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Introduction to pom

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Introduction to pom

  1. 1. Introduction to Operations Management
  2. 2. OM Defined Operations management: The business function responsible for planning, coordinating, and controlling the resources needed to produce a company’s products and services
  3. 3. Simplified Organizational Chart
  4. 4. Information Flows To & From Operations
  5. 5. The Role of OM in the Business
  6. 6. Transformation Process Physical: as in manufacturing operations Locational: as in transportation operations Exchange: as in retail operations Physiological: as in health care Psychological: as in entertainment Informational: as in communication
  7. 7. Service - Manufacturing Services: • Intangible product • No inventories • High customer contact • Short response time • Labor intensive Manufacturing: • Tangible product • Can be inventoried • Low customer contact • Capital intensive • Long response time
  8. 8. Service-Manufacturing Continuum
  9. 9. What Operations Managers Do Plan - Organize - Staff - Lead Control
  10. 10. OM Decisions • Strategic decisions: – Decisions that set the direction for the entire company. – Broad in scope & long-term in nature • Tactical decisions: – Short-term & specific in nature – Bound by the strategic decisions
  11. 11. The Critical Decisions • Quality management – Who is responsible for quality? – How do we define quality? • Service and product design – What product or service should we offer? – How should we design these products and services?
  12. 12. The Critical Decisions - Continued • Process and capacity design – What processes will these products require and in what order? – What equipment and technology is necessary for these processes? • Location – Where should we put the facility – On what criteria should we base this location decision?
  13. 13. The Critical Decisions - Continued • Layout design – How should we arrange the facility? – How large a facility is required? • Human resources and job design – How do we provide a reasonable work environment? – How much can we expect our employees to produce?
  14. 14. The Critical Decisions - Continued • Supply chain management – Should we make or buy this item? – Who are our good suppliers and how many should we have? • Inventory, material requirements planning, – How much inventory of each item should we have? – When do we re-order?
  15. 15. Example
  16. 16. Major Historical Developments Industrial Revolution Scientific Management Human Relations Movement Management Science Computer Age Just-In-Time Systems Total Quality Management (TQM) Reengineering Flexibility Time-based Competition Supply Chain Management Global Competition Environmental Issues Electronic Commerce Late 1700s Early 1900s 1930s to 1960s Mid-1900s 1970s 1980s 1980s 1980s 1990s 1990s 1990s 1990s 1990s Late 1990s – Early 21st Century
  17. 17. Industrial Revolution Late 1700s • Replaced traditional craft methods • Substituted machine power for labor • Major contributions: – James Watt (1764): steam engine – Adam Smith (1776): division of labor – Eli Whitney (1790): interchangeable parts
  18. 18. Scientific Management Early 1900s • Separated ‘planning’ from ‘doing’ • Management’s job was to discover worker’s physical limits through measurement, analysis & observation • Major contributors: – Fredrick Taylor: stopwatch time studies – Henry Ford: moving assembly line
  19. 19. Human Relations Movement 1930s to 1960s • Recognition that factors other than money contribute to worker productivity • Major contributions: – Understanding of the Hawthorn effect: Study of Western Electric plant in Hawthorn, Illinois intended to study impact of environmental factors (light & heat) on productivity, but found workers responded to management’s attention regardless of environmental changes – Job enlargement – Job enrichment
  20. 20. Management Science Mid-1900s • Developed new quantitative techniques for common OM problems: – Major contributions include: inventory modeling, linear programming, project management, forecasting, statistical sampling, & quality control techniques
  21. 21. Computer Age 1970s • Provided the tool necessary to support the widespread use of Management Science’s quantitative techniques – the ability to process huge amounts of data quickly & relatively cheaply • Major contributions include the development of Material Requirements Planning (MRP) systems for production control
  22. 22. Developments: 1980s Japanese Influence • Just-In-Time (JIT): – Techniques designed to achieve high-volume production using coordinated material flows, continuous improvement, & elimination of waste • Total Quality Management (TQM): – Techniques designed to achieve high levels of product quality through shared responsibility & by eliminating the root causes of product defects • Business Process Reengineering: – ‘Clean sheet’ redesign of work processes to increase efficiency, improve quality & reduce costs
  23. 23. Developments: 1990s • Flexibility: – Offer a greater variety of product choices on a mass scale (mass customization) • Time-based competition: – Developing new product designs & delivering customer orders more quickly than competitors • Supply Chain Management – Cooperating with suppliers & customers to reduce overall costs of the supply chain & increase responsiveness to customers
  24. 24. Developments: 1990s • Global competition: – International trade agreements open new markets for expansion & lower barriers to the entry of foreign competitors (e.g.: NAFTA & GATT) – Creates the need for decision-making tools for facility location, compliance with with local regulations, tailoring product offerings to local tastes, managing distribution networks, … • Environmental issues: – Pressure from consumers & regulators to reduce, reuse & recycle solid wastes & discharges to air & water
  25. 25. Electronic Commerce • Internet & related technologies enable new methods of business transactions: – E-tailing creates a new outlet for retail goods & services with global access and 24-7 availability – Internet provides a cheap network for coordinating supply chain management information • Developing influence of broadband & wireless
  26. 26. Trends in Business • Major trends – The Internet, e-commerce, e-business – Management technology – Globalization – Management of supply chains – Outsourcing – Agility – Ethical behavior 1-26
  27. 27. Management Technology • Technology: The application of scientific discoveries to the development and improvement of goods and services • Product and service technology • Process technology • Information technology 1-27
  28. 28. Simple Product Supply Chain Suppliers’ Suppliers Direct Suppliers Producer Distributor Final Consumer Supply Chain: A sequence of activities And organizations involved in producing And delivering a good or service 1-28
  29. 29. Other Important Trends • • • • • Working with fewer resources Revenue management Process analysis and improvement Increased regulation and product liability Lean production 1-29

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