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BA240: Operations Management

BA240: Operations Management. Overview Manufacturing & Services Process Mapping The Role of Technology POM Software Demo Measuring Productivity Exercises. What is Operations Management?.

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BA240: Operations Management

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  1. BA240: Operations Management Overview Manufacturing & Services Process Mapping The Role of Technology POM Software Demo Measuring Productivity Exercises

  2. 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.

  3. What is a Transformation Process? A transformation process is defined as a user of resources to transform inputs into some desired outputs.

  4. Transformations • Physical -- manufacturing • Locational -- transportation • Exchange -- retailing • Storage -- warehousing • Physiological -- health care • Informational -- telecommunications

  5. Value added Inputs Outputs Transformation/ Land Goods Conversion Labor Services process Capital Feedback Control Feedback Feedback Value-Added The difference between the cost of inputs and the value or price of outputs.

  6. OM in the Organization Chart Finance Marketing Operations Plant Manager Operations Manager Director Manufacturing, Production control, Quality assurance, Engineering, Purchasing, Maintenance, etc

  7. Business Operations Overlap Operations Marketing Finance

  8. Quality Costs Productivity – – – Responsibilities of Operations Management Planning Organizing Capacity Degree of centralization – – Location Process selection – – Products & services Staffing – Make or buy – Hiring/laying off – Layout – Use of Overtime – Projects – Directing Scheduling – Incentive plans – Controlling/Improving Issuance of work orders – Inventory – Job assignments –

  9. OM Decisions • Product / Service Design • Quality Management • Process Strategy / Capacity Planning • Location Strategies • Layout Strategies • Human Resources • Supply Chain Management • Inventory Management • Scheduling • Maintenance

  10. Core servicesare basic things that customers want from products they purchase. Core Services

  11. Quality Flexibility Speed Price (or cost Reduction) Core Services Performance Objectives Operations Management

  12. Value-added servicesdifferentiate the organization from competitors and build relationships that bind customers to the firm in a positive way Value-Added Services

  13. Value-Added Service Categories Problem Solving Operations Sales Support Information Management Field Support

  14. Tangible Act Manufacturing or Service?

  15. Output Intangible Tangible Customer contact High Low Uniformity of input Low High Labor content High Low Uniformity of output Low High Measurement of productivity Difficult Easy Opportunity to correct Low High quality problems High Manufacturing vs Service Characteristic Manufacturing Service

  16. Productivity • Productivity • A measure of the effective use of resources, usually expressed as the ratio of output to input • Productivity ratios are used for • Planning workforce requirements • Scheduling equipment • Financial analysis

  17. Outputs Productiv ity = Inputs Productivity • Partial measures • output/(single input) • Multi-factor measures • output/(multiple inputs) • Total measure • output/(total inputs)

  18. Current Period Productivity – Previous Period Productivity Previous Period Productivity Productivity Growth Productivity Growth =

  19. Measures of Productivity Partial Output Output Output Outputmeasures Labor Machine Capital Energy Multifactor Output Output measures Labor + Machine Labor + Capital + Energy Total Goods or Services Produced measure All inputs used to produce them

  20. Labor Productivity Units of output per labor hour Units of output per shift Value-added per labor hour Machine Productivity Units of output per machine hour machine hour Capital Productivity Units of output per dollar input Dollar value of output per dollar input Energy Productivity Units of output per kilowatt-hour Dollar value of output per kilowatt-hour Examples of Partial Productivity Measures

  21. Capital Quality Technology Management Factors Affecting Productivity

  22. Other Factors Affecting Productivity • Standardization • Quality • Use of Internet • Computer viruses • Searching for lost or misplaced items • Scrap rates • New workers

  23. Other Factors Affecting Productivity • Safety • Shortage of IT workers • Layoffs • Labor turnover • Design of the workspace • Incentive plans that reward productivity

  24. 10/hr Machine #1 10/hr Bottleneck Operation 30/hr Machine #3 10/hr Machine #4 10/hr Bottleneck Operation Machine #2

  25. Improving Productivity • Develop productivity measures • Determine critical (bottleneck) operations • Develop methods for productivity improvements • Establish reasonable goals • Get management support • Measure and publicize improvements • Don’t confuse productivity with efficiency

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