39239477 Operations Managemet Lecture One

7/28/2019 39239477 Operations Managemet Lecture One

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CEMBA/CEMPA 557

PRODUCTION & OPERATIONS MANAGEMENT


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ISSUESyABUBAKARI YAKUBU

y

QUIZZESyEXAMS

yANY OTHER ISSUES :

yRULES OF ENGAGEMENT


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LECTURE ONE

BLOCKS ONE & TWO y Block 1 Issues in POM

y Issues in POM an Overview

y Production System: Issues & Environment

y Total Quality Management

y

Block 2 Forecastingy Need & Importance of Forecasting

y Qualitative methods of Forecasting

y Quantitative methods of Forecasting


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Unit 1 Production and OperationsMgt: An Overview


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Definitiony Operations management is the process of obtaining and

utilising resources to produce useful goods and services soas to meet the goals of the organisation


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Sig ifica t Ev nts in OSignificant Ev nts in O

Figure 1.3Figure 1.3


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Contributions FromContributions From

Human factors

Industrial engineering

Management science Biological science

Physical sciences

Information science


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NewChallenges in OMNewChallenges in OM

Global focusGlobal focus

JustJust--inin--timetime

Supplychain partneringSupplychain partnering

Rapid productRapid productdevelopment, alliancesdevelopment, alliances

Mass customizationMass customization

Empowered employees,Empowered employees,teamsteams

ToToFromFrom

Localor national focusLocalor national focus

Batch shipmentsBatch shipments

Lowbid purchasingLowbid purchasing

Lengthy product developmentLengthy product development

Standard productsStandard products

Job specializationJob specialization


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Characteristics ofGoodsCharacteristics ofGoods

Tangible productTangible product

Consistent productConsistent productdefinitiondefinition

Production usuallyProduction usuallyseparate fromseparate fromconsumptionconsumption

Can be inventoriedCan be inventoried LowcustomerLowcustomer

interactioninteraction


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Characteristics ofServiceCharacteristics ofService

Intangible productIntangible product

Produced and consumedProduced and consumedat same timeat same time

Often uniqueOften unique

Highcustomer interactionHighcustomer interaction

Inconsistent productInconsistent product

definitiondefinition Often knowledgeOften knowledge--basedbased

Frequently dispersedFrequently dispersed


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Goods Versus ServicesGoods Versus Services

Table 1.3Table 1.3

Can be resoldCan be resold

Can be inventoriedCan be inventoried

Some aspects of qualitySome aspects of quality

measurablemeasurableSelling is distinct fromSelling is distinct fromproductionproduction

Product is transportableProduct is transportable

Site of facility important forcostSite of facility important forcost

Often easy toautomateOften easy toautomate

Revenue generated primarilyRevenue generated primarilyfrom tangible productfrom tangible product

Attributes ofGoodsAttributes ofGoods(Tangible Product)(Tangible Product)

Attributes of ServicesAttributes of Services(Intangible Product)(Intangible Product)

Reselling unusualReselling unusual

Difficult to inventoryDifficult to inventory

Quality difficult to measureQuality difficult to measure

Selling is part of serviceSelling is part of service

Provider, not product, isProvider, not product, isoften transportableoften transportable

Site of facility important forSite of facility important forcustomercontactcustomercontact

Often difficult toautomateOften difficult toautomate

Revenue generated primarilyRevenue generated primarilyfrom the intangible servicefrom the intangible service


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How is Operations relevant to my

work or area ofexpertise?yAccounting

y

InformationTechnology

y

Management

yAs an auditor you mustunderstand the fundamentals ofoperations management.

y IT is a tool, and theres no betterplace to apply it than inoperations.

y We use so many things youlearn in operationsmanagementscheduling, leanproduction, decision theory,materials management and lots

of quality tools.


