Operations and Production Management GPO300

2nd October 2012

Thursday, October 4, 12

first semester 2012 13 GPO300 Operations and Production Management CLASSROOM CODE OF CONDUCT GROUND RULES: Start and end time No cell phones or electronic devices Respect all ideas Know your rights and obligations to others Listen to others Do not interrupt others Do not criticize, condemn or complain Side Discussions Complete your assignments Focus on ‘what’ is right and not ‘who’ is right

If You don’t understand something it is better to be ignorant for 5 minutes and ask now then to shy away and be ignorant for the rest of your life.

Thursday, October 4, 12

Thursday, October 4, 12

1

Ops the Big Picture Week 1

Week 2

Operations management 1

➤ What is operations management?

2

➤ Why is operations management important in all types of organization?

3

➤ What is the input–transformation–output process?

4

➤ What is the process hierarchy?

5

➤ How do operations processes have different characteristics?

6

➤ What are the activities of operations management?

Operations performance 7

➤  Why is operations performance important in any organization?

8

➤  How does the operations function incorporate all stakeholders’ objectives?

9

➤  What are the performance objectives of operations and what are the internal and external benefits which derive from excelling in each of them?

10 ➤  How do operations performance objectives trade off against each other?

Operations strategy 11 ➤  What is strategy and what is operations strategy? 12 ➤  What is the difference between a ‘top-down’ and a ‘bottom-up’ view of operations strategy? 13 ➤  What is the difference between a ‘market requirements’ and an ‘operations resources’ view of operations strategy? 14 ➤  How can an operations strategy be put together? insights into operational decision making

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2 Design Week 3

Week 6

Process design 1

➤ What is process design?

Layout and flow

2

➤ What objectives should process design have?

12 ➤ What is layout?

3

➤ How do volume and variety affect process design?

13 ➤ What are the basic layout types used in operations?

4

➤ How are processes designed in detail and decision Making made?

14 ➤ What type of layout should an operation choose? 15 ➤ What is layout design trying to achieve?

Products and services design 5

➤  Why is good product and service design important?

Process technology

6

➤  What are the stages in product and service design?

17 ➤ What is process technology?

7

➤  Why should product and service design and process design be considered interactively?

18 ➤ How are process technologies evaluated? 19 ➤ How are process technologies implemented?

Supply Chain design 8

➤ Why should an organization take a total supply Chain perspective?

Organizations, People, and jobs

9

➤ What is involved in configuring a supply Chain?

20 ➤ Why are people issues so important in operations management?

10 ➤ Where should an operation be located? 11 ➤ How much capacity should an operation plan have?

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21 ➤ How do operations managers contribute to human resource strategy?

3

How to run Operations Week 7

Week 12

The nature of planning and control 1

➤  What is planning and control?

2

➤  How do supply and demand affect planning and control?

3

➤  What are the activities of planning and control?

Capacity planning and control

Supply chain planning and control 15

➤  What is supply chain management?

16

➤  What are the activities of supply chain management?

4

➤  What is capacity planning and control?

5

➤  How are demand and capacity measured?

17

6

➤  What are the alternative ways of coping with demand fluctuation?

➤  What are the types of relationship between operations in supply chains?

18

➤ How do supply chains behave in practice?

19

➤ How can supply chains be improved?

7 8

➤  How can operations plan and control their capacity level? ➤  How can queuing theory be used to plan capacity?

Inventory planning and control

ERP 20

➤ What is ERP?

9

➤  What is inventory?

21

➤ How did ERP develop?

10

➤  Why is inventory necessary?

22

➤ How should ERP systems be implemented?

11

➤  What are the disadvantages of holding inventory?

12

➤  How much inventory should an operation hold?

13

➤  When should an operation replenish its inventory?

14 ➤  How can inventory be controlled?

Thursday, October 4, 12

Project planning and control 23

➤ What is a project?

24

➤ What makes project management successful?

Quality planning and control 25

➤ What is quality and why is it so important?

26

➤ How can quality problems be diagnosed?

Capacity

Quality

Inventory

MRP & ERP

Project

Supply chain

4 Getting Better Week 13

Week 16

Operations improvement 1

➤ Why is improvement so important in operations management?

2

➤ What are the key elements of operations improvement?

3

➤ What are the broad approaches to managing improvement?

Organizing improvement 8

➤ How should the improvement effort be linked to strategy?

9

➤ How can organizational culture affect improvement?

10 ➤ What are the key implementation issues?

Risk management Operations and corporate social responsibility (CSR)

4

➤ What is risk management?

5

➤  How can failures be prevented?

6

➤  How can operations mitigate the effects of failure?

12 ➤ How does the wider view of corporate social responsibility influence operations management?

7

➤  How can operations recover from the effects of failure?

13 ➤ How can operations managers analyze CSR issues?

Thursday, October 4, 12

11 ➤ What is corporate social responsibility?

