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