Description
Overview & trends in operation mgmt
OPERATIONS MANAGEMENT
Click to edit Master subtitle style
AN OVERVIEW
11
OPERATION MANAGEMENT
Inputs: - Raw Materials - Plant & Machinery Spare parts & Consumables - Manpower
Transform ation of inputs through some operations
Output: Product or Service
Example of Cement Plant Inputs: -Raw Materials: Lime stone Iron ore Bauxite Sand Gypsum - Plant & machinery - spare parts & consumables - Manpower Operations in cement manufacturing: -Crushing - Grinding - Pre-calcination & calcination - Cooling clinker - Clinker grinding with gypsum 22 Output: Cement
33
OPERATIONS MANAGEMENT
Management of various operations with effectiveness and efficiently is known as operations management
44
EFFECTIVENESS OF THE ORGANIZATION
•
Organization is said to be effective, if the output of the transformation process satisfies the needs and expectations of its customers and at the same time achieves the objectives and goals of the company. Effectiveness is measured in terms of value generated for the customers by the product.
55
•
•
EFFICIENCY OF THE ORGANIZATION
•
•
•
Efficiency is a measure of costs incurred to obtain the output as compared to the value or the cost of the output. Efficiency is measured in terms of money (dollars) or in terms of labor hours used to produce the product. Efficiency is examined for short term operations and for survival of the company.
66
77
INTER-RELATIONSHIP OF ELEMENTS OF OM
Customer Demand Operation System
Process Capacity
88
IMPACT OF CUSTOMER DEMAND ON OPERATION MANAGEMEN-CASE OF CEMENT-1
•
Capacity of plant depends upon:
–
Demand in local and foreign market Price level in these markets Market share captured by competitors Nature of construction activities
99
–
–
–
IMPACT OF CUSTOMER DEMAND ON OPERATION MANAGEMEN-CASE OF CEMENT- 2
–
–
–
–
–
Suitable packing and transportation system for different customers: Bulk customer needs bulk handling & packing facilities Medium size customers need big bags of 1 ton capacity (Jumbo bags) Small customers need bags of 50kgs (paper / jute / plastic bags) Concern for pollution control
1010
IMPACT OF CUSTOMER DEMAND ON OPERATION MANAGEMEN-CASE OF CEMENT3
• •
•
•
Other factors helping in winning the customers: Competitive price (some of the plants located far off offer lower price than the plants located close to Market.) Assured delivery schedule due to large storage capacity. Able to meet the demand fluctuations in difficult situations like additional supply to expedite construction to support some major event.
1111
IMPACT OF CUSTOMER DEMAND ON OPERATION MANAGEMEN-CASE OF CEMENT4
•
•
•
Able to maintain high quality (Korean cement for construction of flyovers for Asiad games due to assured quality control system) Extending credit facility (two months credit by co.) Good support system for settling quality & other problems. For example, testing facilities, competent technical teams.
1212
IMPACT OF CUSTOMER DEMAND ON OPERATION MANAGEMENT CASE OF CEMENT-5
•
• • •
•
•
Operation management decides on the following taking in to account the customer demand, size of operations and other factors: Capacity of the cement plant and facilities Capacity of packing and storage of cement Type of loading facilities (manual/automatic loading of 50kg bags on trucks, bulk loading) Transportation mode (rail tankers / road tankers / big bags / 50 kg bags in trucks/trailers) Type of pollution control system (ESP / BAG HOUSE)
1313
CUSTOMERS OF PRODUCT / SERVICE
•
Internal customers External customers
•
1414
INTERNAL CUSTOMERS
•
Different departments in the organization:
– – – – – – – –
Administration Finance Materials Management Marketing Quality Control Production Maintenance Sales
1515
EXTERNAL CUSTOMERS
Foreign or local markets that are concerned with the product or service
1616
FACTORS - EXTERNAL CUSTOMER IS KEEN TO KNOW ABOUT SUPPLIER
•
Strengths & weaknesses of the systems in terms of:
– – – –
Plant and machinery facilities Policies and procedures Manpower Operational functions like finance, materials management, marketing, sales and security arrangements etc.