Thursday, October 4, 12

first semester 2012 13 GPO300 Operations and Production Management

Some nice restaurant

Thursday, October 4, 12

first semester 2012 13 GPO300 Operations and Production Management

Emergencies

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first semester 2012 13 GPO300 Operations and Production Management EFFECTIVENESS

Thursday, October 4, 12

EFFICIENCY

first semester 2012 13 GPO300 Operations and Production Management

Chapter 1 Operations management

A CHANGING ENVIRONMENT

Table 1.2 Changes in the business environment are shaping a new operations agenda The business environment is changing . . .

Prompting operations responses . . .

For example,

For example,

• Increased cost-based competition

• Globalization of operations networking

• Higher quality expectations

• Information-based technologies

• Demands for better service • More choice and variety

• Internet-based integration of operations activities

• Rapidly developing technologies

• Supply chain management

• Frequent new product/service introduction

• Customer relationship management

➡

• Flexible working patterns

• Increased ethical sensitivity

• Mass customization

• Environmental impacts are more transparent

• Fast time-to-market methods

• More legal regulation

• Environmentally sensitive design

• Greater security awareness

• Supplier ‘partnership’ and development

• Lean process design

• Failure analysis • Business recovery planning

Thursday, October 4, 12

11

s

 

ds and

model. Put simply, operations are processes that take in a set of input resources which are used to transform something, or are transformed themselves, into outputs of products and services.semester And although all operations first 2012 conform 13 to this general input–transformation–output model, they differ in the nature of their specific inputs and outputs. For example, if you GPO300 stand far enough away from a hospital or a car plant, they might look very similar, but move Operations and do Production Management closer and clear differences start to emerge. One is a manufacturing operation producing ‘products’, and the other is a service operation producing ‘services’ that change the physiological PROCESSES or psychological condition of patients. What is inside each operation will also be

Tangible Intangible

All operations are service providers

Figure 1.3 All operations are input–transformation–output processes Thursday, October 4, 12

first semester 2012 13 GPO300 _06_SE_C01.QXD 10/20/09 9:07 Page 16 Operations and Production Management One

Processes Internal external supplier Introduction Internal external customer

Operations can be analyzed at three levels

Table 1.4 Some operations described in terms of their processes Operation

Some of the operation’s inputs

Some of the operation’s processes

Some of the operation’s outputs

Airline

Aircraft Pilots and air crew Ground crew Passengers and freight

Check passengers in Board passengers Fly passengers and freight around the world Care for passengers

Transported passengers and freight

Department store

Goods for sale Sales staff Information systems Customers

Source and store goods Display goods Give sales advice Sell goods

Customers and goods ‘assembled’ together

Police

Police officers Computer systems Information systems Public (law-abiding and criminals)

Crime prevention Crime detection Information gathering Detaining suspects

Lawful society, public with a feeling of security

Frozen food manufacturer

Fresh food Operators Processing technology Cold storage facilities

Source raw materials Prepare food Freeze food Pack and freeze food

Frozen food

Thursday, October 4, 12

information between them. Although it is not comprehensive, it gives an idea of the nature of each relationship. However, note that the support functions have a different relationship with operations than operations has with the other core functions. Operations management’s responsibility to support functions is primarily to make sure that they understand operations’ needs and help them to satisfy these needs. The relationship with the other two core functions is more equal – less of ‘this is what we want’ and more ‘this is what we can do currently – how do we reconcile this with broader business needs?’

 

first semester 2012 13 GPO300 Operations and Production Management 3 Core functions Table 1.1 The activities of core functions in some organizations Core functional activities

Internet service provider (ISP)

Fast food chain

International aid charity

Furniture manufacturer

Marketing and sales

Promote services to users and get registrations Sell advertising space

Advertise on TV Devise promotional materials

Develop funding contracts Mail out appeals for donations

Advertise in magazines Determine pricing policy Sell to stores

Product/service Devise new services development and commission new information content

Design hamburgers, pizzas, etc. Design décor for restaurants

Develop new appeals campaigns Design new assistance programmes

Design new furniture Coordinate with fashionable colours

Operations

Make burgers, pizzas etc. Serve customers Clear away Maintain equipment

Give service to the beneficiaries of the charity

Make components Assemble furniture

Maintain hardware, software and content Implement new links and services

+ Enablers - Accounting & Finance - Human Resources - Information technology Thursday, October 4, 12

Operations and Production Management Process Hierarchy Senior Management Owned Enabling processes do not directly impact the customer. They must exist to enable and support the execution of the core processes.

Enabling Processes

Middle Management Owned

P M#S ummary

Process Member and Process Owner Responsibilities

Thursday, October 4, 12

Core Processes

Process A

Process B

Process C

Process D

Process E

A core process is directly related to generating revenue, providing services to the customer or creating a strategic advantage for the company.

