operations management 1,2,4,5

Marketing's Influence

Identifying consumer wants and/or needs Pricing and quality Advertising and promotion

Establishing Priorities

In nearly all cases, certain issues or items are more important than others Recognizing this allows managers to focus their attention to those efforts that will do the most good

Historical Evolution of OM

Industrial Revolution Scientific Management Human Relations Movement Decision Models and Management Science Influence of Japanese Manufacturers

industrial revolution

Management theory and practice did not advance appreciably during this period

scientific management

Movement was led by efficiency engineer, Frederick Winslow Taylor

Random variation

Natural variation that is present in all processes. Generally, it cannot be influenced by managers

Assignable variation

Variation that has identifiable sources. This type of variation can be reduced, or eliminated, by analysis and corrective action

four sources of variation

Variety of goods or services being offered Structural variation in demand Random variation Assignable variation

Typical operations decisions include:

What: What resources are needed, and in what amounts? When: When will each resource be needed? When should the work be scheduled? When should materials and other supplies be ordered? Where: Where will the work be done? How: How will the product or service be designed? How will the work be done? How will resources be allocated? Who: Who will do the work?

Services

are activities that provide some combination of time, location, form or psychological value. Air travel Education Haircut Legal counsel

Goods

are physical items that include raw materials, parts, subassemblies, and final products. Automobile Computer Oven Shampoo

theory X

avoid work, must be controlled, avoid responsibility, seek security

Maslow's Hierarchy of Needs

bottom to top biological and physical needs safety belongingness and loved esteem cognitive aesthetic self actualization transcendence

science of management

Emphasis on maximizing output

Mission

The reason for an organization's existence

operational processes

make up value stream

Analysis of Trade-Offs

A trade-off is giving up one thing in return for something else Carrying more inventory (an expense) in order to achieve a greater level of customer service

direct suppliers

prego sisco food distribution

The scope of operations management

ranges across the organization

consumer

final customer

outputs

goods and services

Competitiveness

How effectively an organization meets the wants and needs of customers relative to others that offer similar goods or services Organizations compete through some combination of their marketing and operations functions What do customers want? How can these customer needs best be satisfied?

Pre-Industrial Revolution Craft production

- System in which highly skilled workers use simple, flexible tools to produce small quantities of customized goods

Pareto Phenomenon

- a few factors account for a high percentage of occurrence of some event(s) The critical few factors should receive the highest priority This is a concept that is appropriately applied to all areas and levels of management

Supply Chain

- a sequence of activities and organizations involved in producing and delivering a good or service

System

- a set of interrelated parts that must work together The business organization is a system composed of subsystems marketing subsystem operations subsystem finance subsystem

Model

- an abstraction of reality; a simplification of something.

Process

- one or more actions that transform inputs into outputs

Keys to successfully using a model in decision making What is its purpose?

How is it used to generate results? How are the results interpreted and used? What are the model's assumptions and limitations?

The operations function includes many interrelated activities such as

: Forecasting Capacity planning Facilities and layout Scheduling Managing inventories Assuring quality Motivating employees Deciding where to locate facilities And more . . .

Control

= The comparison of feedback against previously established standards to determine if corrective action is needed

Feedback

= measurements taken at various points in the transformation process

Quantitative Approaches

A decision making approach that frequently seeks to obtain a mathematically optimal solution Linear programming Queuing techniques Inventory models Project models Forecasting techniques Statistical models

strategy

A plan for achieving organizational goals Serves as a roadmap for reaching the organizational destinations Organizations have Organizational ------ Overall ------- that relate to the entire organization Support the achievement of organizational goals and mission Functional level strategies Strategies that relate to each of the functional areas and that support achievement of the organizational strategy

strategy

A plan for achieving organizational goals Serves as a roadmap for reaching the organizational destinations The organizational strategy guides the organization by providing direction for, and alignment of, the goals and strategies of the functional units The organizational strategy is a major success/failure factor

decision making

A primary function of the operations manager is to guide the system by ...... System Design Decisions System Operation Decisions

Marketing & Operations

Demand data Product and service design Competitor analysis Lead time data

Why Some Organizations Fail

Neglecting operations strategy Failing to take advantage of strengths and opportunities and/or failing to recognize competitive threats Too much emphasis on short-term financial performance at the expense of R&D Too much emphasis in product and service design and not enough on process design and improvement Neglecting investments in capital and human resources Failing to establish good internal communications and cooperation Failing to consider customer wants and needs

OM and Supply Chain Career Opportunities

Operations manager Supply chain manager Production analyst Schedule coordinator Production manager Industrial engineer Purchasing manager Inventory manager Quality manager

Businesses Compete Using Operations

Product and service design Cost Location Quality Quick response Flexibility Inventory management Supply chain management Service Managers and workers

service

Products are typically neither purely ---- or purely goods-based.

Model Limitations

Quantitative information may be emphasized at the expense of qualitative information Models may be incorrectly applied and the results misinterpreted This is a real risk with the widespread availability of sophisticated, computerized models are placed in the hands of uninformed users. The use of models does not guarantee good decisions.

Influence of Japanese Manufacturers

Refined and developed management practices that increased productivity Credited with fueling the "quality revolution"

Mission statement

States the purpose of the organization The mission statement should answer the question of "What business are we in?"