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How is Operations Relevant to

my Major? (cont)y Economics

y Marketing

y Finance

y Its all about processes. I live byflowcharts and Paretoanalysis.

y How can you do a good jobmarketing a product if youreunsure of its quality or deliverystatus?

yMost of our capital budgetingrequests are from operations,and most of our cost savings,too.


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Scope and Significancey The name of production management was changed to

operations mgt as a result of the need to encompass

the rapidly expanding service sectory Operations mgt can be described as mgt of

manufacturing and services

y Some of the functional sub areas have achieved great

importance that they are being explored as distinctsubjects of study eg quality mgt, technology mgt,project mgt and ergonomics.


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Productivity ChallengeProductivity Challenge

Productivity is the ratioofoutputs (goods andProductivity is the ratioofoutputs (goods andservices) divided by the inputs (resourcesservices) divided by the inputs (resources

suchassuchas laborlaborand capital)and capital)

The objective is to improve this measureThe objective is to improve this measureof efficiencyof efficiency

Important Note!Production is a measure ofoutput only

and not a measure of efficiency


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Productive Use ofresourcesy Operations personnel should make maximum use of

resources at their disposal

y Input=Output+Waste

y There are two approaches for enhancing productivity

a. Increasing productivity

Productivity=Output/Input

The ratio can be improved in various ways1. Increasing output while keeping inputs constant

2. Decreasing inputs while keeping output constant

3. Increasing output in greater proportion than increase

in input


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Productive Use ofresourcesb. Decreasing wastivity

Reduction of waste or scrap is another way of

enhancing productivity One way of reducing waste is to minimize the

generation of waste

The emphasis is shifting to tacking the problem at

the source of the generation of the waste rather thandealing with the waste


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Environmental Concerns of

Operationsy Operations management has impacted negatively to

the environment (comments)

y

As a result of the increase of production, theenvironment has been damaged to an extent that theozone layer is threatened

yVarious laws have been enacted to control the

following pollutants- solid waste, liquid waste,atmospheric waste and noise pollution


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Social Concerns ofOperationsy Operations mgt can rightly pride itself for being in the

vanguard of material progress

y

It has made life more comfortable and enjoyabley Industrialisation has created the need and awareness

of knowledge and information


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Intoduction


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Role ofProduction Mgty Production mgt is concerned with proper mgt and

utilisation of enterprise resources required to produce

goods and servicey In this competitive environment organisations are

compelled to develop strategy which will make themcompetitive

y

For achieving this the functional level strategies shdcontribute to the coherent strategy of the organisation


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The reactive role of

production/operations mgty Many companies fail to embrace operations mgt in

their strategy formulation as a result of the following:

1. The production /operations mgr should have theability to handle the strategic aspects ofproduction/operations mgt consistently

2. Production/operations mgrs rely more on verbal

communication and have little interest in writtenwords

3. The production/operations mgrs has the tendency toview themselves as holding a reactive corporate brief


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The reactive role of

production/operations mgt (Cont).y Companies also view the role of production/operations

mgt as a short term and reactive to and do not stress

the long term nature of this task


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Production/Operations mgt-A

system viewpointy Production /operations mgt is greatly influenced by

the rapid economic change and technologicaladvancement

yAccording to Ogawa production mgt may be definedas the planning, implementation and control ofproduction activities conducted by organisationalentity with define performance objectives subject to

modifications according to ambient conditionsy Production mgt encompasses all the activities right to

the end of the production process

y The production system which are responsive to rapid

changes are capable of reducing the start up period.


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The Production System


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Systems Perspectivey Inputs

y Transformation System

y Altery Transport

y Store

y Inspect

y Outputsy Environment


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Inputsy Inputs include facilities, labor, capital, equipment, raw

materials, and supplies.

y

A less obvious input is knowledge of how to transformthe inputs into outputs.