•
Customer obtains feedback through formal discussions, questionnaire, 1717 interview.
FEED BACK BY OPERATION MANAGEMENT
• • •
•
Customer complaints Repeat business Comparison of its own product with the best in the target market Operation management reviews, modifies or completely changes the system in the company to capture new customers and to retain old customers.
1818
OM MUST KNOW ABOUT EXTERNAL CUSTOMERS - 1
• • • • •
Correct demand. What customer wants? What customer does not want? What is acceptable to customer? What minimum level of performance is acceptable?
1919
OM MUST KNOW ABOUT EXTERNAL CUSTOMERS - 2
•
Identify aspects of product / service that could help the organization to win or loose customers such as:
– – – – –
Assured delivery schedule Meeting the requirements promptly. Extending credit facilities. Resolving the quality problems promptly. Good packing to avoid wastage and ease in handling.
2020
PERFORMANCE LEVELS
•
• • • • •
Operation management must lay down the performance levels such as: Delivery schedule. Cost. Quality. After sales service The performance levels should be acceptable to the customers.
2121
OM GUIDES AND CONTROLS THE FUNCTIONS OF INTERNAL CUSTOMERS
•
•
•
•
OM looks into the systems and interdependence of internal customers. Takes care of the requirements of each one. Adjust, modify, and change the subsystems of each department for balancing the operations. Line balancing is one of the examples of this. Initiates actions to achieve efficiency and effectiveness. 2222
OM MEETS THE REQUIREMENTS OF EXTERNAL CUSTOMERS IN THE CHAIN
Supplier 1 Cement Co. Supplies cement to Construction company Construction company (immediate customer) Builds the hospital (the ultimate customer)
Supplier 2 Steel Co.
Supplies structural steel items to construction company
2323
RESPONSIBILITIES OF OM
•
Satisfy the needs of all the customers in the chain. Forecast the needs of all current and potential customers. Adjust internal structure and systems to meet the present and future needs of all the customers.
2424
•
•
GROUPS OF PERSONS OR PERSONS HAVING INTEREST IN THE ORGANIZATION - 1
Groups / persons Banks & investment firms Their Interest Assured rate of return on their investments
Suppliers, manpower Prompt payments on delivery, timely recruiting and supply payments of wages/salary, timely agencies & contractors payment on completion of work.
2525
GROUPS OF PERSONS OR PERSONS HAVING INTEREST IN THE ORGANIZATION - 2
Groups / persons Local population Their Interest
Employment opportunities, general development of region, potential problem like traffic jams, sharing of community resources, pollution and law & order situation. Adherence of rules and regulations
Government agencies
2626
EVOLUTION OF PRODUCTION AND OPERATION MANAGEMENT
Reality of global competition, Quality, Customer services, Cost challenges, Rapid expansion of Advanced Technologies, Continued growth of the service sector, Scarcity of Operations Resources and Social-Responsibility Issues
Ci vil W H ar u P m er a io n d R el at S io er n vi s c a e n R d e B v e C ol h o ut a m io vi p n r ut er R e v ol ut io n
T o d a y’ s D e O v p el er o at p io m n e s nt R s S e ci s e e nt ar ifi c c
C o n ti n u al E v ol u ti
Tomorrow
2727
ISSUES IN OPERATIONS MANAGEMENT
Reality of global competition, • Quality, • Customer services, • Cost challenges, • Rapid expansion of Advanced Technologies, • Continued growth of the service sector, • Scarcity of Operations Resources • Social-Responsibility Issues
•
2828
CHANGE IN PHILOSOPHY OF OPERATION MANAGEMENT 1Today’s Philosophy Earlier
Philosophy Stress on production of goods or services
• Stress on management philosophy, • Laying standards for acceptability & not acceptable, • Important & unimportant issues, • Setting up priorities, • Value base, • Value structure, • Working environment and work culture
2929
CHANGE IN PHILOSOPHY OF OPERATION MANAGEMENT 2
Earlier Philosophy • Focus on large scale production • Cost reduction Today’s Philosophy • Focus on new approaches, • New tools, • System’s simplification, • Continuous improvements, • Total quality management, and • Just-in-time manufacturing.
