Chapter01and02[street08Spring]

7/31/2019 Chapter01and02[street08Spring]

1/63

Welcome MGT329


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: [email protected]


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


4/63


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?


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?


7/63

Why Study Operations

Management?

Operations

ManagementBusiness Education

Systematic Approach

to Organizational

Processes

Career Opportunities

Cross-FunctionalApplications


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


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.


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.


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.


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]


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


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


15/63

Transformations

Physical--manufacturing

Locational--transportation

Exchange--retailing

Storage--warehousing

Physiological--health care

Informational--telecommunications


16/63

Competitive Priorities

Quality (including Service)

Price (or production cost)

Delivery (speed)

Flexibility V =f(Q,T)

COur Value Equation


17/63

Core services are basic things

that customers want fromproducts (or services) they

purchase.

Core Services Definition


18/63

Core Services Performance Objectives(Competitive Priorities)

Operations

ManagementFlexibility

customized

Quality

made correctly

Delivery Speed

on-time

Price (or cost

Reduction)

Competitively


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


20/63

Value-Added Service Categories

Operations

ManagementInformation

educate customer

Problem Solvingclose gaps

Sales Support

flex to demands

Field Support

grow utility


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


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?)


23/63

What about McDonalds?

Service or Manufacturing?

The company certainly manufacturestangible products

Why then would we considerMcDonalds a service business?


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


25/63

Operations Strategy and

Competitiveness

Chapter 2


26/63

Operations Strategy

Customer Needs Corporate Strategy

Operations Strategy Core

Competencies

Decisions

Processes, Infrastructure, and Capabilities

Alignment

Competitors


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


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


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


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.


31/63


FormulationCompany

Achieve unified purpose viainformation;

team involvement in planning and

implementing change.


32/63


FormulationCompetitors

Get to know the competition and

world-class leaders.


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


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


35/63

Operations Strategy

Customer Needs Corporate Strategy

Operations Strategy Core

Competencies

Decisions

Processes, Infrastructure, and Capabilities

Alignment

Competitors


36/63

competitive priorities

Quality

FlexibilityService

Cost

Lead TimesVariability


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.


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?


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


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?


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?


42/63

How do we convert order winners intospecific performance requirements?

Us

(Distinctive

Competencies)

Competition

(Them) Differentiation


43/63

7

Service can bean orderwinner

Warranty

Roadside

Assistance

Travel

Planning

Loaner

Vehicles

Leases

Car Dealership


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.


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


46/63

What factors affect the

productivity of a business?

work methods

capital

qualitytraining

technology

management


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


48/63

Total Measure Productivity

Total measure Productivity = OutputsInputs

or

= Goods and services produced

All resources used

[Productivity versus Throughput]


49/63

Partial measures of productivity =

Output or Output or Output or OutputLabor Capital Materials Energy

Partial Measure Productivity


50/63

Multifactor measures of productivity =

Output .

Labor + Capital + Energy

or

Output .

Labor + Capital + Materials

Multifactor Measure Productivity


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.


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?


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


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?


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****]


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


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


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


U.S. 100,000 60,000 1.67

LDC 20,000 5,000 4.00


58/63

Solution to Problem #2

Multifactor Labor and Capital Equipment


Inputin Hours


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


Inputin Dollars


U.S. 100,000 $20,000 5.00

LDC 20,000 FC $20,000/10=$2,000

10.00


59/63

Lasik Vision


60/63

Lasik Vision

What was Lasik Visions competitive priority?

High volume low cost

Other priorities?

Flexibility?

Delivery?

Quality?


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?


62/63

Lasik Vision

Given that a company has chosen this

priority, what needs to be done to achieve

success?


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

Date post:	05-Apr-2018
Category:	Documents
Upload:	see248985
View:	215 times
Download:	0 times

Chapter01and02[street08Spring]

Documents