MAN 4504 Ch 1

External supply chain

Raw materials, parts, equipment, supplies, and the deliver outputs that are goods to the organization's customers.

systems approach

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 -the whole is greater than the sum of it's middle parts The systems approach is essential whenever something is being designed, redesigned, implemented, improved, or otherwise changed. - 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 page 20 book (slide 34) page 4 back printed pp

Role of the Operations Manager

The Operations Function consists of all activities directly related to producing goods or providing services. A primary function of the operations manager is to guide the system by decision making. -System Design Decisions -System Operation Decisions

services

activities that provide some combination of time, location, form, and psychological value. - air travel - education - haircut - legal counsel

physical models

look like their real life counterparts so they have visual correspondence with reality

schematic models

more abstract than their physical counterparts so they have less resemblance to the physical reality. They are more simple to construct and change

process

one or more actions that transform inputs into outputs

The transformation process

page 2 slide. pages 6 and 7 book

goods

physical items produced by business organizations. Include raw materials, parts, subassemblies, and final products. - automobile - computer - oven -shampoo

goods service continum

products are typically neither purely service or purely goods based

agility

the ability of an organization to respond quickly to demands or opportunities

value-added

the difference between the cost of inputs and the value or price of outputs

mathematical models

the most abstract; they don't look like their real life counterparts at all

ideal goal of a company

to achieve an economic match of supply and demand. Slide page 3 power point.

the Japanese

who can be credited for spawning "quality revolution" and generating interest in lean production

major decision areas in supply chain management

-location -production -distribution -inventory

widely used metrics to deal with variability

-mean: -standard deviation: quantifies variation around the mean - normal distribution

technologies operations management are concerned with

-product and service -process -information

customized output

-tends to have a much lower output volume but higher price tag -involves more highly skilled people, flexible equipment, and generally more time consuming page 20 book (slide 34) page 5 printed pp

five principles for thinking ethically

-utilitarian principle -rights principle -fairness principle -common good principle -virtue principle

Benefits of Models

1- Models are generally easier to use and less expensive than dealing with the real system 2- Require users to organize and sometimes quantify information 3- Increase understanding of the problem 4- Enable managers to analyze "What if?" questions (Scenario Analysis) 5- Serve as a consistent tool for evaluation and provide a standardized format for analyzing a problem 6- Enable users to bring the power of mathematics to bear on a problem. page 18 book (slide 30) page 4 pp

Model Limitations

1- Quantitative information may be emphasized at the expense of qualitative information 2- Models may be incorrectly applied and the results misinterpreted This is a real risk with the widespread availability of sophisticated, computerized models being placed in the hands of uninformed users. BLACK BOX! 3- The use of models does not guarantee good decisions. page 19 book (slide 31) page 4 back pp

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 Pareto Phenomenon (80/20 Rule) - a few factors account for a high percentage of occurrence of some event(s). Can be applied at all levels of management and to every aspect of decision making, both professional and personal. The critical few factors should receive the highest priority

Historical Evolution of OM

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

OM-Related Professional Societies

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

Frederick Winslow Taylor

-father of scientific management -believed that management should be responsible for finding the best way to perform each job -his methods emphasized maximizing output

three basic functions of business organizations

-finance -operations -marketing

Quantitative Approaches

A decision making approach that frequently seeks to obtain a mathematically optimal solution - Linear programming: widely used for optimum allocation of scarce resources. - Queuing techniques: useful for analyzing situations in which waiting lines form. - Inventory models: widely used to control inventories. - Project models: such as PERT (program evaluation and review technique) and CPM (critical path method) are useful for planning, coordinating, and controlling large-scale projects. - Forecasting techniques: widely used in planning and scheduling - Statistical models: currently used in many areas of decision making.

marketing

responsible for assessing customer wants and needs, and selling and promoting the goods and services

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 and account for random variability dealing with decisions and reflecting on the pros and cons

Performance Metrics

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

Why Study Operations Management?

Every aspect of business affects or is affected by operations Operations and sales are the two line functions in a business organization. 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

Three functions overlap

Finance & Operations - Budgeting - Economic analysis of investment proposals - Provision of funds Marketing & Operations - Demand data - Product and service design - Competitor analysis - Lead time data

Process Variation

Four Sources of Variation: - 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. - Structural variation in demand: These are generally predictable. They are important for capacity planning. (i.e. Christmas) - 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. Variations can be disruptive to operations and supply chain processes. They may result in additional costs, delays and shortages, poor quality, and inefficient work systems. Page 13 book page 3 slide pp

system design decisions

Involves the decisions that relate to system capacity, facility location, facility layout (arrangement of departments and placement of equipment within physical structures, product and service planning, and acquisition of equipment. These are typically strategic decisions that - usually require long-term commitment of resources - determine parameters of system operation

Understanding Models

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? particularly important. Garbage in; garbage out!