Operations

The actual "doing" part of the process

Variety of goods or services being offered

The greater the variety of goods and services offered, the greater the variation in production or service requirements.

operations management?

The management of systems or processes that create goods and/or provide services

Tactics

The methods and actions taken to accomplish strategies The "how to" part of the process

Goals

The mission statement serves as the basis for organizational goals

What is operations?

The part of a business organization that is responsible for producing goods or services

Mission

The reason for an organization's existence It answers the question "What business are we in?"

Core Competencies

The special attributes or abilities that give an organization a competitive edge To be effective ----- and strategies need to be aligned

Successful strategy formulation

also requires taking into account: Order qualifiers Order winners

control

comparing pizzas to other companies testing the quality of the pizza

The Operations Function

consists of all activities directly related to producing goods or providing services.

transformation process

delivering pizza

output

level of work

Effective strategy formulation

requires taking into account: Core competencies Environmental scanning SWOT

uniformity of input

same size chicken strips

distributor

ship out item

Operations managers

spend more time on system operation decision than any other decision area They still have a vital stake in system design

supporting processes

support core process

Three Categories of Business Processes:

upper management processes operational processes supporting processes

suppliers

wheat farmers, dairy farmers, butcher

theory Y

work is natural, self direction, seek responsibility, good decisions widely dispersed

examples of companies or services

low price = Walmart responsiveness = mcdonalds, fast food differentiation high quality = sony TV newness = apple variety = mcdonalds service = Disney land location = supermarkets

organization strategy examples

low price, responsiveness, differentiation: high quality, newness, variety, service, location

Basic Functions of the Business Organization

marketing, operations, finance

Hierarchical Planning

mission goals organizational strategies functional strategies tactics

Model classifications

physical, schematic, mathmatical

producer

pizza hut, mazzios

outputs

pizza is a good delivery would be the sevice

System Operation

These are generally tactical and operational decisions Management of personnel Inventory management and control Scheduling Project management Quality assurance

Competitiveness Strategy Productivity

This chapter focuses on three separate, but related ideas that are vitally important to business organizations

OM-Related Professional Societies

APICS - The Association for Operations Management American Society for Quality (ASQ) Institute for Supply Management (ISM) Institute for Operations Research and Management Science (INFORMS) The Production and Operations Management Society (POMS) The Project Management Institute (PMI) Council of Supply Chain Management Professionals (CSCMP)

Performance Metrics

All managers use metrics to manage and control operations Profits Costs Quality Productivity Flexibility Inventories Schedules Forecast accuracy

Some key elements of the industrial revolution

Began in England in the 1770s Division of labor - Adam Smith, 1776 Application of the "rotative" steam engine, 1780s Cotton Gin and Interchangeable parts - Eli Whitney, 1792

Finance & Operations

Budgeting Economic analysis of investment proposals Provision of funds

System Design

Capacity Facility location Facility layout Product and service planning Acquisition and placement of equipment These are typically strategic decisions that usually require long-term commitment of resources determine parameters of system operation

Order qualifiers

Characteristics that customers perceive as minimum standards of acceptability for a product or service to be considered as a potential for purchase

Manufacturing vs. Service

Degree of customer contact Uniformity of input Labor content of jobs Uniformity of output Measurement of productivity Production and delivery Quality assurance Amount of inventory Evaluation of work Ability to patent design

The systems approach

Emphasizes interrelationships among subsystems Main theme is that the whole is greater than the sum of its parts The output and objectives of the organization take precedence over those of any one subsystem

Why Study Operations Management?

Every aspect of business affects or is affected by operations Many service jobs are closely related to operations Financial services Marketing services Accounting services Information services

Decision Models & Management Science

F.W. Harris - mathematical model for inventory management, 1915 Dodge, Romig, and Shewart - statistical procedures for sampling and quality control, 1930s Tippett - statistical sampling theory, 1935 Operations Research (OR) Groups - OR applications in warfare George Dantzig - linear programming, 1947

Benefits of Models

Models are generally easier to use and less expensive than dealing with the real system Require users to organize and sometimes quantify information Increase understanding of the problem Enable managers to analyze "What if?" questions Serve as a consistent tool for evaluation and provide a standardized format for analyzing a problem Enable users to bring the power of mathematics to bear on a problem.

Why Study Operations Management?

Through learning about operations and supply chains you will have a better understanding of: The world you live in The global dependencies of companies and nations Reasons that companies succeed or fail The importance of working with others

Goals

Provide detail and the scope of the mission Goals can be viewed as organizational destinations

Goals

Provide detail and the scope of the mission Goals can be viewed as organizational destinations Goals serve as the basis for organizational strategies

order qualifiers order winners

Strategy Formulation

Structural variation in demand

These are generally predictable. They are important for capacity planning

The human relations movement

emphasized the importance of the human element in job design

inputs

employees, menu, location, ingredients

Other Pioneers in Scientific Management

gilbreth, ghantt, emerson, ford

upper management processes

govern the operation of the entire organization

transformation proccess

includes inputs, transformation/conversion process, outputs, control and feedback

Modeling

is a key tool used by all decision makers

operations

legal, public relations, human resources, MIS, accounting

uniformity of output

level of work

operations strategies

low cost, short processing times, on time delivery, high performance design, high quality processing, consistent quality, innovation, flexibility, volume, convenience, superior customer service