06 PA OM Process Analysis 02 10 2008

06 PA OM Process Analysis 02 10 2008 - Operations...

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Operations Management Professor Arnold and Friends
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Good Stuff Cheap Effectiveness The extent to which customers are satisfied sufficiently to remain customers. Efficiency The extent to which products and services are delivered at low cost. Products and Services
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What does Process Analysis give you? Clear picture of how inputs flow and are processed Sense of the simplicity or complexity of process Quantify process capacity to produce goods or to service customers; quantify effect of changes Identify and quantify bottlenecks, breakdowns, disconnects Visual “magnetic board” to “move pieces around” when brainstorming improvement ideas.
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Operations “perform” PFA helps analyze and improve performance Performance dimensions: Speed of responsiveness to orders Quality (delivering what is promised) Unit Cost Flexibility for product volume, product variety (can be ‘customization’)
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A few key terms in PFA: Inventories : Raw Materials (RM), Work-in-Process (WIP), Finished Goods (FG) Cycle time : time between successive completed units Throughput time (TPT): material time-in-system start to finish (elapsed time) Capacity : how much product process can make, or amount of time available for making products Bottleneck : the slowest task in a process Run time : time machines or people are busy making product Set-up time : time getting ready to run, or cleaning up Idle time : time people or machines are not making product
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Competition 1. Price - Which company sets the price in the market place? The company with the highest costs or the one with the lowest costs? If the firm with the highest costs can not generate positive margin what is the outcome? 2. Quality = (Materials + Workmanship + Design) 3. Product Differentiation through features 4. Flexibility - Henry Ford was once asked what colors the Model T would be available in. Ford’s famous response was “They [customers] can have any color they want as long as its black.” Today’s marketplace is a little different. 5. Time - How soon can it be delivered? Fedex was originally designed to deliver time sensitive documents. Now what? What about eCommerce? 6. Service - How well can customers have needs satisfied? How easy can product use be made?
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06 PA OM Process Analysis 02 10 2008 - Operations...

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