Post on 05-Apr-2018
transcript
7/31/2019 Chapter01and02[street08Spring]
1/63
Welcome MGT329
7/31/2019 Chapter01and02[street08Spring]
2/63
Operations Management:MGT329
Lecture: Monday and Wednesday9:30 AM - 10:45 AM
11:00 AM 12:15 PM
Professor: Jeff Street
Office: BA 434
Phone: X4184Cell: (770) 654-2056
e-mail: strejeff@isu.edu
7/31/2019 Chapter01and02[street08Spring]
3/63
Course Books
Operations Management ForCompetitive Advantage, 11th Edition,by Richard B. Chase, F. Robert Jacobs
and Nicholas J. Aquilano.
The Goal, by Eliyahu M. Goldratt andJeff Cox
7/31/2019 Chapter01and02[street08Spring]
4/63
7/31/2019 Chapter01and02[street08Spring]
5/63
Some questions to be addressed
in this course include:
How does the customer fit intooperations strategy?
How is globalization affectingbusiness and operations strategies?
What effect are new technologies
having on the utilization of anorganizations resources?
7/31/2019 Chapter01and02[street08Spring]
6/63
Some questions to be addressedin this course include:
How has the concept of qualitymanagement changed, and how doesit affect operations?
Why is continuous improvement inthe operations management functionnecessary for an organization toremain competitive?
7/31/2019 Chapter01and02[street08Spring]
7/63
Why Study Operations
Management?
Operations
ManagementBusiness Education
Systematic Approach
to Organizational
Processes
Career Opportunities
Cross-FunctionalApplications
7/31/2019 Chapter01and02[street08Spring]
8/63
Scientific
Management
Moving Assembly
Line
Hawthorne
Studies
Operations
Research
HistoricalUnderpinnings
Computers
(MRP)
JIT/TQC &
Automation
Manufacturing
Strategy
Service Quality
and Productivity
TQM & Quality
Certification
Business Process
Reengineering
Electronic
Enterprise
Global Supply
Chain Mgmt.
OM's Emergenceas a Field
Development of OM as a Field
7/31/2019 Chapter01and02[street08Spring]
9/63
Current Issues
Speeding up the time it takes to get newproducts and services into production.
Developing flexible production systems toenable mass customization of products andservices.
Managing global production/supply networks.
Developing and integrating new productiontechnologies into existing production systems.
7/31/2019 Chapter01and02[street08Spring]
10/63
Current Issues
Achieving high quality quickly andkeeping it up in the face of restructuring.
Managing a diverse workforce.
Conforming to environmental constraints,
ethical standards, and governmentregulations.
7/31/2019 Chapter01and02[street08Spring]
11/63
What is Operations Management?
Operations Management is a functional areaof business devoted to the management ofan organization's resources to createproducts or services.
The set of resources includes anorganization's know-how,facilities, work-force, materials, and equipment.
Operations Management issues permeate alllevels of an organization's decision makingfrom the long-term strategic to the tactical to
the day to day operations.
7/31/2019 Chapter01and02[street08Spring]
12/63
Operations management is concernedwith the design, operation, and
improvementof the production system
that creates the firms primary products
and services.
[Even Elmers, ISU, and Portneuf Medical
Center are production systems]
7/31/2019 Chapter01and02[street08Spring]
13/63
Operations Decision MakingMarketplace
Corporate Strategy
Operations Strategy
Operations Management
Marketing StrategyFinance Strategy
People Plants Parts Processes
Planning and Control
Production System
Materials &
Customers
Input
Products &
Services
Output
7/31/2019 Chapter01and02[street08Spring]
14/63
Managing Transformations
The Production System
Input Output
People
Plants
Parts
Processes Planning and
Control
TransformationProcess
(Value Adding)
Transformation is
enabled by The 5 Ps of OM:
[A.K.A. The 5 MsMan,
Machines, Materials, Methods,
And Management]
Micro View
7/31/2019 Chapter01and02[street08Spring]
15/63
Transformations
Physical--manufacturing
Locational--transportation
Exchange--retailing
Storage--warehousing
Physiological--health care
Informational--telecommunications
7/31/2019 Chapter01and02[street08Spring]
16/63
Competitive Priorities
Quality (including Service)
Price (or production cost)
Delivery (speed)
Flexibility V =f(Q,T)
COur Value Equation
7/31/2019 Chapter01and02[street08Spring]
17/63
Core services are basic things
that customers want fromproducts (or services) they
purchase.
