Transcript Introduction Ops Mgt - Farrell & Associates (Australia)

MGSM 890
Operations Management
Session 7 - Scheduling & Control of Operations & Projects
1
This Evening’s Program
• Scheduling & Control – Concepts & Techniques
• Information Systems in Managing Operations
• Enterprise Resources Planning (ERP) concepts
• Scheduling & Controlling Projects
• In-class Activities:
– Problems 2, 5 on pp 639-640 in Chase et al
– Problems 1, 2 & 4 on pp 89-90 in Chase et al
• Case study analysis (“Keep patients waiting? Not in
My Office” on pp 643 - 644)
•
Case Study for the week: The Rise & Demise of an
Excellent Team
2
What is Planning & Control?
Supply of
products &
Services
The
organisation’s
resources
Planning &
Control
The activities which
reconcile supply &
demand
Demand for
products &
Services
The
organisation’s
customers
3
P&C as a Function of the Volume
Variety Matrix
Variety
Short planning horizon
Timing decisions important
Detailed plans
Long planning horizons
Volume decisions important
Aggregated plans
Volume
4
Planning and Control Functions
• Loading
How much to produce?
• Sequencing
In what order?
• Scheduling
When to produce?
• Controlling
Are we on plan?
5
Loading – Comparing Demand
with Available Capacity
Maximum Time Available
Normal Time Available
Not worked
Planned Time Available
Planned Running Time
Set-ups
Available Time
Actual Running time
Down Time
6
Loading
Finite Loading
Possible to limit the load
eg GP
Necessary to limit the load
eg aircraft
Infinite Loading
Not possible to limit the load
eg hospital
Not necessary to limit the load eg queue or
flexible capacity
7
Sequencing
Various sequencing rules can be deployed:
•
Customer priority;
•
Due Date
•
LIFO – last in first out
•
FIFO – first in fist out
•
Longest operation time first
•
Shortest operation time first
8
Scheduling
Forward Scheduling
Start work as soon as job arrives
Advantage of flexibility, labour utilisation
High inventory costs
Backward Scheduling
Start work to finish when job is required
Advantage of lower inventory costs
Higher risk
JIT based
9
Gantt Charts
Job
Mon
5th
Tue
6th
Wed
7th
Thu
8th
Fri
9th
Mon
12th
Tue
13th
Table
Chairs
Units
Schedule
Progress
Time now
10
Controlling
Monitor deviations from plan and take corrective action.
Push system
Material moved to next stage as
soon as processed
Downhill metaphor
Consistent with MRP
Pull system
Material moved to next stage only
as needed
Uphill metaphor
Consistent with JIT
11
Managing Enterprise Systems
Customers
Sales force and
customer service
reps
Managers and
Stakeholders
Reporting
applications
Sales and
delivery
applications
Central
database
Suppliers
Back office
administration and
workers
Financial
applications
Manufacturing
applications
Service
applications
Human
resource
management
applications
Inventory and
supply
applications
Employees
12
What is ERP?
•
•
•
•
Enterprise Resources Planning
or
Eternal Revenue Provider?
Exaggerated Requirements Promise?
Extremely Repetitive Pandemonium?
13
Where did ERPs come from?
•
Early IT systems (1960s – 1980s) were primarily stovepipe
(standalone) systems
•
Organisations began to recognise the need for sharing
information across the enterprise
Organisations began to focus on resources and their costs
Organisations had to optimise the utilisation of their scarce
resources
•
•
14
Where did ERPs come from
(cont.)?
•
Integration of information / processes and systems became a
requirement
•
MRP (Material Requirements Planning) systems evolved
•
Then MRP II (Manufacturing Resources Planning) systems came
on the scene
•
But what was needed was something which could manage the
business from end-to-end (i.e. as per the Value Chain)
ERP systems were seen as the solution
15
What were the Promised Benefits?
•
Cost reduction
•
Increased productivity
•
Reduced cycle times
•
Increased quality & customer service
•
Managerial benefits
•
Organisational benefits
16
What is the Reality?
•
The average ERP implementation costs around $US11
million and takes around 23 months to complete
•
Almost two-thirds of organisational management consider
that their ERP systems may hurt the organisation
•
The average large system is finished overall a year late and
costs almost twice as much as the original estimate.
17
What are the Problems?
•
Poor project management
•
Lack of commitment by senior management
•
Poor governance of the implementation (the Lego Box
effect)
•
