Ch01_6e - Chapter 1 Chapter Introduction to Operations...

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Unformatted text preview: Chapter 1 Chapter Introduction to Operations Management The Operations The Function Function Operations as a transformation Operations process process Operations as a Operations basic function basic Operations as the Operations technical core technical Operations is a Transformation Process Transformation INPUT Material Machines Labor Management Capital TRANSFORMATION PROCESS Feedback OUTPUT Goods Services Operations is the technical core of an organization core Finance/Accounting Suppliers Material availability Quality data Delivery schedules Designs Budgets Cost analysis Capital investments Stockholder requirements Operations Personnel needs Skill sets Performance evaluations Job design Work measurement Hiring/firing Training Legal requirements Union contract negotiations Human Resources Product/Service availability Lead-time estimates Status of order Delivery schedules Sales forecasts Customer orders Customer feedback Promotions Marketing Production data Inventory data Capital budgeting requests Capacity expansion Technology plans Orders for materials Production/delivery schedules Quality requirements Design/Performance specs Historical Events in OM Historical Industrial Revolution Scientific Management Human Relations Management Science Quality Revolution Globalization Information Age/Internet Revolution Historical Events in OM Historical Industrial Revolution Steam engine Division of labor Interchangeable parts 1769 James Watt 1776 Adam Smith 1790 Eli Whitney Scientific Management Principles Time and motion studies Activity scheduling chart Moving assembly line 1911 1911 1912 1913 Frederick W. Taylor Frank & Lillian Gilbreth Henry Gant Henry Ford Human Relations Hawthorne studies Motivation theories 1930 1940s 1950s 1960s Elton Mayo Abraham Maslow Frederick Hertzberg Douglas McGregor Management Science Linear programming Digital computer Simulation, PERT/CPM, Waiting line theory MRP 1947 George Dantzig 1951 Remington Rand 1950s Operations research groups 1960s Joseph Orlicky, IBM Quality Revolution JIT, Lean TQM 1970s Taiichi Ohno, Toyota 1980s W. Edwards Deming, Joseph Juran, et. al. Strategy and operations 1980s Skinner, Hayes Reengineering 1990s Hammer, Champy Six Sigma 2000s GE, Motorola, other cos Internet Revolution Internet, WWW 1990s ARPANET,Tim Berners-Lee ERP, Supply chain management CRM 2000s SAP, i2 Technologies, ORACLE, Microsoft E-commerce Amazon, Yahoo, eBay, and others Globalization World Trade Organization European Union and other trade agreements 2000s Numerous countries and companies IT has integrated the value chain. IT Customer Manufacturer Supplier Flow of information (customer order) Flow of product (order fulfillment) Supply Chain Management Supply World Population World World Population Distribution Source: U.S. Census Bureau, 2006. Trade as % of GDP Trade Trade in Goods as % of GDP (sum of merchandise exports and imports divided by GDP, valued in U.S. dollars) Competitiveness Competitiveness The degree to which a nation can produce goods and services that meet the test of international markets while simultaneously maintaining or expanding the real incomes of its citizens. http://www.youtube.com/watch?v=kzn9-M2umFQ Productivity Productivity Output Productivity = Input Productivity improves when firms: Become more efficient Downsize Expand Retrench Achieve breakthroughs International Comparisons of Productivity of Average Annual Growth Rates in Productivity, 1995-2005. Source: Bureau of Labor Statistics. A Chartbook of International Labor Comparisons. January 2007, p. 28. Inputs and Outputs Inputs Average Annual Growth Rates in Output and Input, 1995-2005 Source: Bureau of Labor Statistics. A Chartbook of International Labor Comparisons, January 2007, p. 26. Strategy and Operations Strategy Strategy is a common vision that common unites an organization, provides consistency in decisions, and consistency and keeps the organization moving in the right direction. direction 1. Define a primary task 1. What are you in the business of doing? 1. Assess core competencies What do you do better than anyone else? 1. Determine order winners & order Determine qualifiers qualifiers What characteristics qualify your product to be What considered for purchase? What wins the order? order? 1. Position the firm Position On what do you wish to compete? On Competing on Cost Competing Eliminate all waste Invest in Updated facilities & Updated equipment equipment Streamlining Streamlining operations operations Training & Training development development Competing on Quality Competing Please the customer Understand customer Understand attitudes toward and expectations of quality quality Exceed expectations Exceed expectations Competing on Innovation Competing Both products & Both processes processes Introduce new products Introduce & modify existing products quickly quickly Respond to customer’s expressed & unexpressed needs unexpressed Push the envelope Competing on Speed Competing Fast moves Fast adaptations adaptations Tight linkages Key Features of a Good Operations Strategy Operations • Fits with the way the firm has chosen to compete • Excels on order winners; meets order qualifiers • All the pieces fit together • Quality and workforce • Product and process • Capacity and technology Processes & Technology Services Products Capacity Facilities Human Resources Sourcing Quality Operating Systems Strategic Planning Process Strategic Mission and Vision Voice of the Business Marketing Strategy Corporate Strategy Operations Strategy Voice of the Customer Financial Strategy Operations Operations Strategy at Strategy Wal-Mart Wal-Mart Mission Competitive Competitive Priority Priority Wal-Mart Provide value for customers Low prices, everyday Operations Operations Strategy Strategy Low inventory levels Short flow times Operations Operations Structure Structure Linked communications between stores Fast transportation system Enabling Enabling Process and Technologies Technologies EDI/satellites Cross-docking Focused locations Policy Deployment Policy Hoshin planning Focuses employees on common goals & Focuses priorities priorities Translates strategy into measurable Translates objectives objectives Aligns day-to-day decisions with strategic Aligns plan plan Derivation of an Action Plan Derivation What Who Resource Reduce Reduce production cycle time by 30% by Reduce Reduce queue time by 50% by Reduce setup Reduce time by 50% time Cut lot sizes in Cut half half Reduce Reduce business cycle time by 50% by Improve Billy $5,000 work Wray flow ... ... Increase electronic Increase transactions by 30% transactions Reduce Reduce purchasing cycle time by 30% by ... Redesign supplier Redesign quality reporting process quality ... Set up supplier Set education groups education ... Reduce supplier Reduce base by 50% base ... When Measure 9-1-04 Average queue time per job Balanced Scorecard Balanced Finance — How should we look to our shareholders? shareholders? Customer — How should we look to our customers? customers? Processes — At which business processes Processes must we excel? must Learning and Growing — How will we sustain our ability to change and improve? sustain Balanced Scorecard Radar Chart Balanced Scorecard Dashboard Issues and Trends Issues and Trends Global markets Supply chains Outsourcing Collaborative Collaborative commerce commerce Virtual companies Technological Technological advances advances Greater choice Knowledge is key Emphasis on service Speed and flexibility Sustainability Cost / Survival ...
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