| Date post: | 08-Apr-2018 |
| Category: |
Documents |
| Upload: | aalok-kabra |
| View: | 221 times |
| Download: | 0 times |
of 28
8/7/2019 OM from net
1/28
Page 0 of 30
Chapter 1Chapter 1Chapter 1Chapter 1
Production and OperationsProduction and Operations
Management (POM):Management (POM):
An IntroductionAn Introduction
8/7/2019 OM from net
2/28
Page 1 of 30
OverviewOverviewOverviewOverview
IntroductionIntroduction
Historical Milestonesin POMHistorical Milestonesin POM
Factors Affecting POM TodayFactors Affecting POM Today
Different Ways of Studying POMDifferent Ways of Studying POM WrapWrap--Up: What WorldUp: What World--Class Producers DoClass Producers Do
8/7/2019 OM from net
3/28
Page 2 of 30
IntroductionIntroductionIntroductionIntroduction
Production and operations managementProduction and operations management (POM) isthe(POM) isthe
management of an organizations productionsystem.management of an organizations productionsystem.
AA productionsystemproductionsystem takesinputs and convertsthemtakesinputs and convertsthem
into outputs.into outputs. TheThe conversion processconversion process isthe predominant activity ofisthe predominant activity of
a productionsystem.a productionsystem.
The primary concern of anThe primary concern of an operations manageroperations manager istheisthe
activities ofthe conversion process.activities ofthe conversion process.
8/7/2019 OM from net
4/28
Page 3 of 30
Organizational ModelOrganizational ModelOrganizational ModelOrganizational Model
POMPOM
MarketingMarketing
MISMISEngineeringEngineering
HRMHRM
QAQA
AccountingAccounting
SalesSalesFinanceFinance
8/7/2019 OM from net
5/28
Page 4 of 30
Organization ChartOrganization Chart--Major ElementsMajor Elements
Facilities
Production &
Inventory ontrol
Quality Assurance
& Control
Procurement
Engineering Design
Industrial Engineering
Process Engineering
Operations
Disbursements
& Credits
Funds Management
Capital Requirements
Finance/Accounting
Sales Promotion
Advertising
Sales
Market Research
Marketing
Manufacturing Organization
8/7/2019 OM from net
6/28
Page 5 of 30
EntryEntry--Level Jobs in POMLevel Jobs in POMEntryEntry--Level Jobs in POMLevel Jobs in POM
Purchasing planner/buyerPurchasing planner/buyer
Production(oroperations) supervisorProduction(oroperations) supervisor
Production(oroperations) scheduler/controllerProduction(oroperations) scheduler/controller
Production(oroperations) analystProduction(oroperations) analyst Inventory analystInventory analyst
Quality specialistQuality specialist
8/7/2019 OM from net
7/28
Page 6 of 30
Historical Milestones in POMHistorical Milestones in POM
The Industrial RevolutionThe Industrial Revolution
PostPost--Civil WarPeriodCivil WarPeriod
Scientific ManagementScientific Management
HumanRelations and BehaviorismHumanRelations and Behaviorism OperationsResearchOperationsResearch
The Service RevolutionThe Service Revolution
8/7/2019 OM from net
8/28
Page 7 of 30
The Industrial RevolutionThe Industrial RevolutionThe Industrial RevolutionThe Industrial Revolution
TheThe industrial revolutionindustrial revolution developed in England inthedeveloped in England inthe
1700s.1700s.
The steam engine, invented by James Wattin 1764,The steam engine, invented by James Wattin 1764,
largely replaced human and waterpowerforfactories.largely replaced human and waterpowerforfactories. Adam SmithsAdam SmithsThe Wealth of NationsThe Wealth of Nations in 1776 toutedin 1776 touted
the economic benefits ofthethe economic benefits ofthe specialization of laborspecialization of labor..
Thusthe lateThusthe late--1700s factories had not only machine1700s factories had not only machine
powerbut also ways of planning and controlling thepowerbut also ways of planning and controlling thetasks of workers.tasks of workers.