3030
CHANGE IN OPTIONS OF OPERATION MANAGEMENT
Earlier Options Options were: • New technology, • Automation, and • Computerization. Today’s Options
• New approaches, and • New perspectives.
3131
TERMINOLOGIES ASSOCIATED WITH OPERATION MANAGEMENT
•
Manufacturing Management Production Management Operations Management
•
•
3232
MANUFACTURING MANAGEMENT
•
The concept of manufacturing management is more than a century old. Manufacturing management focused on:
– –
•
Sub-division of work Specialization of work force
3333
PRODUCTION MANAGEMENT -1
•
Production management became popular in 1930s. Production management focused on:
– – –
•
Scientific approach Techniques of doing work Use of techniques in decision making.
3434
PRODUCTION MANAGEMENT -2
•
Improvements in operational efficiency through:
– – – –
Use of industrial engineering applications, Work measurement, Method study, Incentive schemes
•
Improving worker performance, and human relation was given importance during this period.
3535
MODERN OPERATION MANAGEMENT -1
•
Focus:
– – – – –
Product quality Customer satisfaction Technological innovations Collective performance of management Use of models in better decision making
3636
MODERN OPERATION MANAGEMENT - 2
•
Focus:
–
–
–
OM strived for system improvement and organizational development rather than employee improvement. More open to new ideas with a belief that there can be a better way of doing things. Accurate, timely and relevant information is an important link in operation management.
3737
3838
TRENDS IN OPERATION MANAGEMENT - 1 QUALITY
•
•
• •
Great emphasis on quality as compared to previous days. Quality is associated with the use and cost. Best quality as demanded is not correct. Right quality is the quality that suited to the purpose.
3939
•
•
•
Final cost of the product is looked from the point of view of revenues and not the cost of the product. Operation management is satisfied as long as revenues are more than the cost of product. Generation of positive income is one of the important considerations.
4040
TRENDS IN OPERATION MANAGEMENT - 2 REVENUE
TRENDS IN OPERATION MANAGEMENT - 4 CUSTOMERS
•
Products and services are tailored to the needs of the customers or the groups of customers. Attentions is given to current base of the customers as well to the potential customers. Company targets its customer class. Some products are targeted for 4141 rich very
•
•
• • • •
•
•
Emphasis on training of human resources. Training is considered as an investment. Stress on team work. Stress on a work environment of cooperation rather than of conflicts. Human resource is an asset for the organization not for its survival but for its future growth. Philosophy of operation management has 4242 changed, where importance is on people-
TRENDS IN OPERATION MANAGEMENT - 5 HUMAN RESOURCE
TRENDS IN OPERATION MANAGEMENT - 6 SYSTEMS DEVELOPMENTS
• •
•
•
Unplanned improvements and problem solving has been done away. Objective is for systematic development of the systems. Systems should be user friendly, easy to understand, simple to operate, easy to explain, easy to control and easy to monitor. Efforts in continuous improvements in systems through system analysis and 4343 evaluation and by eliminating unnecessary
TRENDS IN OPERATION MANAGEMENT - 7 FLEXIBLE MANAGEMENT - A
•
Need for change is an accepted concept today, which is the key for improvement and success.
•
Change in customer demand comes with the change in customers due to education, income level, exposure to outside world, advertising, competitor’s actions or even government policies.
4444
TRENDS IN OPERATION MANAGEMENT - 7 FLEXIBLE MANAGEMENT - B
•
Operation systems and systems capacity change due to:
– – – –
– –
Changes in technology, Introduction of new plant and machinery, Introduction of new software, New management procedures and tools (e.g. JIT manufacturing), Quality of resources, and Research findings.
•
It is essential to align the operation 4545 systems with the dynamic nature of the
TRENDS IN OPERATION MANAGEMENT - 9 INTEGRATION OF BUSINESS PROCESS
•
To improve the effectiveness and efficiency of the operation management systems, it is essential to integrate the activities of various functional areas with the common objective ‘Customer Satisfaction’.
