Production and Operations Management Jiaqin Yang Department of Management Georgia College & State University
Topic-1 Introduction to operations Management
Introduction to operations Management • Operations: All activities that involved in the Conversion Process of Input to Output (Goods/service) • Management: The Process of Planning, Organizing and Controlling in achieving the desired objectives. • University as an Example:
Operations as a System Production System Conversion Subsystem Inputs Outputs Control Subsystem
Functions • Accounting • Distribution • Engineering • Operations • Finance • Human resources • Marketing Types of Organizations Bank Construction Government Health care Manufacturing Retailing Transportation Wholesaling • ----------------- • ----------------- • ----------------- • ----------------- • ----------------- • ----------------- • ----------------- • ----------------- Operations Management as a Function
Support processes New service/ product development process Customer relationship process External suppliers External customers Supplier relationship process Order fulfillment process Internal Value-Chain Linkages Showing Work and Information Flows
Functions of Operations Management • Relationship between Operations and Other Functions: Three Primary Functions in Business: • Broader Perspective of Operations Management: An Integrated Production System Including: Inventory Control / Aggregate Planning / Demand Forecasting
Functions of Operations Management Scheduling / Capacity Planning / Purchasing / Quality Control / Facility Location & Layout / Production and Process Design / Job Design / Maintenance / Project Management / …… • Operations Manager’s Responsibility: (typically) ——— 75% of the Firm’s Investment ———80% of the Firm’s Personnel ———85% of Firm’s Expenditures for Materials
Entry-Level Jobs in OM • Purchasing planner/buyer • Production (or operations) supervisor • Production (or operations) scheduler/controller • Production (or operations) analyst • Inventory analyst • Quality specialist
Manufacturing vs Service • Manufacturing: Provide Tangible Goods (Cars / TV Sets / Foods /…… • Service: Provide Intangible (Goods) (Education / Banking / Legal/Repairing / Medical Service / Transportations/…… • Four Major Differences between Manufacturing and Service: ，
Manufacturing vs Service Most Principles and Techniques for Manufacturing can also be applied to Service Operations.
A Classification Scheme For Service Organizations • The Classification scheme is based upon the extent of customer contact in the creation of the service. • Customer Contact---The physical presence of the customer in the system. The extent of contact is the presence time of the customer must be in the system relative to the total time required to service the customer. • Creation of the service---The work process that is involved in providing the service.
A Classification Scheme For Service Organizations • High customer contact service system--- More difficult to control, customer can affect the time if demand, exact nature of service quality of service. More uncertainty, customer can disrupt service planning. Capacity unlikely to equal demand at any given time. Balance of work more difficult, must staff for demand close to peak rather than average. Skills of employees must include significant public relations component. • Low customer contact service system--- Easier to control. Customer usually has little impact on the system during the production process. Can more easily match capacity with demand.
Operations Approaches to Improving Service Design 1.Substitute Technology for personnel • Automatic Banking Tellers • Scanners at Grocery and Department stores • Long Distance Direct Dialing • Vending Machines • Automatic Car Wash • Computerized Legal Research System
Operations Approaches to Improving Service Design 2. Increasing Customer Involved in Production of Service: • Self Service Department Store • Customer Reading of Utility meters • Mail Order Shopping • Customer Fills out Order Blank at Discount Store • U-Frame-It Picture Frame Shops • ……….
Operations Approaches to Improving Service Design General System Approach in Service Operations • Color Coding of Food Wrappers at Fast Food Restaurants • Drive-In Claims Service in Insurance-Use of Rate Books • Computerized Allocation of Police to Patrol Routes
Classification of Operations • 1.Based on Demand Pattern: a) Make-to-Order (e.g. Airplane / Film Developing/……) Assembly-to-Order (e.g. Car/ Fast food/……) b) Make-to-Stock (e.g. Clothes/ Toys/……) Assembly-to-Stock (e.g. Electronic Products/ TV Sets/……)
Classification of Operations • 2.Based on Type of Conversion Process:
Major Changes in Business, 1987-1997 A. The Changing Nature of the Workforce • 1. More Older Workforce • 2. More Women • 3. More Two-Career Families • 4. Multiple Career Changes by Workforce • 5. Better Educated Force
Major Changes in Business, 1987-1997 B. Changing Value in the Workforce • 1. Considerably Less Loyalty to Company • 2. More Desire for Independence and Autonomy • 3. Continuing Decline of Union Power • 4. Need for Individual Motivation
Major Changes in Business, 1987-1997 C. Changing Nature of Competition • 1. Increased International Competition • 2. Emergence of New Third World Competitors D. Operations Consequences • 1. Continued Emphasis on Productivity • 2. Increase in Just-In-Time Production • 3. Return to the Basics in Manufacturing
Major Changes in Business, 1987-1997 • 4. Continued Shift to Service Organizations • 5. Dramatically Decreased Product Life Cycles. • 6. Increased Emphasis of Human Factor in Manufacturing • 7. Continuing Need to Match Technology with the Human Element. • 8. Decrease in Direct Labor Component of Manufacturing Goods