Transcript Module 15 – Introduction to Operations Management

Introduction to Operations
Management
Chapter 1
pp. 2-15; 22-37
June 25, 2012
Learning objectives
• LO 1 – define operations management
• LO 2 – understand how manufacturing and
service differ
• LO 3 – be familiar with current trends in
business that impact operations management
Operations Management
• Definitions
– Operations
– Operations management
– Transformation process
• Series of activities along a “value chain”
Value Chain
The Transformation Process – Systems
Theory
Value-Added
Inputs
Transformation/
Conversion
Process
•Land
•Labor
•Capital
•Information
Outputs
•Goods
•Services
Feedback
Feedback
Control
Feedback
Transformation Process
• Physical: as in manufacturing operations
• Locational: as in transportation or warehouse
operations
• Exchange: as in retail operations
• Physiological: as in health care
• Psychological: as in entertainment
• Informational: as in communication
The Transformation Process – Systems
Theory
Value-Added
Inputs
Transformation/
Conversion
Process
•Land
•Labor
•Capital
•Information
Outputs
•Goods
•Services
Feedback
Feedback
Control
Feedback
Supply Chain as Transformation Process
Manufacturing vs. Service?
Goods
Services
Tangible
Act-Oriented
Key Differences in Goods and Services
1. Customer contact
2. Uniformity of input
3. Labor content of jobs
4. Uniformity of output
5. Measurement of productivity
6. Production and delivery
7. Quality assurance
8. Amount of inventory
Manufacturing (goods) vs Service
Characteristic
Manufacturing Service
Output
Tangible
Customer contact
Low
High
Uniformity of input
High
Low
Labor content
Low
High
Uniformity of output
High
Low
Measurement of productivity
Easy
Difficult
Opportunity to correct
quality problems
High
Low
High
Intangible
Managing Services is Challenging
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Less structured jobs
Customer contact
Often low-skilled jobs and workers
High turnover (especially in low-skill jobs)
High input variability
External factors
Process Management
• Definition
– “one or more actions that transform inputs into
outputs”
• Variety
– Projects
Process Management
• Definition
• Types
– Projects
– Batch production
Process Management
• Definition
• Types
– Projects
– Batch production
– Mass production
• chocolates
– Mass customization
• It once was just a sneaker!
Customization (normally)
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More labor intensive
More time consuming
Requires more highly-skilled people
Requires more flexible equipment
Much lower volume of output
Higher price tags
Process Management
• Definition
• Types
– Projects
– Batch production
– Mass production
– Mass customization
• It once was just a sneaker!
– Continuous production
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.
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.
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Key Trends and Issues in
Manufacturing
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E-Business & E-Commerce
Management of Technology
Globalization
Management of Supply Chains
Outsourcing
Agility
Ethical Behavior
Key trend: What is Manufacturing?
• Not your grandfather’s industry
• World's largest manufacturing economy,
– US: 21%
– China: 15%
– Japan: 12%
• 11.7% GDP
Key trend: What is Manufacturing?
• 17 million US jobs (including support)
– one in six private sector jobs
– 12 million mfg jobs
• Avg $77,186 annually (pay and benefits)
– average non-manufacturing = $56,436 annually.
• 66% of all R&D in the nation
• Would be the 8th largest economy
Key trend: What is Manufacturing?
• Who’s going to work there?
– Jobs, but no people
– and it's not just here
Key trend:
Globalization/Offshoring
• access to international markets
Key trend:
Globalization/Offshoring
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access to international markets
response to changes in demand
reliable sources of supply
latest trends and technologies
favorable cost
Key trend: Supply Chain
Management
• Supply chain
Suppliers’
suppliers
Direct
suppliers
Producer
Distributor
Final
Customers
Historical Evolution of OM
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Industrial Revolution
Scientific Management
Human Relations Movement
Decision Models and Management Science
Influence of Japanese Manufacturers
Influence of Japanese Manufacturers
• “Japan, Inc.”
• Japanese manufacturing
– Efficiency and quality
• TPS and JIT (lean) mfg
TPS and JIT (lean) mfg
• “lean” philosophy
– Value or waste
– Preserve value with less work
– Increase efficiency, decrease waste, and measure
• TPS characteristics
– Cost reductions by eliminating waste
– Very low inventories (JIT)
• It all has to fit
TPS and JIT (lean mfg)
• “lean” philosophy
• TPS characteristics
– Cost reductions by eliminating waste
– Very low inventories (JIT)
– Short production cycle times
– Order-based production
Advanced manufacturing
• Definition
– Nanotechnology
• then is now