

co

mp

on

en

ts

Au

to f

ocu

s

Au

to e

xp

osu

re

Pain

t p

allet

Erg

on

om

ic d

esig

n

Co

mp

an

y A

Co

mp

an

y B

G P

G P

F G

G P

P P

Target values(Technical attributes)

Technical evaluation

Company A 0.7 60% yes 1 ok G

Company B 0.6 50% yes 2 ok F

Us 0.5 75% yes 2 ok G

0.5

A

75

%

2’to

∞

2c

irc

uit

s

Fa

ilu

re 1

pe

r 1

0,0

00

Pa

ne

l ra

nk

ing

22 9 27 27 32 25

Designing Service Products

• Service products are very different

• Direct customer involvement introduces significant variability in the process

• Questions to address:• How will this variability be addressed?

• What are the implications for operational cost and the customer service experience?

3-14

Moments of Truth

Concept created by Jan Carlzon of Scandinavian Airways

Critical moments between the customer and the organization that determine customer satisfaction

There may be many of these moments

These are opportunities to gain or lose business

Chapter 6 Theory

Total quality management

Total quality management is defined as managing the entire organization so

that it excels on all dimensions of products and services that are

important to the customer

Quality Specifications

• Design quality: Inherent value of the product in the marketplace

• Dimensions include: Performance, Features, Reliability/Durability, Serviceability, Aesthetics, and Perceived Quality.

• Conformance quality: Degree to which the product or service design specifications are met

Quality makes business sense

Improved

quality

Improved response/

reputation / flexible

pricing

(higher price)

Reduced cost of

failure/rework/ warranty

Higher profit

Costs of Quality

External FailureCosts

Appraisal Costs

Prevention Costs

Internal FailureCosts

Costs of

Quality

Six Sigma Quality

• A philosophy and set of methods companies use to eliminate defects in their products and processes

• Seeks to reduce variation in the processes that lead to product defects

Two meanings

Statistical definition of a process that is 99.9997% capable, 3.4 defects per million opportunities (DPMO)

A program designed to reduce defects, lower costs, and improve customer satisfaction

Six Sigma

Mean

Lower limits Upper limits

3.4 defects/million

±6

2,700 defects/million

±3

Figure 6.4

Six Sigma Quality: DMAIC Cycle

1. Define (D)

2. Measure (M)

3. Analyze (A)

4. Improve (I)

5. Control (C)

Customers and their priorities

Process and its performance

Causes of defects

Remove causes of defects

Maintain quality

Analytical Tools for Six Sigma and Continuous Improvement

• Flow Chart

• Run Chart

• Pareto Analysis

• Checksheet

• Histogram

• Cause & Effect Diagram (fishbone)

• Control Charts

Benchmarking

Selecting best practices to use as a standard for performance

Determine what to benchmark

Form a benchmark team

Identify benchmarking partners

Collect and analyze benchmarking information

Take action to match or exceed the benchmark

ISO 9000 and ISO 14000

• Series of standards agreed upon by the International Organization for Standardization (ISO)

• Adopted in 1987

• More than 160 countries

• A prerequisite for global competition (?)

• ISO 9000: international reference for quality, ISO 14000 concerned with environmental management

Determinants of Service Quality

Reliability

Responsiveness

Competence

Access

Courtesy

Communication

Credibility

Security

Understanding/ knowing the customer

Tangibles

Service Quality

The Operations Manager must recognize:

1. The tangible component of services is important

2. The service process is important

3. The service is judged against the customer’s expectations

4. Exceptions will occur

Your assignment• Step 1: Make sure you understand the concepts that are covered in this slide show. If

necessary, go through it again or study the textbook. The slides by Heizer & Render (available on eFundi) also give valuable extra information.

• Step 2: Prepare a one-page summary of the theory. Make sure it fits into the template in the study guide. Remember to make a note of those issues that you want explained in class.

• Step 3: Find out how new product development and quality management takes place in your organisation. Give a one-page summary on the template.

• Step 4: Critique the way quality management takes place in your organisation. Where necessary, suggest improvements. Give a one-page summary on the template. (If there are diagrams, you are allowed a fourth page for them).

• Step 5: Submit your three-page report on efundi before Thursday night 23:59. This counts towards your individual assignment and your final pass mark!

• Step 6: For your group assignment, prepare a three-slide PowerPoint show: Slide 1: Briefly present the essence of quality management to your community organisation. (If it is important to them, you could do new product development instead. Slide 2: Explain whether/how they presently do quality management. Slide 3: Give them advice on how to improve their quality management process. Use the template that is on eFundi. One group member must submit on efundi before Thursday night 23:59 as well!

• Names of both documents must be as indicated in your study guide.