Productivity.op mgmt.chpt 20

SEWP ZC 241: SEWP ZC 241: PRINCIPLES OF PRINCIPLES OF MANAGEMENTMANAGEMENT

Productivity, Productivity, Operations Operations Management, and Management, and Total Quality Total Quality ManagementManagement

After studying this chapter, you After studying this chapter, you should understand:should understand:

1. The nature of productivity issues and ways to improve effectiveness and efficiency.

2. Production and operations management as an applied case of managerial planning and control.

3.  Techniques for improving productivity including JIT and outsourcing.

4.  The importance of quality, the nature of a variety of techniques for improving quality, and lean manufacturing.

What is Productivity?What is Productivity?

Productivity is the input-output ratio within a time period with due consideration

for quality

Production and Operations Production and Operations Management: Manufacturing Management: Manufacturing and Serviceand Service

Production management was the term used to refer to those activities

necessary to manufacture products

Production and Operations Production and Operations Management: Manufacturing Management: Manufacturing and Serviceand Service

Operations management refers to activities necessary to produce and deliver a service

as well as a physical product

WHAT IS OPERATIONS MGMT?WHAT IS OPERATIONS MGMT?

• Business Function that:PLANSORGANIZESCOORDINATESCONTROLS

the RESOURCES needed to provide company’s GOODS and SERVICES.

• OPERATIONS MANAGEMENT is a MANAGEMENT FUNCTION.

WHAT IS OPERATIONS MGMT?WHAT IS OPERATIONS MGMT?

Definitions of tasks:

• PLANNING:Activities that establish a course of action.

Guides future decision making.

• ORGANIZING:Activities that establish a structure of

tasks and authority.

• CONTROLLING:Activities that ensure that actual

performance is in accordance with planned performance.

WHAT IS OPERATIONS MGMT?WHAT IS OPERATIONS MGMT?

• Operations management INVOLVES:PeopleEquipmentTechnologyInformation

• OPERATIONS MANAGEMENT is a

CORE FUNCTION of any company.

ROLE OF OPERATIONS MGMT: ROLE OF OPERATIONS MGMT: OPERATIONS SYSTEMOPERATIONS SYSTEM

INPUTSINPUTS

COMPARISON: ACTUAL VERSUS DESIRED

OUTPUTS

CONVERSION/ TRANSFORMATION

PROCESSADJUSTMENT

NEEDED

MONITOR OUTPUT

RANDOM FLUCTUATIONS

To TRANSFORM company’s INPUTS into FINISHED GOODS or SERVICES

ROLE OF OPERATIONS MGMT: ROLE OF OPERATIONS MGMT: COMPONENT DEFINITIONSCOMPONENT DEFINITIONS

• INPUTS:Human ResourceFacilities and processesMaterialsTechnologyInformation

• OUTPUTS:Physical GoodsServices

ROLE OF OPERATIONS MGMT: ROLE OF OPERATIONS MGMT: COMPONENT DEFINITIONSCOMPONENT DEFINITIONS

• OPERATION SYSTEMS:

Part of orgn. That produces organizations physical goods and services.

• CONVERSION/ TRANSFORMATION PROCESS:

The process of changing INPUTS to OUTPUTS.

• TECHNOLOGY:

The level of scientific sophistication in plant/ equipement or skills in the CONVERSION PROCESS..

ROLE OF OPERATIONS MGMT: ROLE OF OPERATIONS MGMT: COMPONENT DEFINITIONSCOMPONENT DEFINITIONS• RANDOM FLUCTUATIONS:

Unplanned/ Uncontrollable influences that cause differences between ACTUAL and EXPECTED output.Can be EXTERNAL or INTERNAL.

• VALUE ADDED: Net increase between FINAL VALUE of outputs compared to SUM of VALUE OF INPUTS.Greater the value, more profitable the business.

ROLE OF OPERATIONS MGMT: ROLE OF OPERATIONS MGMT: COMPONENT DEFINITIONSCOMPONENT DEFINITIONS

• FEEDBACK:

INFORMATION in the control process that allows management to decide whether organizational activities require ADJUSTMENT.