Focus on processes rather than information
18
What are the Problems (cont.)?
•
Poor, inadequate understanding of the business and its
information requirements
•
Inefficient & ineffective business processes
•
“Not Invented Here” syndrome
19
What are the Problems (cont.)?
•
Poor fit between the tools, technology and the
requirements
•
Lack of appreciation / recognition of the cascade effect in
ERP systems
•
Underestimation of the effort required – resources, skills,
communication, technology, training, post-implementation
support, etc.
20
One of the biggest problems
however is . . .
• The Lack of Proper Change Management over:
–The project
–The corporate culture
–The people, and
–The existing business processes
And communicating the changes effectively
21
The Solution
Seven things MUST be done right:
• Planning
•
Senior Management Commitment
•
User Involvement & Training
•
Business Analysis
•
Project Management
•
Change Management, and
•
Constant Communication
22
The Opportunities
If you get your ERP system right, you can:
•
Reduce order-to-shipment times by 50% (Colgate-Palmolive)
•
Increase efficiencies of coal handling by more than 20% (DBCT)
•
Obtain improved timeliness of information, greater accuracy,
better monitoring, quicker response for information requests and
achieve competitive advantage (Philips, Shell, Orica)
23
The Opportunities (cont.)
•
Improved supply-demand linkages between remote locations and
local offices (Unilever)
•
Improved international operations - multiple tax structures,
currencies, accounting practices, etc. (Deutsche Bank)
•
42% ROI in 2 years (Houston Independent School District)
24
In Summary . . .
•
ERP Systems can provide enormous benefits – but at a
cost
•
Done badly, ERP Systems can cost millions (see recent
press re Crane)
•
At worst, the organisation can go belly up
•
ERP systems don’t just support the business – they ARE
the business
25
Exercises
• pp 639-640 Chase et al
– Problem 2 – Scheduling Hotel Receptionists
– Problem 5 – Scheduling a list of jobs
• pp 89-90 Chase et al
– Problem 1 – prepare a CPM diagram
– Problem 2 – Scheduling using CPM
– Problem 4 – CPM for a construction project
26
Case Study – Keep My Patients
Waiting? Not in My Office
1. What features of the appointment scheduling system were
crucial in capturing “many grateful patients”?
2. What procedures were followed to keep the appointment
system flexible enough to accommodate the emergency
cases, and yet able to keep up with the other patients’
appointments?
3. How were special cases such as latecomers and no-shows
handled?
27
Case Study – The Rise and
Demise of an Excellent Team
• What motivated the team up to the Documentation stage?
• What happened then?
• What forces were acting on the group?
• What lessons can be learned here?
28
Project Planning and Control
29
Volume -Variety Matrix
Variety
Projects
Volume
30
Matrix of Project Types
Military
Campaign
Oil Exploration
Uncertainty
Wedding
Building an
Aircraft
Complexity
31
What is a Project?
• Unique set of objectives
• Definite start point and end point
• Governed by scope, cost and time goals
• Aim to achieve results and disband
• Contract to on-going management
32
What is Management?
• The Purpose of Management is to plan, lead, organise
and control (Fayol, 1916)
–
–
–
–
–
–
leadership of a team;
determination of team objectives;
communication control of a team with its client or sponsor;
comparison of achievement against set objectives;
authority to change what a team is doing; and;
resolution of conflict.
• Planning and control are the core of project management
33
Job Design in a Project
Environment
• Project team
- Individuals from different departments within company
• Matrix structure
- Team structure with members from
different functional
areas, depending on skills needed
• Project manager
- Leader of project team
34
Objectives in a Project
Environment
Quality
Cost
Time
35
Project Planning Tools
•
Gantt Charts
•
Critical Path Method (CPM)
•
Program Evaluation and Review Technique (PERT)
36
Gantt Chart
• Also known as a bar chart
• Named after Henry Gantt (World War I shipbuilding)
• Very useful for showing:
– Amount of time involved
– Sequence of activities
– Dependencies between activities
• Can also be used for:
– Tracking progress of the project
– Scheduling resources to activities
– Identify milestones (major review points) for the project
37
Gantt Chart