Core Services Definition
7/31/2019 Chapter01and02[street08Spring]
18/63
Core Services Performance Objectives(Competitive Priorities)
Operations
ManagementFlexibility
customized
Quality
made correctly
Delivery Speed
on-time
Price (or cost
Reduction)
Competitively
7/31/2019 Chapter01and02[street08Spring]
19/63
Value-added services (or features)
differentiate the organization from
competitors and buildrelationships that bind customers
to the firm in a positive way.
(i.e. increase switching costs)
Value-Added Services Defined
7/31/2019 Chapter01and02[street08Spring]
20/63
Value-Added Service Categories
Operations
ManagementInformation
educate customer
Problem Solvingclose gaps
Sales Support
flex to demands
Field Support
grow utility
7/31/2019 Chapter01and02[street08Spring]
21/63
Value-Added Factory Services
Information - provide critical data to market
Problem Solving troubleshooting ability
Sales Support demonstrate the offering
Field Support replace/replenish stock, spares
7/31/2019 Chapter01and02[street08Spring]
22/63
Service or Good?
If you drop it on your foot, it wont
hurt you. (Good or service?)
Services never include goods andgoods never include services.
(True or false?)
7/31/2019 Chapter01and02[street08Spring]
23/63
What about McDonalds?
Service or Manufacturing?
The company certainly manufacturestangible products
Why then would we considerMcDonalds a service business?
7/31/2019 Chapter01and02[street08Spring]
24/63
Verbalize
OrderCollect
paymentEnter Order
Prepare
Food
15 seconds60 seconds
Correct
Order
Fail
point
Standard
execution time 2
minutes
30 seconds 15 seconds
20 seconds
How would an Operations
Management focus apply
here?
Materials
(e.g., food, paper)
Select and
purchase supplies
Not seen by customer
but necessary to
performance
Line of
visibility
Back Office
Front Office
7/31/2019 Chapter01and02[street08Spring]
25/63
Operations Strategy and
Competitiveness
Chapter 2
7/31/2019 Chapter01and02[street08Spring]
26/63
Operations Strategy
Customer Needs Corporate Strategy
Operations Strategy Core
Competencies
Decisions
Processes, Infrastructure, and Capabilities
Alignment
Competitors
7/31/2019 Chapter01and02[street08Spring]
27/63
Strategy Process
Forced-Choice ModelEnvironmental Assessment Organizations Position
Strategic options
Requirements for implementing options
Contingency plans
Statement of mission
Interrelated set of financial
and nonfinancial objectives
Statement of strengths and
weaknesses
Forecast of operational needs
Major future programs
Broad economic assumptions
Key government
and regulatory issues
Major technological forces
Significant market
opportunities and threats
Explicit strategies of competitors
7/31/2019 Chapter01and02[street08Spring]
28/63
Customer Needs
Corporate Strategy
SBU Operations Strategy
Decisions on Processesand Infrastructure
ExampleStrategy Process
More Product
Increase Org. Size
Increase Production Capacity
Build New Factory
7/31/2019 Chapter01and02[street08Spring]
29/63
Hierarchy of Strategy Process
CustomersEnvironment
Corporate StrategicPlanning
SBU #1 SBU #2 SBU#3
Marketing
OperationsMgt
Engineering
Capabilities
Progress
Potential Problems/Changes
VisionType of Value deliveredSpecific Market
Corporate ValuesCore competencies
Performance metrics
Strategic
BusinessUnits
FunctionalAreas
Finance
O ti St t
7/31/2019 Chapter01and02[street08Spring]
30/63
Operations Strategy --
Formulation
Customers
Get to know; team up with next and
final customer.
Continual, rapid improvement in
lead time, quality, cost, flexibilityand variability.
7/31/2019 Chapter01and02[street08Spring]
31/63
Operations Strategy --
FormulationCompany
Achieve unified purpose viainformation;
team involvement in planning and
implementing change.
7/31/2019 Chapter01and02[street08Spring]
32/63
Operations Strategy --
FormulationCompetitors
Get to know the competition and
world-class leaders.