Manufacturing vs. Service

Manufacturing and service are often different in terms of what is done but similar in terms of how it is done Points of comparison: 1. Degree of customer contact: when there is a high degree of contact, the interaction between server and customer becomes a "moment of truth" that will be judged by the customer every time the service occurs. 2. Uniformity of input: service operations are often subject to a higher degree of variability of inputs. Manufacturing operations often have a greater ability to control the variability of inputs, leading to more uniform job-requirements 3. Labor content of jobs: services often have a higher degree of labor content than manufacturing jobs do, automatic services are an exception. 4. Uniformity of output: 5. Measurement of productivity: more difficult to services jobs due to the high variations of inputs. ex doctor with more routine cases vs. a doctr with difficult cases. 6. Production and delivery: many similarities between managing the production of products and managing services. 7. Quality assurance: more challenging to services jobs due to the high variations of inputs, and because delivery and consumption occur at the same time and have less opportunity to avoid exposing the customer to mistakes. 8. Amount of inventory:Services tend to involve less use of inventory than manufacturing operation, so the cost of having inventory on hand are lower than than they are for manufacturing. However, services cannot be stored thay must be provided on demand. 9. Evaluation of work: manufacturing jobs are usually well paid, and have less wage variation than service jobs. 10. Ability to patent design: product designs are usually easier to patent than service designs, and some services cannot be patented, making it easier for competitors to copy.

models

Modeling is a key tool used by all decision makers -an abstraction of reality; a simplified representation of something. ex: a child's toy car is a model of a real automobile -can be physical: look like real-life counterpart. ex: miniature cars, trucks, airplanes, toy animals and trains. the advantage is the visual correspondence with reality -schematic: are more abstracts that their physical counterparts. ex: graphs and charts, blueprints, pictures, and drawings. Relative simple to constrict and change. -or mathematical: are the most abstracts. ex: numbers, formulas, and symbols. usually the easiest to manipulate, and important forms of inputs for computers and calculators. -ex. include financial ratios, tangible models, balance sheets, etc Common features of models: - They are simplifications of real-life phenomena - They omit unimportant details of the real-life systems they mimic so that attention can be focused on the most important aspects of the real-life system

OM Decision Making

Most operations decisions involve many alternatives that can have quite different impacts on costs or profits 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 he product or service be designed? How will the work be done? How will resources be allocated? Who: Who will do the work? An operations manager's daily concern include costs (budgets), quality, and schedules (time)

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

Internal supply chain

Part of the operation functions itself. Supplying operations with parts and materials, performing works on products, and/or performing services

Industrial revolution

Pre-Industrial Revolution Craft production - System in which highly skilled workers use simple, flexible tools to produce small quantities of customized goods 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 Management theory and practice did not advance appreciably during this period a number of innovations in the 18th century changed the face of production forever by substituting machine power for human power

Process Management

Process - one or more actions that transform inputs into outputs Three Categories of Business Processes Upper-management processes: These govern the operation of the entire organization. (i.e. Organizational strategy) Operational processes: These are core processes that make up the value stream. (i.e. purchasing, production, marketing, etc Supporting processes: These support the core processes. (i.e. human resources, accounting, IT, etc.) page 12 book end, slide page 3 pp

Goods-service continuum

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

Operations Management

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

operations

The part of a business responsible for producing the goods or providing the services

finance

responsible for securing financial resources at favorable prices and allocating those resources throughout the organization as well as budgeting, analyzing investment proposals, and providing funds for operations

Scope of Operations Management

The scope of operations management ranges across the organization. The operations function includes many interrelated activities such as: ex airline company example -Forecasting: weather landing condition, seat demand for flights, and the growth in air travel. -Capacity planning: essential to maintain cash flow and make a reasonable profit. (too few or too many, or even the right number of planes in the wrong place will hurt profits) -Facilities and layout: important in achieving effective use of workers and equipment. -Scheduling: of planes for flights and for routine maintenance. Scheduling of pilots and flight attendants. -Managing inventories: of such items as foods and beverages. first-aid equipment, in flight magazines. -Assuring quality: essential in flying and maintenance operations, where the emphasis is on safety, and important in dealing with customers at ticket counters, check-in, telephone, and electronic reservations. -Motivating employees: in all phases of operations. -Deciding where to locate facilities: decisions on which cities to provide service for, where to locate maintenance facilities, and where to locate major an minor hubs. and more... page 14-15 book page 3 dlides pp back 23 slide

system operations decisions

These are generally tactical and operational decisions - Management of personnel - Inventory management and control - Scheduling - Project management - Quality assurance Feedback on these decisions involve measurement and control. Operations managers spend more time on system operation decision than any other decision area They still have a vital stake in system design because system design essentially determines many of the parameters of system operations. Ex: costs, space, capacities, and quality. page 16 book, slides 25 and 26 pp, (page 3 back printed pp)

Supply chain

a sequence of activities and organizations involved in producing and delivering a good or service. Slide page 2 pp functions include: forecasting, purchasing, inventory management, information management, quality assurance, scheduling, production, distribution, delivery, and customer service

service sector

accounts for more than 70% of jobs in the US