Topics Covered in this Report
• Operations Management– Definition– Brief History– Importance– Productivity, Competitiveness, & Strategy
• Manufacturing Systems– Features, Components & Types
• Production Systems– Features, Components & Types
The planning, organizing, controlling, and directing, of
systems or processes that create goods and/or services.
Organization of the Operations Function
Operations Marketing
Finance
History of Operations Management
Pre Industrial Revolution• Public works or
projects for the government
• Pyramids of Egypt, Great Wall of China, Aqueducts of Rome, etc.
• Craft Production
History of Operations Management
Industrial Revolution• 1770s in England• Replaced manpower
with machine power• Invention of machines
– Steam engine
• Standardization of gauges
History of Operations Management
Scientific Management
• Focused on observation, measurement, analysis & improvement of work design
• Replaced craft production by mass production
• Low skilled workers replaced highly skilled workers
History of Operations Management
Scientific Management• Management Pioneers
– Frederick Taylor
– Henry Gantt
– Harrington Emerson
– Henry Ford
Taylor Gantt
Ford
Human Relations Movement
• Emphasized on the human factor in production
• Emergence of Motivational Theories by– Frederick Herzberg
– Douglas Mcgregor
– Abraham Maslow
History of Operations Management
Herzberg
Maslow Mcgregor
History of Operations Management
Japanese Influences• Developed and refined
existing management practices
• Introduced the concept of quality, continual improvement, and time based management
History of Operations Management
Recent Trends• Internet & Electronic
Business• Supply Chain
Management– Supply chain is a
sequence of activities and organizations involved in producing a good or a service
Importance of Operations Management
1. Operations activity is the core of all business organizations
2. A large percentage of jobs are in the field of operations
3. All activities in the other areas of business are interrelated with operations management
4. Responsible for a large portion of the company’s assets
5. It has a major impact on quality & is the face of the company to its customers
Productivity
• An index measure that measures output (goods & services) relative to input (labor, materials, energy, and other resources)
Productivity Measures
• Single Operation
Productivity = Output Input
• Multifactor Measure
= Output
Labor+Capital+Materials
• Total Measure
= G&S Produced
All Resources Used
Examples:
= Yards of carpet installed
Labor hours worked
= 720 Square yards
4 workers x 8 hrs/worker
= 720 yards
32 hours
= 22.5 yards/hour
Factors that Affect Productivity
• Capital• Methods• Quality• Technology• Management
Steps to Improve Productivity
• Develop Productivity Measures• Look at the system as a whole and determine
which operations are critical• Develop methods for achieving productivity
improvements• Establish reasonable goals• Consider Incentives• Measure improvements & publicize them• Do not confuse productivity with efficiency
Competitiveness
• How effectively an organization meets the needs of customers relative to others that offer similar goods or services
Ways to remain competitive through Operations
1. Price
2. Quality
3. Product / Service Differentiation
4. Flexibility
5. Time
6. Service
7. Management & Workers
Operational Strategy
• Strategy is a plan for achieving goals
• Organizational strategy provides for the overall direction for the organization. It is very broad and covers the entire organization
• Operations strategy deals only with the operations aspect of the organization
Things to consider in Strategy Formulation
• External Scanning– Economic
Conditions
– Political Conditions
– Legal Environment
– Technology
– Competition
– Markets
• Internal Scanning– Human Resources– Facilities &
Equipment– Financial Resources– Customers– Products/Services– Technology– Suppliers– Others
1. External Factors
Things to consider in Strategy Formulation
2. Distinctive Competency– Cost– Quality– Time– Flexibility– Customer service– Location
Examples of Distinctive Competencies
Type Competency Company/Service
Price Low cost Motels, Thrift Shops
Quality High Performance
Consistent Quality
Five Star Hotels, Cadillac
Kodak, XeroxTime Rapid Delivery
On-time Delivery
Domino’s Pizza, UPS
FedExFlexibility Variety
Volume
Burger King, Emergency Rooms
Jollibee, SupermarketsLocation Convenience 711, Mercury Drug, Service Stations,
Banks/ATMs
Service Superior Customer Disneyland, IBM
Manufacturing Systems
• A collection of all interrelated activities involved in producing goods
• Manufactured goods are tangible items that can be transferred from one place to another and can be stored for purchase by a consumer at a later date and time
Components of a Manufacturing System
• Inputs & Outputs• Suppliers & Customers• Processes• Managers & Feedback
Suppliers CustomerInput OutputProcess
Manager
Productive System Types
Continuous Flow: – Characterized by high
production volume and a high degree of product standardization
– Processes are highly specialized
– High degree of automation
– Little use for skilled work force
– Costs are generally low
Productive System Types
Mass or Assembly line: – High production
volume
– Small variety of different products
– Labor skill requirements are low
Productive System Types
Batch or Intermittent: – Used for producing small
lots of similar products
– Products are made in batches with short production runs
– Differs from mass production in the materials used, machine setups, & layout
Productive System Types
Job Shop: – Produce a wide variety of
small quantity of specialized products
– Products are customized
– May be produced by different sequences of operations
– General purpose equipment is used
– Labor force must be highly skilled
Productive System Types
Project: – One in which unique
and unusually large and complex items are produced
– Products are assembled at a fixed location
– Components and subassemblies must be brought to the location
Service Systems
• A collection of all interrelated activities involved in producing services
• Non-manufactured goods are intangible items that cannot be transferred from one place to another and is usually consumed by the consumer at the point of sale
Distinctive Features of Service Systems
• Customer Contact• Uniformity if Input• Labor content of jobs• Uniformity of Output• Labor content of jobs• Measurement of productivity• Simultaneous production and delivery• Quality assurance
Service Strategy
• Identification of a target market
• Development of a service concept to address targeted customers’ needs
• Design of an operating strategy to support the service concept
• Design of a service delivery system to support the service concept