7/31/2019 Chapter01and02[street08Spring]
33/63
Operations Priorities Cost
Quality
Delivery Speed
Flexibility
Service
Delivery Reliability
Coping with Changes in Demand
Flexibility and New Product Introduction Speed
Traditional
Competitive Priorities
7/31/2019 Chapter01and02[street08Spring]
34/63
A Framework for Manufacturing Strategy
Customer Needs
New product : Old product
Competitive
dimensions & requirements
Quality, Cost, Delivery, Flexibility, and Service
Operations & Supplier capabilities
R&D Technology Systems People Distribution
Support Platforms
Financial management Human resource management Information management
Enterprise capabilities
Operations and Supplier Capabilities
R&D Technology Systems People Distribution
7/31/2019 Chapter01and02[street08Spring]
35/63
Operations Strategy
Customer Needs Corporate Strategy
Operations Strategy Core
Competencies
Decisions
Processes, Infrastructure, and Capabilities
Alignment
Competitors
7/31/2019 Chapter01and02[street08Spring]
36/63
competitive priorities
Quality
FlexibilityService
Cost
Lead TimesVariability
7/31/2019 Chapter01and02[street08Spring]
37/63
Dealing with Trade-offs
Cost
Quality
DeliveryFlexibility
For example, if weimprove customerservice problem solvingby cross-trainingpersonnel to deal with a
wider-range ofproblems, they maybecome less effective atdealing with commonly
occurring problems.
For example, if we reduce costs by reducing productquality inspections, we might reduce product quality.
7/31/2019 Chapter01and02[street08Spring]
38/63
World-Class Manufacturing
World-class manufacturers [i.e. operations] nolonger view cost, quality, speed of delivery, andeven flexibilityas tradeoffs.
They have become order qualifiers.
Distinctive Competency
What are the order winnersintodays market?
7/31/2019 Chapter01and02[street08Spring]
39/63
Distinctive competency
A strength that sets a business
apart from its competition
McDonalds
Disney World or Disney Land
Delta Airlines
Intel Corporation UPS
7/31/2019 Chapter01and02[street08Spring]
40/63
Strategy Begins with Priorities
Consider the case of a personal computermanufacturer.
1. How would we segment the market according
to product group? Personal use
Small business
Large Corporations
2. How would we identify product requirements,demand patterns, and profit margins for eachgroup?
7/31/2019 Chapter01and02[street08Spring]
41/63
How do we identify order winner andorder qualifiers for each group?
quality costdeliveryflexibilityservice
Personal useSmall business
Large Corporations
What would be the winner for each market group?
7/31/2019 Chapter01and02[street08Spring]
42/63
How do we convert order winners intospecific performance requirements?
Us
(Distinctive
Competencies)
Competition
(Them) Differentiation
7/31/2019 Chapter01and02[street08Spring]
43/63
7
Service can bean orderwinner
Warranty
Roadside
Assistance
Travel
Planning
Loaner
Vehicles
Leases
Car Dealership
7/31/2019 Chapter01and02[street08Spring]
44/63
Again, What is Operations
Management?
Operations Management is the
functional area of business devoted tothe management of an organization'sresources to create products or
services.
7/31/2019 Chapter01and02[street08Spring]
45/63
What is Productivity?
A measure of the effective use ofresources, usually expressed as theratio of output to input.
Output
Productivity = Input
Wh t f t ff t th
7/31/2019 Chapter01and02[street08Spring]
46/63
What factors affect the
productivity of a business?
work methods
capital
qualitytraining
technology
management
7/31/2019 Chapter01and02[street08Spring]
47/63
What methods can be used to
improve productivity?develop productivity measures
measurement is necessary to control the operation
look at overall productivitydevelop methods for achieving productivity
improvements
establish reasonable goals for improvement
measure and communicate improvements toboth customers and employees
7/31/2019 Chapter01and02[street08Spring]
48/63
Total Measure Productivity
Total measure Productivity = OutputsInputs
or
= Goods and services produced
All resources used
[Productivity versus Throughput]
7/31/2019 Chapter01and02[street08Spring]
49/63
Partial measures of productivity =
Output or Output or Output or OutputLabor Capital Materials Energy
Partial Measure Productivity
7/31/2019 Chapter01and02[street08Spring]
50/63
Multifactor measures of productivity =
Output .
Labor + Capital + Energy
or
Output .