4646
DEVELOPMENTS THAT HAVE IMPACTED POM IN 1980s & 1990s - 1
• • •
• • •
Robotics and numerical control Computer-assisted design Statistical process control for quality (total quality management). Lean (Just-in-Time) manufacturing. Benchmarking . ISO Standards
4747
DEVELOPMENTS THAT HAVE IMPACTED POM IN 1980s & 1990s - 2
• • • •
Time based competition Process engineering Outsourcing Supply chain management
4848
STRUCTURAL MODEL OF MANAGEMENT INFORMATION SYSTEM OF MODERN OPERATION MANAGEMENT
Marketin g
Production
Purchasin g
Strategic Planning Management Planning & Control Management Activities
Warehousin Finance g & & inventory accountin control g Organizational Functions
Personn el
Engineering
Customer Demand
INTEGR ATED MIS
Operational Planning & Control
Supplier Interface
4949
• •
Low production costs Improved delivery performance:
– –
AREAS OF COMPETITIVE ADVANTAGES & OPERATIONS
Fast delivery On-time delivery
• •
High-quality products/services Improved customer service and flexibility
5050
STRATEGIC ACTIONS TO ACHIEVE COMPETITIVE ADVANTAGE BY LOW PRODUCTION COSTS
Production Cost Unit cost of each product/service including: • Labor • Materials • Overhead cost
Strategic Actions Re-design of products/services New technology Increase in production rates Reduction of scrap or waste Reduction of inventories
5151
STRATEGIC ACTIONS TO ACHIEVE COMPETITIVE ADVANTAGE BY IMPROVED DELIVERY PERFORMANCE Delivery Strategic Actions Performance Fast Delivery Larger finished-goods inventories Faster production rates Quicker shipping rates On-time delivery More realistic promises Better control of production of orders Better information systems
5252
STRATEGIC ACTIONS TO ACHIEVE COMPETITIVE ADVANTAGE BY BETTER CUSTOMER SERVICE AND FLEXIBILITY
Customer Service Ability to quickly change production to other products/ services, customer responsiveness Strategic Actions Change in types of processes used Use of advanced technologies. Reduction of amount of work in process through lean manufacturing. Increase in capacity
Ref: Table 2.6, page 45, Operations Management by Norman Gaither & Greg Fraizer
5353
STRATEGIC ACTIONS TO ACHIEVE COMPETITIVE ADVANTAGE BY IMPROVED PRODUCTS/SERVICES
Quality of products/ services Customers’ perception of degree of excellence exhibited by products/ services
Strategic Approach
Appearance Malfunction or defect rates Performance and function Wear, endurance ability After-sales services
5454
STRATEGIC ACTIONS BY APPLE COMPUTER INC. - 1
• •
•
•
15 Product families was cut back to just a handful that share common components. Use of consistent technology in the new products. Focus on a few key features in new products instead of many bells and wistles like some competitors. Strongly meeting new product deadlines, usually in a year.
5555
STRATEGIC ACTIONS BY APPLE COMPUTER INC. - 2
• •
•
•
Outsourced half of its products to contractors who could do it far efficiently. Key suppliers were reduced from 100 to 24. Company scrapped an off the shelf software programme. Devised its own build-to-order system for manufacturing and inventories that has been limping along.
