Production Planning and Control

1. Production Planning and Control BMFP 4513 Instructor : Muhammad Syafiq Syed Mohamed

2. Welcome to PPC! • Brief introductions • My office = PPS building 2nd floor • Primary mode of contact = syafiq@utem.edu.my • Class expectations • Plans for the semester

3. Introduction • At the end of each class, you will be required to answer these questions on a scrap paper: • What was the clearest point of the lecture? • What was confusing about the lecture? • These papers will be collected at the end of class. • Don’t write your name on them.

4. Objectives for today: • Introduction to PPC/Operations Management • Understand what is strategy and productivity

5. Introduction to PPC What is Operations Management? Operations management (OM)is defined as the design, operation, and improvement of the systemsthat create and deliver the firm’s primary products and services.

6. Topic Areas of PPC Course • Aggregate Planning • Scheduling • Supply Chain • Simulation • Lean Six Sigma • Management of Information System • Prerequisite topics: • Forecasting

7. PRODUCTION SYSTEM

8. History of Production and OM • Major Thrust of the Industrial Revolution 1850-1890 • Factories tended to be small. Boss had total control. Little regard for workers safety or workers rights. • Production Manager Position. 1890-1920. • Frederick Taylor champions the idea of “scientific management”. • As complexity grows specializations take hold. • Inventory Control Manager • Purchasing Manager • Scheduling Supervisor • Quality Control Manager etc.

9. Operations (product design, manufacturing, product quality, process efficiency, customer service, inventory management…) Marketing (often conservative product analysis, imitative/innovative, IBM & Xerox) Finance (views manufacturing management as portfolio management  risk reduced by diversification, by 1969, 70% of largest firms has no dominant business) Functional Areas of the Firm

10. What is Strategy ? Strategy is; • a common vision that unites an organization, • provides consistency in decisions, • and keeps the organization moving in the right direction

12. Mission and Strategy • What is your mission in life? • What is your strategy to achieve that?

13. Example • Mission • live a good life • Goal • successful career, good income, obedience to god • Strategy • get degree, and study religion • Tactics • Select university and course for degree, select place of study for religion • Operations • register, buy books, study

14. DECISION MAKING

15. Time Horizons for Strategic Decisions • 1. Long Term Decisions ( > year)  Strategic decision • Locating and Sizing New Facilities • Finding New Markets for Products • Mission Statement: meeting quality objectives • 2. Intermediate Term Decisions (weeks or month) • Forecasting Product Demand • Determining Manpower Needs • Setting Channels of Distribution • Equipment Purchases and Maintenance • 3. Short Term Decisions (hours or days)  Tactical decision • Purchasing • Shift Scheduling and Maintenance • Inventory Control

16. Issues relating to ops strategy

17. STRATEGIC DECISIONS IN OPERATIONS

18. Decision Horizons of Manufacturing Strategy

19. Example : WAL-MART

20. GLOBALIZATION COMPETITION Global competition is heating up to an unprecedented degree. It appears that several factors favor the success of some industries in some countries For example: • Germany: printing presses, luxury cars, chemicals • Switzerland: pharmaceuticals, chocolate • Sweden: heavy trucks, mining equipment • United States: personal computers, software, entertainment • Japan: automobiles, consumer electronics

21. Strategic Initiatives • Re-engineering of the Business Process • Questioning why things are done certain way, not accepting the answer ( things were done that way) • JIT Deliveries • Cutting waste • Time-based competition • Shortening time to delivery • Competing on Quality - can mean different things to different people

22. Quality • Quality (in the context of manufactured goods) = “high quality product is the one that performs as it was designed to perform.” • Another definition : “Degree to which a set of inherent characteristics fulfill requirements”   • May refer to function, reliability, delivery speed, design

23. COMPETITION

24. The process of taking a cold hard look at the way that things are done. Term coined by Hammer and Champy in their 1993 book. Classic Example: IBM Credit Corporation. The process had been broken down to a series of multiple steps, each having substantial delays. Approval required from 6 days to 2 weeks. The process was re-engineered so that a single specialist would handle a request from beginning to end. The result was that turnaround time was slashed to an average of 4 hours! Business Process Re-engineering

25. Just-In-Time JIT is a production control system that grew out of Toyota’s kanban system. It is a philosophy of production control (also know as lean production) that attempts to reduce inventories to an absolute minimum. It has become pretty much a standard way of thinking in many industries (especially the automobile.)

26. Time-Based Competition “Time-based competitors focus on the bigger picture, on the entire value-delivery system. They attempt to transform an entire organization into one focused on the total time required to deliver a product or service. Their goal is not to devise the best way to perform a task, but to either eliminate the task altogether or perform it in parallel with other talks so that over-all system response time is reduced. Becoming a time-based competitor requires making revolutionary changes in the ways that processes are organized” (Blackburn(1991). Being not only the first to market but the first to volume production as well gives a firm a decided advantage.

27. How Do Firms Differentiate Themselves from Competitors? • Low Cost Leaders: Some examples include • WalMart and Costco in Retailing • Korean automakers (Hyundai, Kia, etc.) • e machines personal computers • High Quality (and price) Leaders. Ex: • Mercedes Benz automobiles • Rolex Watches • (some firms do both: Chevrolet and Cadillac)

28. How to measure Productivity? • Productivity = Output/Input • Single factor productivity • Multifactor productivity • Denominators will have to be at the same unit (e.g. cost)

29. Single factor productivity • P=Output/Labor hours • P=Output/machine hours • P=Output/Energy cost • Etc.

30. Multifactor productivity • P=Output/(Labor+Materials+Energy+ Etc) • Example: • Greeting card company produced 6000 cards. Labor cost was RM 500, materials cost = RM 250, and overhead = RM 725 • P=6000/(500+250+725)=4.07 cards per RM.

31. Multifactor productivity • Example : • 4 workers installed 720 sq. meters of carpeting in eight hours. • Output? = 720 sq meters • Input ? = 4 workers , 8 hours per worker • Productivity ? = 720/ (4 * 8) = 22.5 meters per hour

32. The Product Life-Cycle Curve

33. The Product/Process Matrix

34. Product Vs. Process Vs. Technology

35. Matrix

36. ISSUES and TRENDS

37. Summary • What is strategy? • Different dimensions of competition? • Strategic initiatives done by companies? • Productivity?

38. The END