Labor + Capital + Materials
Multifactor Measure Productivity
7/31/2019 Chapter01and02[street08Spring]
51/63
Example of Productivity Measurement
You have just determined that your serviceemployees have used a total of 2400 hours of laborthis week to process 560 insurance forms. Last weekthe same crew used only 2000 hours of labor toprocess 480 forms.
Which productivity measure should be used?Answer: Could be classified as a Total Measure orPartial Measure.
Is productivity increasing or decreasing?Answer: Last weeks productivity = 480/2000 = 0.24,and this weeks productivity is = 560/2400 = 0.23. So,productivity is decreasing slightly.
7/31/2019 Chapter01and02[street08Spring]
52/63
Example
10,000 Units Produced
Sold for $10/unit
500 labor hours
Labor rate: $9/hr
Cost of raw material: $5,000
Cost of purchased material: $25,000
What is thelabor productivity?
7/31/2019 Chapter01and02[street08Spring]
53/63
10,000 units/500hrs = 20 units/hour
(10,000 unit*$10/unit)
(500hrs*$9/hr)
What do these calculations tell us?
More importantly -- What dont they tell us?
Example--Labor Productivity
= $22.22
7/31/2019 Chapter01and02[street08Spring]
54/63
Applying Productivity Figures
Youve just told your boss that the
plant labor productivity is better thanthat of a plant in a related business.
What does this really mean?
7/31/2019 Chapter01and02[street08Spring]
55/63
Productivity measures
need to be tracked over time
need to include all possible inputs
are difficult to compare betweencompanies or industries
do not (directly) include measures of
timeliness or quality[th********] [sc*** and re****]
7/31/2019 Chapter01and02[street08Spring]
56/63
Solution for Problem #1
Labor Productivity units/hour
Model Outputin Units
Inputin Labor Hours
Productivity(Output/Input)
Deluxe Car 4,000 20,000 0.20
Limited Car 6,000 30,000 0.20
Labor Productivitydollars
Model Outputin Dollars
Inputin Dollars
Productivity(Output/Input)
Deluxe Car 4,000($8000)=$32,000,000
20,000($12.00)=$240,000
133.33
Limited Car 6,000($9500)=$57,000,000
30,000($14.00)=$420,000
135.71
7/31/2019 Chapter01and02[street08Spring]
57/63
Solution to Problem #2
Labor Productivity
Country Output
in Units
Input
in Hours
Productivity
(Output/Input)
U.S. 100,000 20,000 5.00
LDC 20,000 15,000 1.33
Capital Equipment Productivity
Country Outputin Units
Inputin Hours
Productivity(Output/Input)
U.S. 100,000 60,000 1.67
LDC 20,000 5,000 4.00
7/31/2019 Chapter01and02[street08Spring]
58/63
Solution to Problem #2
Multifactor Labor and Capital Equipment
Country Outputin Units
Inputin Hours
Productivity(Output/Input)
U.S. 100,000 20,000 + 60,000=80,000
1.25
LDC 20,000 15,000 + 5,000=20,000
1.00
Raw Material Productivity
Country Outputin Units
Inputin Dollars
Productivity(Output/Input)
U.S. 100,000 $20,000 5.00
LDC 20,000 FC $20,000/10=$2,000
10.00
7/31/2019 Chapter01and02[street08Spring]
59/63
Lasik Vision
7/31/2019 Chapter01and02[street08Spring]
60/63
Lasik Vision
What was Lasik Visions competitive priority?
High volume low cost
Other priorities?
Flexibility?
Delivery?
Quality?
7/31/2019 Chapter01and02[street08Spring]
61/63
Lasik Vision
Is this the appropriate approach in thisindustry?
Is standardization more difficult in health
care?
What repercussions, actual or
perceived might occur with thispriority?
7/31/2019 Chapter01and02[street08Spring]
62/63
Lasik Vision
Given that a company has chosen this
priority, what needs to be done to achieve
success?
7/31/2019 Chapter01and02[street08Spring]
63/63
Lasik Vision -- Update
January 15, 2001 Icon Laser Eye Centersproposes takeover of Lasik Vision
March, 2001 takeover complete
April 4, 2001 Lasik Vision in bankruptcy
April 23, 2001 Dr. Hugo Sutton andothers purchase assets of Lasik Vision.
Clinic reopens as Lasik Eye Centres