5656
COMPETITIVE ADVANTAGES ACHIEVED BY APPLE COMPUTER INC. THROUGH STRATEGIC ACTIONS - 1
•
• •
•
•
With in a year finished goods inventory reduced from 70 days to 30 days worth. Made 500million dollars profit. 10 finished goods warehouses were closed leaving only 9 regional warehouses. Simplified Apple’s manufacturing functioning. Simplicity was the key to Apple’s Operation Strategy. 5757
COMPETITIVE ADVANTAGES ACHIEVED BY APPLE COMPUTER INC. THROUGH STRATEGIC ACTIONS - 2
• •
•
•
•
Eased the tracking of all the parts. With less number of suppliers, each supplier has more business, which resulted in better control over suppliers. Began shipping 75% on-line oeders compared to 5% earlier. Company also pursuaded key suppliers to set-up shops close to Apple’s facilities for just-in-time deliveries. Apple’s parts inventory reduced 5858less to
doc_950074616.pptx
Overview & trends in operation mgmt
OPERATIONS MANAGEMENT
Click to edit Master subtitle style
AN OVERVIEW
11
OPERATION MANAGEMENT
Inputs: - Raw Materials - Plant & Machinery Spare parts & Consumables - Manpower
Transform ation of inputs through some operations
Output: Product or Service
Example of Cement Plant Inputs: -Raw Materials: Lime stone Iron ore Bauxite Sand Gypsum - Plant & machinery - spare parts & consumables - Manpower Operations in cement manufacturing: -Crushing - Grinding - Pre-calcination & calcination - Cooling clinker - Clinker grinding with gypsum 22 Output: Cement
33
OPERATIONS MANAGEMENT
Management of various operations with effectiveness and efficiently is known as operations management
44
EFFECTIVENESS OF THE ORGANIZATION
•
Organization is said to be effective, if the output of the transformation process satisfies the needs and expectations of its customers and at the same time achieves the objectives and goals of the company. Effectiveness is measured in terms of value generated for the customers by the product.
55
•
•
EFFICIENCY OF THE ORGANIZATION
•
•
•
Efficiency is a measure of costs incurred to obtain the output as compared to the value or the cost of the output. Efficiency is measured in terms of money (dollars) or in terms of labor hours used to produce the product. Efficiency is examined for short term operations and for survival of the company.
66
77
INTER-RELATIONSHIP OF ELEMENTS OF OM
Customer Demand Operation System
Process Capacity
88
IMPACT OF CUSTOMER DEMAND ON OPERATION MANAGEMEN-CASE OF CEMENT-1
•
Capacity of plant depends upon:
–
Demand in local and foreign market Price level in these markets Market share captured by competitors Nature of construction activities
99
–
–
–
IMPACT OF CUSTOMER DEMAND ON OPERATION MANAGEMEN-CASE OF CEMENT- 2
–
–
–
–
–
Suitable packing and transportation system for different customers: Bulk customer needs bulk handling & packing facilities Medium size customers need big bags of 1 ton capacity (Jumbo bags) Small customers need bags of 50kgs (paper / jute / plastic bags) Concern for pollution control
1010
IMPACT OF CUSTOMER DEMAND ON OPERATION MANAGEMEN-CASE OF CEMENT3
• •
•
•
Other factors helping in winning the customers: Competitive price (some of the plants located far off offer lower price than the plants located close to Market.) Assured delivery schedule due to large storage capacity. Able to meet the demand fluctuations in difficult situations like additional supply to expedite construction to support some major event.
1111
IMPACT OF CUSTOMER DEMAND ON OPERATION MANAGEMEN-CASE OF CEMENT4
•
•
•
Able to maintain high quality (Korean cement for construction of flyovers for Asiad games due to assured quality control system) Extending credit facility (two months credit by co.) Good support system for settling quality & other problems. For example, testing facilities, competent technical teams.
1212
IMPACT OF CUSTOMER DEMAND ON OPERATION MANAGEMENT CASE OF CEMENT-5
•
• • •
•
•
Operation management decides on the following taking in to account the customer demand, size of operations and other factors: Capacity of the cement plant and facilities Capacity of packing and storage of cement Type of loading facilities (manual/automatic loading of 50kg bags on trucks, bulk loading) Transportation mode (rail tankers / road tankers / big bags / 50 kg bags in trucks/trailers) Type of pollution control system (ESP / BAG HOUSE)
1313
CUSTOMERS OF PRODUCT / SERVICE
•
Internal customers External customers
•
1414
INTERNAL CUSTOMERS
•
Different departments in the organization:
– – – – – – – –
Administration Finance Materials Management Marketing Quality Control Production Maintenance Sales
1515
EXTERNAL CUSTOMERS
Foreign or local markets that are concerned with the product or service
1616
FACTORS - EXTERNAL CUSTOMER IS KEEN TO KNOW ABOUT SUPPLIER
•
Strengths & weaknesses of the systems in terms of:
– – – –
Plant and machinery facilities Policies and procedures Manpower Operational functions like finance, materials management, marketing, sales and security arrangements etc.
