1 intro to om

8/6/2019 1 intro to OM

1/20

OPERATION

S

MANAGEME

NT

OPERATIONS ANDPRODUCTIVITY


2/20

Production is the creation of goods and services

Operations Management- management of the setof activities that creates value in the form ofgoods and services by transforming inputs intooutputs

Applies to both manufacturing and service

organizations

WHAT IS OPERATIONS MANAGEMENT?

2


3/20

WHIRLPOOL

Manufactures and sells globally

Major emphasis on Productivity

y Extra pay for employees

y Low prices for customers

y Larger market share and higher stock prices for

stockholders

Quality, training, flexible work rules, gain-

sharing, global procurement Higher

productivity and lower scrap 3


4/20

THE HERITAGE OF OM

Division of labor (Adam Smith 1776 and CharlesBabbage 1852)

Standardized parts (Whitney 1800)

Scientific Management (Taylor 1881)Coordinated assembly line (Ford/Sorenson 1913)

Gantt charts (Gantt 1916)

Motion study (Frank and Lillian Gilbreth 1922)

Quality control (Shewhart 1924; Deming 1950)

CPM/PERT (DuPont 1957) 4


5/20

THE HERITAGE OF OM

Material Requirements Planning (Orlicky 1960)

Computer Aided Design (CAD 1970)

Flexible Manufacturing System (FMS 1975)Baldrige Quality Awards (1980)

Computer Integrated Manufacturing (1990)

Globalization(1992)

Internet (1995)5


6/20

CONTRIBUTIONS FROM

Human factors

Statistics

Industrial engineering

Management science

Biological science

Physical sciences

Information science

6


7/20

ORGANIZATIONAL FUNCTIONS

Marketing

y Gets customers

jOperations

j creates product or service

jFinance/Accountingj Obtains funds

j Tracks money

7


8/20

FUNCTIONS - BANK

OperationsFinance/

AccountingMarketing

CheckClearing

TellerScheduling

TransactionsProcessing

Security

Commercial Bank

8


9/20

FUNCTIONS - AIRLINES

OperationsFinance/

AccountingMarketing

GroundSupport

FlightOperations

FacilityMaintenance

Catering

Airlines

9


10/20

FUNCTIONS - MANUFACTURING

OperationsFinance/

AccountingMarketing

ProductionControl

Manufacturing QualityControl

Purchasing

Manufacturing

10


11/20

WHY STUDY OM?

OM is one of three major functions (marketing,

finance, and operations) of any organization

To know how goods and services are produced

To understand what operations managers do

OM is a costly part of an organization

OMpresents interesting career opportunities e.g.

SCM, QA, Process Re-engineering, etc 11


12/20

OPTIONS FOR INCREASING

CONTRIBUTION

Market ngOpt on

F nance &Account ng

Opt on

OM Opt on

Current Sa esRevenue :

+50%

F nanceCosts: -50%

Product onCosts: -20%

Sa es $100,000 $150,000 $100,000 $100,000Cost ofGoods So d

-80,000 -120,000 -80,000 -64,000

GrossMarg n

20,000 30,000 20,000 36,000

F nanceCosts

-6,000 -6,000 -3,000 -6,000

NetMarg n

14,000 24,000 17,000 30,000

Taxes @25%

-3,500 -6,000 -4,250 -7,500

Contr but on 10,500 18,000 12,750 22,500 12


13/20

13

WHAT OPERATIONS MANAGERS DO

Plan - Organize - Staff- Lead - Control


14/20

TEN CRITICAL DECISIONS

Service, product design .

Quality Management

Process, capacity design ...

Location .....

Layout design ....

Human resources, job design..

Supply-chain management Inventory management ..

Scheduling .

Maintenance ..

Ch. 5

Ch. 6, 6S

Ch. 7, 7S

Ch. 8

Ch. 9

Ch. 10, 10S

Ch. 11,11sCh. 12, 14, 16

Ch. 3, 13, 15

Ch. 17 14


15/20

TEN CRITICAL DECISIONS

Service andproduct design

y What product or service should we offer?

y How should we design these products and services?

Qualitymanagement

y How do we define quality?

y Who is responsible for quality?

15


16/20

TEN CRITICAL DECISIONS - CONTINUED

Process and capacity design

y What processes will these products require and in what order?

y What equipment and technology is necessary for these

processes?

Location

y Where should we put the facility

y On what criteria should we base this location decision?

16


17/20


Layout design

y How should we arrange the facility?

y How large a facility is required?

Human resources and job design

y How do we provide a reasonable work environment?

y How much can we expect our employees to produce?

17


18/20


Supply chain management

y Should we make or buy this item?

y Who are our good suppliers and how many should we have?

Inventory, material requirements planning,

y How much inventory of each item should we have?

y When do we re-order?

18


19/20


Intermediate, short term, andproject scheduling

y Is subcontracting production a good idea?

y Are we better off keeping people on the payroll duringslowdowns?

Maintenancey Who is responsible for maintenance?

y When do we do maintenance?

19


20/20

20

WHERE ARE THE OM JOBS

1 intro to om

Documents