DEFINITION OF OPERATIONS DEFINITION OF OPERATIONS MANAGEMENT:MANAGEMENT:

OPERATIONS MANAGEMENT: THE MANAGEMENT OF THE

CONVERSION PROCESS WHICH CONVERTS INPUTS

INTO DESIRED OUTPUTS OF GOODS AND SERVICES.

DISTINCTIONS BETWEEN DISTINCTIONS BETWEEN MANUFACTURING & SERVICE MANUFACTURING & SERVICE OPERATIONSOPERATIONS• Organizations divided into 2 broad

categories based on their OUTPUTS.

• Primary distinctions

Manufacturing organizations Service organizations

Produces physical tangible goods.

Produces intangible goods (Services)

Can be stored as INVENTORY before they rae needed.

Cannot be produced AHEAD of time.

Customers have no DIRECT CONTACT with the conversion process.

Customers are present during CREATION or DELIVERY of SEVICES.

TYPE OF GOODSTYPE OF GOODS

MANUFACTURING- TANGIBLE

SERVICES- INTANGIBLE

DEGREE OF CUSTOMER DEGREE OF CUSTOMER CONTACTCONTACTMANUFACTURING- LOW SERVICES- HIGH

INVENTORYINVENTORY

MANUFACTURING- STORED AHEAD OF USAGE

SERVICES- REAL TIME

CHARACTERISTICS: MFG & CHARACTERISTICS: MFG & SERVICES ORGANIZATIONSSERVICES ORGANIZATIONS

OVERLAPSOVERLAPS

• In many organizations, there is an overlap of manufacturing and services:Computer + ServiceCar+ Service

• There are certain organizations, which have:Low Customer Contact.Highly Capital Intensive.Yet, they provide a SERVICE.•These are called QUASI MANUFACTURING

ORGANIZATIONS

QUASI MANUFACTURING QUASI MANUFACTURING ORGANIZATION: EXAMPLEORGANIZATION: EXAMPLE

INDIA POSTSINDIA POSTS

• Provides SERVICE- sppedy, reliable delivery of letters, documents & packages.

• Output is intangible and cant be stored in inventory.

• Customer not present during creation of service.

• Highly capital intensive- 1,20,000+ Post Offices, telecom equipment, delivery trucks.

MANY ORGANIZATIONS FALL IN BETWEEN MANUFACTURING & SERVICES

Operations Management SystemsOperations Management Systems

Steps in Product and Production Steps in Product and Production DesignDesign

1. Create product ideas by searching for consumer needs and screening the various alternatives

2. Select the product on the basis of various considerations, including data from market and economic analyses, and make a general feasibility study

3. Prepare a preliminary design by evaluating various alternatives, taking into consideration reliability, quality, and maintenance requirements

Steps in Product and Production Steps in Product and Production DesignDesign

4. Reach a final decision by developing, testing, and simulating the processes to see if they work

5. Decide whether the enterprise's current facilities are adequate or if new or modified facilities are required

6. Select the process for producing the product; consider the technology and the methods available

7. After the product is designed, prepare the layout of the facilities to be used, plan the system of production, and schedule the various things that must be done

PROCESS OF CONVERTING AN IDEA INTO A PRODUCT OR A

SERVICE

INNOVATION: DEFINITIONINNOVATION: DEFINITION• Innovation means a new way of doing

something.

• Something new must be substantially different to be innovative, NOT an insignificant change.

• Linked to performance and growth through improvements in efficiency, productivity, quality, competitive positioning, market share.

COMPONENTS OF INNOVATIONCOMPONENTS OF INNOVATION

• BASIC RESEARCH

• APPLIED RESEARCH

• DEVELOPMENT

• IMPLEMENTATION

COMPONENTS OF INNOVATIONCOMPONENTS OF INNOVATION

• BASIC RESEARCHResearch for advancement

of scientific knowledge that

has no specific commercial

use.Maybe, of present or potential interest

• APPLIED RESEARCHResearch for advancement of scientific

knowledge that has specific commercial uses.