•
Customer obtains feedback through formal discussions, questionnaire, 1717 interview.
FEED BACK BY OPERATION MANAGEMENT
• • •
•
Customer complaints Repeat business Comparison of its own product with the best in the target market Operation management reviews, modifies or completely changes the system in the company to capture new customers and to retain old customers.
1818
OM MUST KNOW ABOUT EXTERNAL CUSTOMERS - 1
• • • • •
Correct demand. What customer wants? What customer does not want? What is acceptable to customer? What minimum level of performance is acceptable?
1919
OM MUST KNOW ABOUT EXTERNAL CUSTOMERS - 2
•
Identify aspects of product / service that could help the organization to win or loose customers such as:
– – – – –
Assured delivery schedule Meeting the requirements promptly. Extending credit facilities. Resolving the quality problems promptly. Good packing to avoid wastage and ease in handling.
2020
PERFORMANCE LEVELS
•
• • • • •
Operation management must lay down the performance levels such as: Delivery schedule. Cost. Quality. After sales service The performance levels should be acceptable to the customers.
2121
OM GUIDES AND CONTROLS THE FUNCTIONS OF INTERNAL CUSTOMERS
•
•
•
•
OM looks into the systems and interdependence of internal customers. Takes care of the requirements of each one. Adjust, modify, and change the subsystems of each department for balancing the operations. Line balancing is one of the examples of this. Initiates actions to achieve efficiency and effectiveness. 2222
OM MEETS THE REQUIREMENTS OF EXTERNAL CUSTOMERS IN THE CHAIN
Supplier 1 Cement Co. Supplies cement to Construction company Construction company (immediate customer) Builds the hospital (the ultimate customer)
Supplier 2 Steel Co.
Supplies structural steel items to construction company
2323
RESPONSIBILITIES OF OM
•
Satisfy the needs of all the customers in the chain. Forecast the needs of all current and potential customers. Adjust internal structure and systems to meet the present and future needs of all the customers.
2424
•
•
GROUPS OF PERSONS OR PERSONS HAVING INTEREST IN THE ORGANIZATION - 1
Groups / persons Banks & investment firms Their Interest Assured rate of return on their investments
Suppliers, manpower Prompt payments on delivery, timely recruiting and supply payments of wages/salary, timely agencies & contractors payment on completion of work.
2525
GROUPS OF PERSONS OR PERSONS HAVING INTEREST IN THE ORGANIZATION - 2
Groups / persons Local population Their Interest
Employment opportunities, general development of region, potential problem like traffic jams, sharing of community resources, pollution and law & order situation. Adherence of rules and regulations
Government agencies
2626
EVOLUTION OF PRODUCTION AND OPERATION MANAGEMENT
Reality of global competition, Quality, Customer services, Cost challenges, Rapid expansion of Advanced Technologies, Continued growth of the service sector, Scarcity of Operations Resources and Social-Responsibility Issues
Ci vil W H ar u P m er a io n d R el at S io er n vi s c a e n R d e B v e C ol h o ut a m io vi p n r ut er R e v ol ut io n
T o d a y’ s D e O v p el er o at p io m n e s nt R s S e ci s e e nt ar ifi c c
C o n ti n u al E v ol u ti
Tomorrow
2727
ISSUES IN OPERATIONS MANAGEMENT
Reality of global competition, • Quality, • Customer services, • Cost challenges, • Rapid expansion of Advanced Technologies, • Continued growth of the service sector, • Scarcity of Operations Resources • Social-Responsibility Issues
•
2828
CHANGE IN PHILOSOPHY OF OPERATION MANAGEMENT 1Today’s Philosophy Earlier
Philosophy Stress on production of goods or services
• Stress on management philosophy, • Laying standards for acceptability & not acceptable, • Important & unimportant issues, • Setting up priorities, • Value base, • Value structure, • Working environment and work culture
2929
CHANGE IN PHILOSOPHY OF OPERATION MANAGEMENT 2
Earlier Philosophy • Focus on large scale production • Cost reduction Today’s Philosophy • Focus on new approaches, • New tools, • System’s simplification, • Continuous improvements, • Total quality management, and • Just-in-time manufacturing.