Activity
Design house and
obtain financing
Lay foundation
Order and receive
materials
Build house
Select paint
Select carpet
Finish work

1

3
Month

5

7

9
38
Activity
Design house
Lay foundation
0

2
Month

4

6

8

Order and receive
materials
Build house
Select paint
Select carpet
Finish work
Resources
required
39
CPM
• Critical Path Method (CPM)
– Du Pont & Remington-Rand (1956)
– based on deterministic task times
40
Critical Path
•
A path is a sequence of connected activities
running from start to end nodes in network
•
The critical path is the path with the longest
duration in the network
•
A project cannot be completed in a shorter time
than the time of the critical path
41
Activities Organised
In a Project
Activity 1
•Activity on Arrow
Node 1
Node 2
•Activity on Node
Activity 1
Activity 2
42
Project Planning
Activities in Series
1
Construct forms
2
Pour concrete
3
43
Project Planning
Activities in Parallel
Construct forms
1
Pour concrete
2
Build walls
4
3
Dummy activity
44
Project Plan For A House
3
Dummy
Lay foundation
0
2
1
3
Design house
and obtain
financing
2
1
Order and
receive
materials
Build
house
6
4
6
1
1 Select
Select
paint
carpet
5
Finish
work
7
1
45
PERT
Project Evaluation & Review Technique (PERT)
- First used by US Navy
- Booz, Allen & Hamilton
- Task time estimates are not deterministic,
but have some probability distribution
46
PERT
(1,3,4)
(3,4,6)
(optimistic time, most likely time, pessimistic time)
47
PERT
Mean time = t (opt) +4 t (likely) + t (pess)
6
Variance = ( t(pess) - t(opt) )
2
36
Project Mean
= Sum of Activity Means
Project Variance = Sum of Activity Variances
( Measure of Riskiness)
48
PERT Example
2
Equipment testing
and modification
Equipment
installation
1
System
development
4
6
System
Testing
Dummy
Recruiting
Off-line
On-job
training
Training
3
5
49
PERT
1. Nominate the Critical Path for this project?
2. What is the mean duration of the Critical Path?
3. What is the variance of the Critical Path duration?
4. Could there be a better path than the Critical Path?
50
PERT
Optimistic
Likely
Pessimistic
Mean
Var
Installation
1
2
6
2.5
.69
Recruiting
1
4
5
3.7
.44
System development
1
2
4
2.2
.25
Equip. testing
2
3
8
3.7
1.0
Off-line training
4
5
8
5.3
.44
On-job training
2
5
7
4.8
.69
System testing
2
4
8
4.3
1.0
51
PERT Example
2
Equipment testing
and modification
3.7, 1.0
Equipment
installation
2.5, .69
1
System development
2.2, .25
6
4.3, 1.0
Recruiting
Off-line
3.7, .44
Training
5.3, .44
3
4
System
Testing
On-job
training
Dummy
4.8, .69
5
52
Which Is the Critical Path?
Probability
Path 2
1-3-4-5-6
Mean=11.0
Path1
Mean=13.8
Var=2.38
Var=1.57
1-2-4-5-6
Time
8.62
12.23
13.38
15.37
53
Project Management . . .
•
•
•
•
Is more than just the numbers
Is not the same as Managing the Project
Don’t forget the human factor
The success of a project is (usually) inversely proportional
to its size and timeframe
• Need exit champions just as much as they need project
champions
54
Project Management –
The Problems & Pitfalls
• Focus on quantitative aspects
• Project Reification – blind faith
• Failure to adequately carry out critical project
reviews
• Throw more resources at the problem
• What was the objective again?
Royer, Isabelle (2003), “Why Bad Projects Are so Hard to Kill”, Harvard
Business Review, 81(2), pp48-56
55
Good Project Management must
include & appreciate the
importance of:
•
•
•
•
•
•
•
•
Business Impact
Risk Management
Issue Management
Documentation Management
Change Management
Resource Management
Communications Management
Scope Management
Matta, Nadim F & Ashkenas, Ronald N, (2003), “Why Good Projects Fail Anyway”,
Harvard Business Review, 81(9), pp109-114
56