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Unformatted text preview: Operations Management
Professor Atalay Atasu Operations Management Group College of Management Click to edit Master subtitle style Georgia Tech Who Am I?
BS in Textile Engineering from Istanbul Technical University • • MS in Industrial Engineering from Bosphorus University PhD in Operations Management from INSEAD Taught at INSEAD (MBA Core Ops.) and University of Mannheim (Exec. Ed. Ops.) • • What Will We Do Today?
How is this course organized? Why Operations Management? • • Organization of Course
• • • • • • • Class web site (use T-Square) Course text: Operations &Supply Management, 12th Edition, by Chase, Jacobs, and Aquilano. Grading: – 2 Midterms (25% each), 1 Final (40%) – Pop Quizzes (10%). At least 4. The highest 4 will be considered for grades. Attendance: Voluntary On-time arrival to class. TA– Ioannis Bellos My office hours Tuesday 10:30 am-12pm. Organization of Course
• • • • Classroom Etiquette – No Cell Phones – No Laptops (unless suggested otherwise) – On-time arrival to class (until 5 minutes after the start time) Penalties – Choose your own – Chocolate or Entertainment? Teaching Style – Active learning – Games – Participation is crucial. Names? What is this course all about? Operations Management (OM) is defined as the design, operation, and improvement of the systems that create and deliver the firm’s primary products and services Why is it a core course? Why does everyone need to take it? Business-Car Analogy
Finance Marketing Accounting Operations Click to edit Master subtitle style … and, of course, you are the driver OM is important because 1. Operations is a core function in every business – both manufacturing and service oriented. It accounts for 60-80% of a firm’s expenses. Operations Management provides a systematic way of looking at any organizational process. Operations Management decisions affect every other functional area of an organization (product quality, marketing, capacity decisions, strategy, environmental, etc.) 2. 3. Key Components of Operations Management Process Design and Management Product / Service Development Supply Chain Management What types of problems does OM address ? Manufacturing Example: Supply Chain Management T 3 T 3 T 3 T 3 T 3 T 2 T1 OEM . co m W C C C C C R T 2 T 2 T1 W R What types of problems does OM address ? Service Example: Bank Loan s Depo sits Credi t Cards What types of problems does OM address ? R&D Example: New Product Development Phase 0
Planning Phase 1
Concept Development Phase 2
System-level Design Phase 3
Detail Design Phase 4
Testing and Refinement Phase 5
Production Ramp-Up Adapted from Ulrich & Eppinger 2002 Types of Decisions in OM … • Strategic Tactical Operational • • Types of Decisions in OM …
Focus Broad Strategic Moderate Tactical Narrow Operational Short 1st Line Moderate Mid Timespan Long Mgt Level Top Link to Corporate Strategy Tight Moderate Loose Types of Decisions in OM …
Operational Tactical Strategic Strategic Decisions Strategic questions that operations managers ask and respond to …
1. How much capacity do we need? How should our staff be trained? Manufacturing 1. Service
1. Which projects should we invest in?
Prod. Development Tactical Decisions
Tactical questions that operations managers ask and respond to …
1. Should we have finished goods inventory or should we make-to-order? What types of queues should we employ in Hartsfield? Do we need to exchange preliminary information with mfg? Manufacturing 2. 3. Service Prod. Development How does OM view these questions? Transformation/Production Process
A transformation/production process uses resources to convert inputs into some desired output Inputs Resources Outpu ts What is the Transformation?
Manufacturing Example: Supply Chain Management T 3 T 3 T 3 T 3 T 3 T 2 T1 OEM . co m W C C C C C R T 2 T 2 T1 W R What is the Transformation?
Service Example: Bank Loans Deposit s Credit Cards Types of Transformations System Hospital Prison Restaurant Inputs Resources
Doctors Medicine Equipment Guards Facilities Food Staff Food Facilities Output
Healthy Patients Sick Patients Criminals Hungry Customers Reformed Citizens Satisfied Customers OM and Production Systems What is the goal of OM with respect to production systems? Efficiency is doing something at the Ø Improving efficiency lowest possible cost
Ø Improving effectiveness Increasing value Effectiveness is doing the right things to create value for the organization Ø Value = quality price Modern Times • • • http://www.youtube.com/watch?v=qDnDaDYZ2AQ http://www.youtube.com/watch?v=7fyyt3JGGvk&feature=re What is operations in “Modern Times”? The First Industrial Revolution (c. 1850)
• Textile manufacturing innovations “Flying shuttle” and “Spinning Jenny” J. Watt: The steam engine Substituting labor with machines small scale production • • A. Smith: Free markets – division of labor Free markets would enhance “quest” for profit Specialization could increase productivity The American System of Manufacturing
Vertical Integration Consolidating different operations under one roof
• Interchangeable parts Mass-produce parts to tight tolerance & assemble
• 1801 contract for 10,000 muskets for the government
• Unskilled workers The Second Industrial Revolution (c. 1910)
1832: 36 enterprises in 10 states with > 250 workers Reliance on water power & local distribution system
• • Transportation innovations Railroads are built in western world Communication innovations The telegraph is established large scale production • • Big retailers come to power Sears & Roebuck’s sales soar to $38M in 10 years Mass Production: the first vehicles arrive… Henry Ford starts producing Model T • 1910-1920: The Scientific Method (Taylorism)
• Principles of Scientific Management Book published in 1911 by Fredrick Taylor Time and Motion studies How much time do workers need to do a task? Incentive systems What is the best payment scheme? • • • Study how systems can be efficient Developed a set of principles that serve efficiency. Planning versus doing. Efficiency is the key! 1920’s - 1930’s: Taylorism Spreads
Application of Taylor’s methods The DuPont Powder company • More importance to the human element Studies at the Western Electric Hawthorne plant to understand ergonomics: the human element in manufacturing
• • Investment in management education Between 1914 and 1940 B-schools grew a lot 1940’s - 1960’s: The Golden Era in the U.S.
• Operations Research tools are “born” G.B. Dantzig devises simplex algorithm Effort to study complex systems The importance of teamwork is introduced • Mathematical analysis becomes the norm Scientific methods are applied throughout the organization
• Mathematics solidify the scientific method Simulation based models, computer usage, scheduling
• 1970’s: Computers and MRP take over
Production Schedule Bill of materials Inventory status Forecast ed Demand MRP (Materials Requirement Planning) MRP automated production… But, someone has to tell the computers what to analyze! 1980’s: The Japanese Challenge
American manufacturing led until the late 70’s, but then…
TQC: Total Quality Control Higher quality Less cost JIT: Just-In-Time The methods introduced by Japanese manufacturing firms outperformed the US … 1990’s: The U.S. rises to the challenge
Entrepreneurship and the ability to change and re-invent themselves allowed American firms to move into new areas. U.S. firms improve productivity and quality. U.S. firms focus on emerging technologies, R&D. Growth of the service industry. Examples in OM…. • • • • Why Operations Management?
Operations Management = Strategy Execution
Time Quality Flexibility Cost OM = Designing, operating, and improving the systems that deliver the firm’s primary products and services Strategy Execution
1. What is our strategy? 2. How do we design our operations to support it? Product / Service Development Process Design and Management Supply Chain Management Strategy Execution
What’s their strategy? How do they execute it? Dell Southwest Walmart Toyota Amazon ...
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This note was uploaded on 01/25/2011 for the course MGT 3501 taught by Professor Chang during the Spring '10 term at Georgia Institute of Technology.
- Spring '10