8/7/2019 OM from net
9/28
Page 8 of 30
The Industrial RevolutionThe Industrial RevolutionThe Industrial RevolutionThe Industrial Revolution
The industrial revolutionspread from England toThe industrial revolutionspread from England to
otherEuropean countries and to the United Sates.otherEuropean countries and to the United Sates.
In 1790 an American, Eli Whitney, developed theIn 1790 an American, Eli Whitney, developed the
concept ofconcept ofinterchangeable partsinterchangeable parts.. The first greatindustry inthe U.S. wasthe textileThe first greatindustry inthe U.S. wasthe textile
industry.industry.
Inthe 1800sthe development ofthe gasoline engineInthe 1800sthe development ofthe gasoline engine
and electricity furtheradvanced the revolution.and electricity furtheradvanced the revolution. By the midBy the mid--1800s, the old1800s, the old cottage systemcottage system ofof
production had beenreplaced by theproduction had beenreplaced by the factory systemfactory system..
. . . more. . . more
8/7/2019 OM from net
10/28
Page 9 of 30
PostPost--Civil War PeriodCivil War PeriodPostPost--Civil War PeriodCivil War Period
During the postDuring the post--Civil Warperiod great expansion ofCivil Warperiod great expansion of
production capacity occurred.production capacity occurred.
By postBy post--Civil Warthe following developmentssettheCivil Warthe following developmentssetthe
stage forthe great production explosion ofthe 20thstage forthe great production explosion ofthe 20thcentury:century:
increased capital and production capacityincreased capital and production capacity
the expanded urban workforcethe expanded urban workforce
new Western U.S. marketsnew Western U.S. markets
an effective national transportationsysteman effective national transportationsystem
8/7/2019 OM from net
11/28
Page 10 of 30
Scientific ManagementScientific ManagementScientific ManagementScientific Management
Frederick Tayloris known asthe fatherofFrederick Tayloris known asthe fatherofscientificscientificmanagementmanagement. His. Hisshop systemshop system employed these steps:employed these steps:
Each workersskill, strength, and learning abilityEach workersskill, strength, and learning abilitywere determined.were determined.
Stopwatch studies were conducted to precisely setStopwatch studies were conducted to precisely setstandard output perworkeron each task.standard output perworkeron each task.
Material specifications, work methods, and routingMaterial specifications, work methods, and routingsequences were used to organize the shop.sequences were used to organize the shop.
Supervisors were carefully selected and trained.Supervisors were carefully selected and trained.
Incentive pay systems were initiated.Incentive pay systems were initiated.
. . . more. . . more
8/7/2019 OM from net
12/28
Page 11 of 30
Scientific ManagementScientific ManagementScientific ManagementScientific Management
Inthe 1920s, Ford MotorCompanys operationInthe 1920s, Ford MotorCompanys operation
embodied the key elements ofscientific management:embodied the key elements ofscientific management:
standardized product designsstandardized product designs
mass productionmass production low manufacturing costslow manufacturing costs
mechanized assembly linesmechanized assembly lines
specialization of laborspecialization of labor
interchangeable partsinterchangeable parts
8/7/2019 OM from net
13/28
Page 12 of 30
Human RelationsHuman Relations
and Behavioralismand Behavioralism
Human RelationsHuman Relations
and Behavioralismand Behavioralism
Inthe 1927Inthe 1927--1932 period, researchersinthe1932 period, researchersinthe
Hawthorne Studiesrealized that human factors wereHawthorne Studiesrealized that human factors were
affecting production.affecting production.
Researchers and managers alike were recognizingResearchers and managers alike were recognizingthat psychological and sociological factors affectedthat psychological and sociological factors affected
production.production.
From the work ofFrom the work ofbehavioralistsbehavioralists came a gradualcame a gradual
change inthe way managersthought about andchange inthe way managersthought about andtreated workers.treated workers.