3030
CHANGE IN OPTIONS OF OPERATION MANAGEMENT
Earlier Options Options were: • New technology, • Automation, and • Computerization. Today’s Options
• New approaches, and • New perspectives.
3131
TERMINOLOGIES ASSOCIATED WITH OPERATION MANAGEMENT
•
Manufacturing Management Production Management Operations Management
•
•
3232
MANUFACTURING MANAGEMENT
•
The concept of manufacturing management is more than a century old. Manufacturing management focused on:
– –
•
Sub-division of work Specialization of work force
3333
PRODUCTION MANAGEMENT -1
•
Production management became popular in 1930s. Production management focused on:
– – –
•
Scientific approach Techniques of doing work Use of techniques in decision making.
3434
PRODUCTION MANAGEMENT -2
•
Improvements in operational efficiency through:
– – – –
Use of industrial engineering applications, Work measurement, Method study, Incentive schemes
•
Improving worker performance, and human relation was given importance during this period.
3535
MODERN OPERATION MANAGEMENT -1
•
Focus:
– – – – –
Product quality Customer satisfaction Technological innovations Collective performance of management Use of models in better decision making
3636
MODERN OPERATION MANAGEMENT - 2
•
Focus:
–
–
–
OM strived for system improvement and organizational development rather than employee improvement. More open to new ideas with a belief that there can be a better way of doing things. Accurate, timely and relevant information is an important link in operation management.
3737
3838
TRENDS IN OPERATION MANAGEMENT - 1 QUALITY
•
•
• •
Great emphasis on quality as compared to previous days. Quality is associated with the use and cost. Best quality as demanded is not correct. Right quality is the quality that suited to the purpose.
3939
•
•
•
Final cost of the product is looked from the point of view of revenues and not the cost of the product. Operation management is satisfied as long as revenues are more than the cost of product. Generation of positive income is one of the important considerations.
4040
TRENDS IN OPERATION MANAGEMENT - 2 REVENUE
TRENDS IN OPERATION MANAGEMENT - 4 CUSTOMERS
•
Products and services are tailored to the needs of the customers or the groups of customers. Attentions is given to current base of the customers as well to the potential customers. Company targets its customer class. Some products are targeted for 4141 rich very
•
•
• • • •
•
•
Emphasis on training of human resources. Training is considered as an investment. Stress on team work. Stress on a work environment of cooperation rather than of conflicts. Human resource is an asset for the organization not for its survival but for its future growth. Philosophy of operation management has 4242 changed, where importance is on people-
TRENDS IN OPERATION MANAGEMENT - 5 HUMAN RESOURCE
TRENDS IN OPERATION MANAGEMENT - 6 SYSTEMS DEVELOPMENTS
• •
•
•
Unplanned improvements and problem solving has been done away. Objective is for systematic development of the systems. Systems should be user friendly, easy to understand, simple to operate, easy to explain, easy to control and easy to monitor. Efforts in continuous improvements in systems through system analysis and 4343 evaluation and by eliminating unnecessary
TRENDS IN OPERATION MANAGEMENT - 7 FLEXIBLE MANAGEMENT - A
•
Need for change is an accepted concept today, which is the key for improvement and success.
•
Change in customer demand comes with the change in customers due to education, income level, exposure to outside world, advertising, competitor’s actions or even government policies.
4444
TRENDS IN OPERATION MANAGEMENT - 7 FLEXIBLE MANAGEMENT - B
•
Operation systems and systems capacity change due to:
– – – –
– –
Changes in technology, Introduction of new plant and machinery, Introduction of new software, New management procedures and tools (e.g. JIT manufacturing), Quality of resources, and Research findings.
•
It is essential to align the operation 4545 systems with the dynamic nature of the
TRENDS IN OPERATION MANAGEMENT - 9 INTEGRATION OF BUSINESS PROCESS
•
To improve the effectiveness and efficiency of the operation management systems, it is essential to integrate the activities of various functional areas with the common objective ‘Customer Satisfaction’.