P M#S ummary

The many detailed activities, tasks and decisions involved in satisfying a process output.

first semester 2012 13 GPO300 Operations and Production Management

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10/21/09

11:49

Page 36

Part One Introduction

Operations management can ‘make or break’ any business Table 2.1 Some operations management characteristics of two companies Company A has operations managers who . . .

Company B has operations managers who . . .

Employ skilled, enthusiastic people, and encourage them to contribute ideas for cutting out waste and working more effectively.

Employ only people who have worked in similar companies before and supervise them closely to make sure that they ‘earn their salaries’.

Carefully monitor their customers’ perception of the quality of service they are receiving and learn from any examples of poor service and always apologize and rectify any failure to give excellent service.

Have rigid ‘completion of service’ sheets that customers sign to say that they have received the service, but they never follow up to check on customers’ views of the service that they have received.

Have invested in simple but appropriate systems of their own that allow the business to plan and control its activities effectively.

Have bought an expensive integrative system with extensive functionality, because ‘you might as well invest in state-of-the-art technology’.

Hold regular meetings where staff share their experiences and think about how they can build their knowledge of customer needs and new technologies, and how their services will have to change in the future to add value for their customers and help the business to remain competitive.

At the regular senior managers’ meeting always have an agenda item entitled ‘Future business’.

Last year’s financial details for Company A: Sales revenue = Wage costs = Supervisor costs = General overheads = Bought-in hardware = Margin = Capital expenditure =

Last year’s financial details for Company B: Sales revenue = A9,300,000 Wages costs = A1,700,000 Supervisor costs = A800,000 General overheads = A1,300,000 Bought-in hardware = A6,500,000 Margin = A700,000 Capital expenditure = A1,500,000

A10,000,000 A2,000,000 A300,000 A1,000,000 A5,000,000 A1,700,000 A600,000

Table 2.2 The effects of three options for improving earning at Kandy Kitchens Thursday, October 4, 12

keep processing costs down. Conversely, low volume, high variety, high variation and high customer contact generally carry some kind of cost penalty for the operation. This is why the volume dimension is drawn with its ‘low’ end at the left, unlike the other dimensions, to keep all the ‘low cost’ implications on the right. To some extent the position of an operation in the four dimensions is determined by the demand of the market it is serving. However, most operations have some discretion in moving themselves on the dimensions. Figure 1.7 summarizes the implications of such positioning.

Operations and Production Management ‘Four Vs’ analysis of processes

 

OPERATIONS CHARACTERISTICS

Figure 1.7 A typology of operations

Thursday, October 4, 12

Thursday, October 4, 12

first semester 2012 13 GPO300 Operations and Production Management Operations management

1

2

3

4

‣

Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. It is one of the core functions of any business, although it may not be called operations management in some industries.

‣

Operations management is concerned with managing processes. And all processes have internal customers and suppliers. But all management functions also have processes. Therefore, operations management has relevance for all managers.

➤ What is operations management?

➤ Why is operations management important in all types of organization?

➤ What is the input–transformation–output process?

➤ What is the process hierarchy?

Thursday, October 4, 12

‣

Operations management uses the organization’s resources to create outputs that fulfil defined market requirements. This is the fundamental activity of any type of enterprise.

‣

Operations management is increasingly important because today’s business environment requires new thinking from operations managers.

‣

All operations can be modelled as input–transformation–output processes. They all have inputs of transforming resources, which are usually divided into ‘facilities’ and ‘staff’, and transformed resources, which are some mixture of materials, information and customers.

‣

Few operations produce only products or only services. Most produce some mixture of tangible goods or products and less tangible services. ‣

All operations are part of a larger supply network which, through the individual contributions of each operation, satisfies end-customer requirements.

‣

All operations are made up of processes that form a network of internal customer–supplier relationships within the operation.

‣

End-to-end business processes that satisfy customer needs often cut across functionally based processes.

first semester 2012 13 GPO300 Operations and Production Management

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➤ How do operations processes have different characteristics?

■ Operations differ in terms of the volume of their outputs, the variety of outputs, the variation in demand for their outputs, and the degree of ‘visibility’ they have. ■ High volume, low variety, low variation and low customer ‘visibility’ are usually associated with low cost.

6

➤ What are the activities of operations management?

■ Responsibilities include understanding relevant performance objectives, setting an operations strategy, the design of the operation (products, services and processes), planning and con- trolling the operation, and the improvement of the operation over time. ■ Operations managers also have a set of broad societal responsibilities. These are generally called ‘corporate social responsibility’ or CSR objectives.

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first semester 2012 13 GPO300 Operations and Production Management Outcome of DAY 1: Understanding Operations Management Back to the Syllabus: Next Module 1 : OPERATIONS THE BIG PICTURE Understanding the operation’s strategic performance objectives. Developing an operations strategy for the organization.

Module 2: DESIGN Designing the operation’s products, services and processes. Module 3: RUNNING THE OPERATIONS Planning and controlling the operation. Module 4: GETTING BETTER Improving the performance of the operation. Conclusions Operations management and Business Models

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