AEM220_211To_Post - AEM220, Introduction to Business...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: AEM220, Introduction to Business Management. Friday 2/8 Operations Management Definition Activities Philosophies Operations Management The management of the conversion or transformation of resources (including human resources) into goods and services. A Compressed History (from "Factory Physics", Hopp & Spearman, 2002) Vertical integration Integrated production processes Specialized supply chains Economies of scale "Interchangeable" labor Emphasis on "generalist" management Economies of scale High speed of production High investment Economies of scale Interchangeable parts Specialized machines Economies of Scale Reduction in cost per unit resulting from increased production, realized through operational efficiencies. Economies of scale can be accomplished because as production increases, the cost of producing each additional unit falls. Short term economies of scale are the result of spreading fixed costs across all throughput; Intermediate term economies of scale are the result of having longer production runs; Long term economies or scale are the result of physics, which dictate that unit cost as a function of capacity is equal to a function aC^(b-1), where b lies between 0.6 and 1. Cost Structures of Craft Production and Mass Production (from "The Second Industrial Divide", Piore & Sabel, 1986) Operations Management Functions Facility Location Facility Layout and production scheduling Inventory Management Quality Control Facility Location Resources Labor Raw Material Infrastructure Retail sites Customer interaction "Just in time" Silicon Valley (IT) Boston, New Jersey (chemicals, pharmaceuticals) Manhattan (financial services) Customers "Clusters" Types of Operations Craft production High customization and variability in the product Eg. Glass blowing, fine musical instruments High standarization and uniformity in the product Eg. Car manufacturers Undifferentiated products Chemicals, agriculture Mass production, assembly line Mass production, process plant MRP, ERP and beyond Materials Requirement Planning A computer-based production management system that uses sales forecasts to make sure that needed parts and materials are available at the right time and place; A software solution that addresses enterprise needs taking the process view of the organization to meet the organizational goals tightly integrating all functions of an enterprise. Enterprise Resource Planning Modern Production Techniques Just-In-Time (JIT) Inventory Mass Customizing Purchasing and Supply Competing in Time Chain Management Flexible Manufacturing Lean Manufacturing Technology Assisted Computer-Aided Design (CAD) Computer-Aided Manufacturing (CAM) Just-in-Time and Lean Production Reducing setup times Increasing flexibility Reducing inventory costs Increasing quality Quality circles Authority to "stop the line" "Lifetime" employment Integrate suppliers into the design and planning process "Kanban" Promote networking across suppliers Worker empowerment Managing the supply chain Reengineering "The fundamental rethinking and radical redesign of business processes" (Hammer and Champy, 1994) Drawbacks of reengineering Reengineering assumes that the factor that limits an organization's performance is the ineffectiveness of its processes (which may or may not be true) and offers no means of validating that assumption. Reengineering assumes the need to start the process of performance improvement with a "clean slate," i.e. totally disregard the status quo. Many reengineering initiatives ended up being management fashion. Comparison of Assembly Costs as a Function of Annual Volume (from "The Second Industrial Divide", Piore & Sabel, 1986) Recommended Reading Any good Operations Management textbook, such as "Operations Management", Render and Heizer (Pearson/PrenticeHall) "The Machine that Changed the World", Womack et al., 1989 "The Goal", Goldratt, 1992 "Reengineering the Corporation", Hammer and Champy, 1993 Take-Aways Operations management refers to the set of activities by which an enterprise transforms resources into the products and services it offers; Operations management comprises: Location Layout Quality management Scheduling (including MRP and ERP technologies) Inventory management We can approach operations management from a "radical" (eg. reengineering) or an incremental ("Just-in-time" methodologies and lean manufacturing) perspective ...
View Full Document

Ask a homework question - tutors are online