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Characteristics ofproduction

systemsy System discrimination- A production system

consisting primarily of inputs and output does nothave the wider connotations involving all phases from

technology forecasting to manufacturingy Interrelationship among systems- The closed

relationships that exist between production and pre-production arrangements is known as the

interrelationships between systemsy Stratum Formulation- A production system consisting

of various strata of corporate hierarchy wherein eachstratum has a role to play


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Characteristics ofproduction

systemy Specification of functions-As the production system

expands it trends to have large number of hierarchicalstrata each performing specialised functions

y Increase of Entropy- according to Ogawa entropy is ameasure of the degradation of the matter and theenergy in the universe to an ultimate state of inertuniformity. To cope with the rapid changes of

technological innovation the organisation as well asproduction system needs to be rejuvenated.

y Insofinality Insofinality is the process of reaching thesame goal by different routes. There are different

approaches to converting input to output.


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Types ofproduction systems

controlsy Control is the basis for production mgt. There are two

types of controls

1. Feedback control- In this type of control the output is

obtained as a result of input and processing. It is thenmeasured to see if it is in agreement with the goal. Ifthe output is not in agreement with the goal, correctivemeasures are taken to address the shortfall

2. Feedforward control- In this type of controlmechanism, input is checked against pre-specifiedstandards prior to processing as well as output phase.The feedforward control system collects measurement

data, compares them against the specification and

initiate corrective measures.


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Production system designy Design of production systems aims to achieve the right

mix of varying proportions of the element of

productiony The production system design must be effective in its

overall context

y Production system must be designed with both the

internal and external factors in mind


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Productivity Improvementy Productivity is a function of the relationship between

input and output

y

Productivity improvement results when a given outputis achieved with less input or a given output is achievedwith less input

y Productivity is a summary measure of the quantity and

quality of work performance with optimal utilisation ofscare resources

y In order to maximise the output and minimise theinput it is necessary to control the whole of production

systems


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What does TQM meany TQM is a systems approach to ensuring quality in an

organisation

y Total Quality Management means that the

organization's culture is defined by and supports theconstant attainment of customer satisfaction throughan integrated system of tools, techniques, and training.This involves the continuous improvement of

organizational processes, resulting in high qualityproducts and services.

y Quality activities are planned and managed intosystems and are oriented towards the achievement of

complete customer satisfaction


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Whats t he goal ofTQM?Do the right things right the first time, every time.


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TQM:A HISTORIC PERSPECTIVEy Quality mgt systems have evolved through quality

control, quality assurance and total quality control

y

Quality control is concerned with defect detection byusing post-production inspection procedures

y Quality assurance systems aim to produce as perdesign specifications and emphasise defect prevention

y Total quality control systems are concerned with costreduction efforts as a drive towards continualimprovement


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Defining Qualityy In technical usage, quality can have two meanings:

y the characteristics of a product or service that bear on its

ability to satisfy stated or implied needs, andy a product or service free of deficiencies


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Defining Quality- Different Viewsy Customers view (more subjective)

y the quality of the design (look, feel, function)y product does whats intended and lasts

y Producers viewy conformance to requirements (Crosby)y costs of quality (prevention, scrap, warranty)y increasing conformance raises profits

y Governments viewy products should be safey not harmful to environment


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TQMs Customer Approachy the customer defines quality.

y the customer is always right.

y the customer always comes first.y the customer is king.

y quality begins and ends with the customer


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Types ofCustomersy External - outside the organization (people who pay

the bills.)

y

End-user customersy Manufacturer (OEM) for suppliers.

y Internal - people within your organization who receiveyour work

y In many situations, producers have multiple customersand therefore find it useful to identify core customers


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Understanding the customery Quality function deployment is a method used to

identify critical customer attributes and to create a

specific link between customer attributes and designparameters

y It helps marketing and design to answer three primaryquestion?

a. What attributes are critical to our customers?b. What design parameters are important in driving

those attributes?

c. What should the design parameter targets be for the

new design?