COMPONENTS OF INNOVATIONCOMPONENTS OF INNOVATION

• DEVELOPMENTTechnical activity concerned

with translating basic and

applied research results into

products or processes.

• IMPLEMENTATIONActivities involved with designing and

building pilot models, equipment and facilities, and initiating marketing channels for products or services emerging from R & D

Screening

Economic Analysis

Development

Testing

Commercial Use

DECAY CURVE FOR NEW PRODUCT DECAY CURVE FOR NEW PRODUCT IDEASIDEAS

TYPES OF PROCESS TECHNOLOGIESTYPES OF PROCESS TECHNOLOGIES

• PROJECTS

• JOB SHOP

• BATCH

• ASSEMBLY LINE

• CONTINOUS PLANTS

CHARACTERISTICS: PROJECT CHARACTERISTICS: PROJECT TECHNOLOGYTECHNOLOGY

• Unique Product

• Requirement of customer tailor made

• Products not standardized.

• Flexible conversion process.

• High degree of problem solving required.

• Teamwork and coordination essential.

EXAMPLES: PROJECT TECHNOLOGYEXAMPLES: PROJECT TECHNOLOGY

CHARACTERISTICS: JOB SHOP CHARACTERISTICS: JOB SHOP TECHNOLOGYTECHNOLOGY• Small batches of different products.

• High degree of customization.

• Unique process steps or ‘Routing’

• Each product uses small portion of resources.

• Elaborate job tracking and control systems required.

• High lead time for access to machines.

• Equipment overloaded or under loaded.

EXAMPLES: JOB SHOP EXAMPLES: JOB SHOP TECHNOLOGYTECHNOLOGY

CHARACTERISTICS: BATCH CHARACTERISTICS: BATCH TECHNOLOGYTECHNOLOGY• Higher standardization than job shop.

• Several products produced repeatedly and in large volumes.

• Certain parts/ components/ items produced and stocked without customers orders.

• System flexibility for small volume/ high variety products.

• No product sufficiently dominant to warrant dedicated equipment processes.

EXAMPLES: BATCH TECHNOLOGYEXAMPLES: BATCH TECHNOLOGY

CHARACTERISTICS: ASSEMBLY LINE CHARACTERISTICS: ASSEMBLY LINE TECHNOLOGYTECHNOLOGY

• Narrow range of specialized products.

• Relatively stable product designs.

• Specialized equipment, human skills

and management systems.

• Beyond a range, manufacturing system

is inflexible.

EXAMPLES: ASSEMBLY LINE EXAMPLES: ASSEMBLY LINE TECHNOLOGYTECHNOLOGY

CHARACTERISTICS: CONTINOUS FLOW CHARACTERISTICS: CONTINOUS FLOW TECHNOLOGYTECHNOLOGY

• Products manufactured in continuous, endless

flows.

• Highly standardized products.

• Normally highly capital intensive.

• High degree of automation and process controls

required.

• High start up costs.

EXAMPLES: CONTINOUS FLOW EXAMPLES: CONTINOUS FLOW TECHNOLOGYTECHNOLOGY

SERVICE PROCESS TECHNOLOGIESSERVICE PROCESS TECHNOLOGIES

• As diverse as product process technologies.

• Services vary: In amount of customer

contact.

In intensiveness of labour versus capital.

CUSTOMER CONTACTCUSTOMER CONTACT

• Occurs in TWO ways:Involvement during

designing or customizing service

During creation of service.

CUSTOMER CONTACTCUSTOMER CONTACT• Basis for categorizing services (high

to low)

• Trade off between flexibility and operational effectiveness.

• High contact process technology:More flexible, efficiency low since

conversion process cant be standardized.

• Low contact process technology:Less flexible, but operations more

standardized and efficient..