8/7/2019 OM from net
14/28
Page 13 of 30
Operations ResearchOperations ResearchOperations ResearchOperations Research
During World WarII, enormous quantities ofDuring World WarII, enormous quantities of
resources(personnel, supplies, equipment, ) had toresources(personnel, supplies, equipment, ) had to
be deployed.be deployed.
MilitaryMilitary operationsresearchoperationsresearch (OR) teams were formed(OR) teams were formedto deal with the complexity ofthe deployment.to deal with the complexity ofthe deployment.
Afterthe war, operationsresearchers found theirwayAfterthe war, operationsresearchers found theirway
backto universities, industry, government, andbackto universities, industry, government, and
consulting firms.consulting firms. ORhelps operations managers make decisions whenORhelps operations managers make decisions when
problems are complex and wrong decisions areproblems are complex and wrong decisions are
costly.costly.
8/7/2019 OM from net
15/28
Page 14 of 30
The Service RevolutionThe Service RevolutionThe Service RevolutionThe Service Revolution
The creation ofservices organizations acceleratedThe creation ofservices organizations accelerated
sharply afterWorld WarII.sharply afterWorld WarII.
Today, more thantwoToday, more thantwo--thirds ofthe U.S. workforce isthirds ofthe U.S. workforce is
employed inservices.employed inservices. AbouttwoAbouttwo--thirds of U.S. GDP is from services.thirds of U.S. GDP is from services.
There is a huge trade surplusinservices.There is a huge trade surplusinservices.
Investment peroffice workernow exceedstheInvestment peroffice workernow exceedsthe
investment perfactory worker.investment perfactory worker.
Thusthere is a growing need forservice operationsThusthere is a growing need forservice operations
management.management.
8/7/2019 OM from net
16/28
Page 15 of 30
Today's Factors Affecting POMToday's Factors Affecting POMToday's Factors Affecting POMToday's Factors Affecting POM
Global CompetitionGlobal Competition
U.S. Quality, CustomerService, and Cost ChallengesU.S. Quality, CustomerService, and Cost Challenges
Computers and Advanced Production TechnologyComputers and Advanced Production Technology
Growth of U.S. Service SectorGrowth of U.S. Service Sector Scarcity of ProductionResourcesScarcity of ProductionResources
Issues of Social ResponsibilityIssues of Social Responsibility
8/7/2019 OM from net
17/28
Page 16 of 30
Different Ways to Study POMDifferent Ways to Study POM
Production as a SystemProduction as a System
Production as an Organization FunctionProduction as an Organization Function
Decision Making in POMDecision Making in POM
8/7/2019 OM from net
18/28
Page 17 of 30
Production as a SystemProduction as a SystemProduction as a SystemProduction as a System
InputsInputs OutputsOutputsConversionConversion
SubsystemSubsystem
Production SystemProduction System
ControlControl
SubsystemSubsystem
8/7/2019 OM from net
19/28
Page 18 of 30
Inputs of a Production SystemInputs of a Production SystemInputs of a Production SystemInputs of a Production System
ExternalExternal
Legal, Economic, Social, TechnologicalLegal, Economic, Social, Technological
MarketMarket
Competition, CustomerDesires, ProductInfo.Competition, CustomerDesires, ProductInfo. Primary ResourcesPrimary Resources
Materials, Personnel, Capital, UtilitiesMaterials, Personnel, Capital, Utilities
8/7/2019 OM from net
20/28
Page 19 of 30
Conversion SubsystemConversion SubsystemConversion SubsystemConversion Subsystem
PhysicalPhysical (Manufacturing)(Manufacturing)
Locational ServicesLocational Services (Transportation)(Transportation)
Exchange ServicesExchange Services (Retailing)(Retailing)
Storage ServicesStorage Services (Warehousing)(Warehousing)
OtherPrivate ServicesOtherPrivate Services (Insurance)(Insurance)
Government ServicesGovernment Services (Federal, State, Local)(Federal, State, Local)
8/7/2019 OM from net
21/28
Page 20 of 30
Outputs of a Production SystemOutputs of a Production SystemOutputs of a Production SystemOutputs of a Production System
DirectDirect
ProductsProducts
ServicesServices
IndirectIndirect WasteWaste
PollutionPollution
Technological AdvancesTechnological Advances
8/7/2019 OM from net
22/28
Page 21 of 30
Production as an Organization FunctionProduction as an Organization FunctionProduction as an Organization FunctionProduction as an Organization Function
U.S. companies cannot compete using marketing,U.S. companies cannot compete using marketing,
finance, accounting, and engineering alone.finance, accounting, and engineering alone.