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Process ofdeveloping thehouse of

qualityy Establishing critical customer attributes for the

product based on their expectations and give themweights according to their importance

y Establishing critical design parameters that drivesystem performance

y Establishing the relationship between customer wantsand design parameters

y Identifying the inter-relationships between thevarious design parameters to establish trade-offs

y Focusing on customer perceptions of the companysexisting product compared to its competitors


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Process ofdeveloping thehouse of

quality involves(cont)y Focusing on the internal assessment by filling in the

engineering section

y

Analysing the matrix and choosing priority items


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SomeData on Customer Attitudes

and Loyaltyy (Source: Winning Back Angry Customers, Quality

Progress, 1993)

yAn average customer with a complaint tells 9-10

people; if it is resolved he/she only tells 5 people.y For every complaint received, there are twenty others

that are not reported.

y It costs 5-10 times more in resources to replace acustomer than it does to retain one.

y Companies spend 95% of service time redressingproblems and only 5% trying to figure out what madethe customer angry.


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Productivity and TQMy Traditional view:

y Quality cannot be improved without significant losses inproductivity.

y TQM view:

y Improved quality leads to improved productivity.


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Basic Tenets ofTQMy 1. The customer makes the ultimate determination

of quality.y 2. Top Management must provide leadership and

support for all quality initiatives.y 3. Preventing variability is the key to producing

high quality.y 4. Quality goals are a moving target, thereby

requiring a commitment toward continuousimprovement.y 5. Improving quality requires the establishment

of effective metrics. We must speak with data andfacts not just opinions


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The three aspects ofTQMy Counting Tools, techniques, and training in their use for

analyzing, understanding, and solving qualityproblems

y Customers Quality for the customer as a

driving force and central concern.

y Culture Shared values and beliefs, expressed byleaders, that define and support quality.


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Total Quality Management

and Continuous Improvementy TQM is the management process used to make

continuous improvements to all functions.

y

TQM represents an ongoing, continuous commitmentto improvement.

y The foundation of total quality is a managementphilosophy that supports meeting customer

requirements through continuous improvement


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What are ISO 9000 Standardsy ISO 9000 Standards

y Define the required elements of an effective qualitymanagement system

y Can be applied to any company

y Adopted by the United States as the ANSI/ASQC Q90series.

y

Revised 2000 wider applicability


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Who created the standards?y International Organization for Standardization -

Geneva

y

ISO tech committee - TC 176 started in 1979y Standards created in 1987

y To eliminate country to country differences

y To eliminate terminology confusion

y To increase quality awareness


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How did ISO get started?y 1906 - International Electro-technical Commission

y 1926 - International Federation of the NationalStandardizing Associations (ISA)

y 1946 London - delegates from 25 countries decided tocreate a new international organization "the object of

which would be to facilitate the internationalcoordination and unification of industrial standards

y 1947 - ISO began to officially functiony 1951 - The first ISO standard was published

y "Standard reference temperature for industrial lengthmeasurement".


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What has ISO Accomplished?y ISO film speed code

y Standardformat for telephone and banking cards

y ISO 9000 which provides a framework for qualitymanagement and quality assurance

y ISO 14000 series provides a similar framework forenvironmental management

y

Internationally standardized freight containersy Standardizedpaper sizes.

y Automobile control symbols

y ISO international codes for country names,

currencies and languages


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ISO 9000:2000 Consists of3 Areasy ISO 9000:2000 Quality Management Systems:

fundamentals and vocabulary

y

ISO 9001:2000 Quality Management Systems Requirements (required for certification)Management responsibilityResource managementProduct/service realizationMeasurement, analysis, improvement

y ISO 9004-2000 Quality Management Systems Guidelines for performance improvement


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Unit 4 - Need & Importance of

Forecasting

Unit 5 - Qualitative methods of

Forecasting

Unit 6 - Quantitative methods of

Forecasting


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Documents

39239477 Operations Managemet Lecture One