TYPES OF SERVICE PROCESS TYPES OF SERVICE PROCESS TECHNOLOGIESTECHNOLOGIES

LOW CUSTOMER CONTACTHIGH CUSTOMER

CONTACT

CAPITAL INTENSIVE

QUASI MANUFACTURING

CUSTOM SHOP SERVICES

LABOUR INTENSIVE

MASS SERVICES PROFESSIONAL SERVICES

CHARACTERISTICS: SERVICE CHARACTERISTICS: SERVICE PROCESS TECHNOLOGIESPROCESS TECHNOLOGIES

• QUASI MANUFACTURING:

Rigidly standardized service.

Concerned with reliable delivery schedule.

Major capital intensive decisions.

• MASS SERVICES:

Scheduling of human resource critical.

Standardized services.

Emphasis on training & development..

CHARACTERISTICS: SERVICE CHARACTERISTICS: SERVICE PROCESS TECHNOLOGIESPROCESS TECHNOLOGIES

• CUSTOM SHOP SERVICE: Professional staff, customized service. Relatively capital intensive conversion

technology.. Emphasis on cost containment and capital

investment decisions.

• MASS SERVICES: Customized service. Intensive interaction between customer and

professional personnel. Professional skills critical.

LABOUR VERSUS CAPITAL LABOUR VERSUS CAPITAL INTENSIVENESSINTENSIVENESS

CAPITAL INTENSIVE LABOUR INTENSIVE

Dominant concerns: Employee scheduling &

training

Dominant concerns: Technological

advancements & capital investments

Tools and Techniques for Tools and Techniques for Improving Productivity Improving Productivity • Inventory Planning and Control

• Just-in-Time Inventory System In the just-in-time (JIT) inventory method, the

supplier delivers the components and parts to the production line "just in time" to be assembled

• Outsourcing Outsourcing means that production and

operations are contracted to outside vendors that have expertise in specific areas

WhatWhat is Operations is Operations Research?Research?

Operations research is the application of scientific methods to the study of alternatives in a problem situation, with a view to obtaining a quantitative basis for arriving at a best solution

WhatWhat is Operations is Operations Research?Research?

An interdisciplinary branch of applied mathematics and formal science that uses methods such as mathematical modeling, statistics, and algorithms to arrive at optimal or near optimal solutions to complex problems.

WhatWhat is Operations is Operations Research?Research?

OR APPLICATIONSOR APPLICATIONS

• statistics,

• optimization,

• probability theory,

• queuing theory,

• game theory,

• graph theory,

• decision analysis, and simulation

What is Value Engineering?What is Value Engineering?

Value engineering, is the process of analyzing the operations of the product or service, estimating the value of each operation, and attempting to improve that operation by trying to keep costs low at each step or part

What is Work Simplification?What is Work Simplification?

• Work simplification is the process of obtaining the participation of workers in simplifying their work

What is a Quality Circle?What is a Quality Circle?

• A quality circle (QC) is a group of people from the same organizational area who meet regularly to solve problems they experience at work

Total Quality Management Total Quality Management (TQM) (TQM)

Total quality management (TQM) is the organization's long-term commitment to the continuous improvement of quality, throughout the organization and with the active participation of all members at all levels, to meet and exceed customer expectations

Mass Production vs Mass Production vs Lean Production Lean Production

MASS PRODUCTION

• Sporadic and inconsistent improvements

• Satisfied with “good enough”

•  High inventory acceptable

LEAN PRODUCTION

•  Continuous improvements (“kaizen”) with strategic breakthroughs

• Aim at zero defects

• Just-in-time inventory system

Mass Production vs Mass Production vs Lean Production Lean Production

MASS PRODUCTION

• “Me” management with emphasis on individual performance

•  Workers considered the cause of poor quality

LEAN PRODUCTION

•   “We” or team management

• Everyone is the problem; especially management

CAD/CAMCAD/CAM

• CAD/CAMs help engineers design products much more quickly than they could with the traditional paper-and-pencil approach

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