We focus on POM as we think of globalWe focus on POM as we think of global
competitiveness, because thatis where the vastcompetitiveness, because thatis where the vast
majority of a firms workers, capital assets, andmajority of a firms workers, capital assets, and
expensesreside.expensesreside.
To succeed, a firm must have a strong operationsTo succeed, a firm must have a strong operations
functionteaming with the otherorganizationfunctionteaming with the otherorganizationfunctions.functions.
8/7/2019 OM from net
23/28
Page 22 of 30
Decision Making in POMDecision Making in POMDecision Making in POMDecision Making in POM
Strategic DecisionsStrategic Decisions
Operating DecisionsOperating Decisions
Control DecisionsControl Decisions
8/7/2019 OM from net
24/28
Page 23 of 30
StrategicDecisionsStrategicDecisions
These decisions are ofstrategic importance and haveThese decisions are ofstrategic importance and havelonglong--term significance forthe organization.term significance forthe organization.
Examplesinclude deciding:Examplesinclude deciding:
the design fora new products production processthe design fora new products production process where to locate a new factorywhere to locate a new factory
whetherto launch a newwhetherto launch a new--product development planproduct development plan
8/7/2019 OM from net
25/28
Page 24 of 30
OperatingDecisionsOperatingDecisionsOperatingDecisionsOperatingDecisions
These decisions are necessary ifthe ongoingThese decisions are necessary ifthe ongoingproduction of goods and servicesisto satisfy marketproduction of goods and servicesisto satisfy market
demands and provide profits.demands and provide profits.
Examplesinclude deciding:Examplesinclude deciding:
how much finishedhow much finished--goodsinventory to carrygoodsinventory to carry
the amount of overtime to use next weekthe amount of overtime to use next week
the details forpurchasing raw material next monththe details forpurchasing raw material next month
8/7/2019 OM from net
26/28
Page 25 of 30
ControlDecisionsControlDecisions
These decisions concernthe dayThese decisions concernthe day--toto--day activities ofday activities ofworkers, quality of products and services, productionworkers, quality of products and services, production
and overhead costs, and machine maintenance.and overhead costs, and machine maintenance.
Examplesinclude deciding:Examplesinclude deciding:
laborcoststandards fora new productlaborcoststandards fora new product
frequency of preventive maintenancefrequency of preventive maintenance
new quality control acceptance criterianew quality control acceptance criteria
8/7/2019 OM from net
27/28
Page 26 of 30
What Controls the Operations System?What Controls the Operations System?What Controls the Operations System?What Controls the Operations System?
Information aboutthe outputs, the conversions, andInformation aboutthe outputs, the conversions, andthe inputsis fed backto management.the inputsis fed backto management.
Thisinformationis matched with managementsThisinformationis matched with managements
expectationsexpectations
Whenthere is a difference, management musttakeWhenthere is a difference, management musttake
corrective actionto maintain control ofthe systemcorrective actionto maintain control ofthe system
8/7/2019 OM from net
28/28
Page 27 of 30
WrapWrap--Up: World Class PracticeUp: World Class PracticeWrapWrap--Up: World Class PracticeUp: World Class Practice
POM importantinPOM importantinanyany organizationorganization
Global competition forcesrapid evolution of POMGlobal competition forcesrapid evolution of POM
Decisionbased framework focus of courseDecisionbased framework focus of course
Strategic, Operating, and ControlStrategic, Operating, and Control