4646
DEVELOPMENTS THAT HAVE IMPACTED POM IN 1980s & 1990s - 1
• • •
• • •
Robotics and numerical control Computer-assisted design Statistical process control for quality (total quality management). Lean (Just-in-Time) manufacturing. Benchmarking . ISO Standards
4747
DEVELOPMENTS THAT HAVE IMPACTED POM IN 1980s & 1990s - 2
• • • •
Time based competition Process engineering Outsourcing Supply chain management
4848
STRUCTURAL MODEL OF MANAGEMENT INFORMATION SYSTEM OF MODERN OPERATION MANAGEMENT
Marketin g
Production
Purchasin g
Strategic Planning Management Planning & Control Management Activities
Warehousin Finance g & & inventory accountin control g Organizational Functions
Personn el
Engineering
Customer Demand
INTEGR ATED MIS
Operational Planning & Control
Supplier Interface
4949
• •
Low production costs Improved delivery performance:
– –
AREAS OF COMPETITIVE ADVANTAGES & OPERATIONS
Fast delivery On-time delivery
• •
High-quality products/services Improved customer service and flexibility
5050
STRATEGIC ACTIONS TO ACHIEVE COMPETITIVE ADVANTAGE BY LOW PRODUCTION COSTS
Production Cost Unit cost of each product/service including: • Labor • Materials • Overhead cost
Strategic Actions Re-design of products/services New technology Increase in production rates Reduction of scrap or waste Reduction of inventories
5151
STRATEGIC ACTIONS TO ACHIEVE COMPETITIVE ADVANTAGE BY IMPROVED DELIVERY PERFORMANCE Delivery Strategic Actions Performance Fast Delivery Larger finished-goods inventories Faster production rates Quicker shipping rates On-time delivery More realistic promises Better control of production of orders Better information systems
5252
STRATEGIC ACTIONS TO ACHIEVE COMPETITIVE ADVANTAGE BY BETTER CUSTOMER SERVICE AND FLEXIBILITY
Customer Service Ability to quickly change production to other products/ services, customer responsiveness Strategic Actions Change in types of processes used Use of advanced technologies. Reduction of amount of work in process through lean manufacturing. Increase in capacity
Ref: Table 2.6, page 45, Operations Management by Norman Gaither & Greg Fraizer
5353
STRATEGIC ACTIONS TO ACHIEVE COMPETITIVE ADVANTAGE BY IMPROVED PRODUCTS/SERVICES
Quality of products/ services Customers’ perception of degree of excellence exhibited by products/ services
Strategic Approach
Appearance Malfunction or defect rates Performance and function Wear, endurance ability After-sales services
5454
STRATEGIC ACTIONS BY APPLE COMPUTER INC. - 1
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15 Product families was cut back to just a handful that share common components. Use of consistent technology in the new products. Focus on a few key features in new products instead of many bells and wistles like some competitors. Strongly meeting new product deadlines, usually in a year.
5555
STRATEGIC ACTIONS BY APPLE COMPUTER INC. - 2
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Outsourced half of its products to contractors who could do it far efficiently. Key suppliers were reduced from 100 to 24. Company scrapped an off the shelf software programme. Devised its own build-to-order system for manufacturing and inventories that has been limping along.
5656
COMPETITIVE ADVANTAGES ACHIEVED BY APPLE COMPUTER INC. THROUGH STRATEGIC ACTIONS - 1
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With in a year finished goods inventory reduced from 70 days to 30 days worth. Made 500million dollars profit. 10 finished goods warehouses were closed leaving only 9 regional warehouses. Simplified Apple’s manufacturing functioning. Simplicity was the key to Apple’s Operation Strategy. 5757
COMPETITIVE ADVANTAGES ACHIEVED BY APPLE COMPUTER INC. THROUGH STRATEGIC ACTIONS - 2
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Eased the tracking of all the parts. With less number of suppliers, each supplier has more business, which resulted in better control over suppliers. Began shipping 75% on-line oeders compared to 5% earlier. Company also pursuaded key suppliers to set-up shops close to Apple’s facilities for just-in-time deliveries. Apple’s parts inventory reduced 5858less to
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