Transcript Lecture

Operations Management
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Operations Management
● Broad range of business activities
– Manufacturing & Production
 E.g. Harley Davidson, automotive industry
– Service
 E.g. H&R Block, Schwab, Merrill Lynch
– Distribution
 FedEx, Maersk
– Processes
 Aetna, IRS
● How FedEx works
● Apple and Foxnet
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Importance of Operations
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Productivity
Quality
Inventory management
Cost control
● Lead to profitability
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Designing Operations Systems
● Product-service mix
– Range of products impacts costs
– E.g. number of parts, processes
● Capacity
– Affects costs and profitability
– E.g. Telcos, Randy’s on the River
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Designing Operations Systems
● Facilities
– Location – how many and where
– Degree of automation
● Layout
– Product layout
– Process layout (functional)
– Fixed-position layout
– Cellular
 A cell might create similar products or
components
 E.g. picture frames
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Manufacturing Technology
● Automation
– Often specialized machines
– “Feedback loop”
● CAD, computer aided manufacture
● CAM, computer aided design
● 3D printing
● Robotics
– Assembly
– Material handling
– Medical
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Service Technology
● Computers in
– Banking
– Insurance
– Education
– Restaurants
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Supply Chain Management
● Managing operations and inventory
● Purchasing management
– Procurement
– Balance cost and inventory (tradeoff)
● Inventory management
– Materials control
– Cost of too much or too little
– Continuous management
– Vendor-controlled
– JIT, just-in-time
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Managing Quality
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What is quality?
ISO 9000
Malcolm Baldridge Award
Importance
– Competition
 Meet
 Differentiate
– Productivity
– Costs
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Total Quality Management, TQM
● Also “quality assurance”
● Requires top level strategic commitment
– There will be costs to transition
– Needs to be more than lip service
● Employee commitment
– Work teams, quality circles
● Technology
● Materials
● Methods & processes
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TQM Tools and Techniques
● Value-added analysis
– Evaluate all work flows to determine value they add
for customers
● Benchmarking
– Compare to competition
– Buy competitive products
– Visit competitors
– Reverse engineer
● Outsourcing
– Focus on core competencies
● Reduce cycle time
– Speed can improve quality
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TQM Tools and Techniques
● Statistical Quality Control, SQC
– Sample inputs
– In-process sampling
– Acceptance sampling
 “Acceptance” refers to final product
● Establish acceptance criteria
– May include documentation, features,
performance, maintainability, etc.
● Six Sigma
– Three errors per million
– Analyze root causes of errors and eliminate
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Managing Productivity
● Aggregate productivity
– Productivity of a country
● Industry productivity
● Company productivity
● Individual productivity
● Productivity = outputs / inputs
or
Productivity = outputs / direct labor
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Improving Productivity
● R&D
– New products
● Automate/revamp production
● Increase employee involvement
– E.g. the ‘red button’
– Training
– Rewards
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