Intro to om
- 1. Introduction to Operations Management 1
- 2. Definition • Operations Management (OM) management of activities that lead to the creation of goods and services through the transformation of inputs to outputs 2
- 3. Operations Management (Definition Contd…) Operations management is an area of management concerned with overseeing, designing, and redesigning business operations in the production of goods and/or services. It involves the responsibility of ensuring that business operations are efficient in terms of using as little resources as needed, and effective in terms of meeting customer requirements. It is concerned with managing the process that converts inputs (in the forms of materials, labor, and energy) into outputs (in the form of goods and/or services). The relationship of operations management to senior management in commercial contexts can be compared to the relationship of line officers to the highest-level senior officers in military science. The highest-level officers shape the strategy and revise it over time, while the line officers make tactical decisions in support of carrying out the strategy 3
- 4. OM - Critical Decisions 1. Managing quality 2. Design of goods and services 3. Process and capacity design 4. Layout design 5. Human resources 6. Location strategies 7. Supply-chain management 8. Inventory management 9. Scheduling 10. Maintenance 4
- 5. The Critical Decisions - 1 • Quality management – Who is responsible for quality? – How do we define quality? • Goods and services design – What product or service should we offer? – How should we design these products and services? 5
- 6. The Critical Decisions - 2 • Process and Capacity design – What processes will these products require and in what order? – What equipment and technology is necessary for these processes? 6
- 7. The Critical Decisions - 3 • 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? 7
- 8. The Critical Decisions - 4 • Supply chain management and JIT “Just-in-time” Inventory, Material Requirements Planning – Should we make or buy this item? – Who are our good suppliers and how many should we have? – How much inventory of each item should we have? – When do we re-order? 8
- 9. The Critical Decisions - 5 • Immediate, short term, and project scheduling – Is subcontracting production a good idea? – Are we better off keeping people on the payroll during slowdowns? • Maintenance – Who is responsible for maintenance? • Location – Where should we put the facility – On what criteria should we base this location decision? 9
- 10. Output of most Operations a Mixture of Goods and Services PURE GOODS Tangible CRUDE OIL PRODUCTION Can be stored Production precedes ALUMINIUM SMELTING SPECIALIST MACHINE TOOL consumption Low customer contact MANUFACTURER Can be transported RESTAURANT Quality is evident COMPUTER SYSTEMS SERVICES PSYCHOTHERAPY CLINIC CONSULTANCY MANAGEMENT Intangible Cannot be stored Production and consumption are simultaneous High customer contact Cannot be transported Quality difficult to judge PURE SERVICES 10
- 11. Goods Versus Services Goods Service Can be resold Reselling unusual Can be inventoried Difficult to inventory Some aspects of Quality difficult to quality measurable measure Selling is distinct Selling is part of from production service 11
- 12. Goods Versus Services (Contd...) Goods Service • Product is transportable • Provider, not product is • Site of facility important transportable for cost • Site of facility important • Often easy to automate for customer contact • Revenue generated • Often difficult to primarily from tangible automate product • Revenue generated primarily from intangible service. 12
- 13. The Transformation Model Input Resources Output Services + Products Input Transformed Resources Materials Information Customers Transformation Customers Process Input Transforming Resources Facilities Staff 13
- 14. Economic System Transforms Inputs to Outputs Inputs Process Outputs Economic system Land, Labour, transforms inputs to Goods and Capital, outputs at about an Services Management annual 1% increase in productivity: - capital 1/6 of 1% - labour 1/6 of 1% - management 2/3 of 1% Feedback Loop 14
- 15. Macro and Micro Operations • Micro – An operation or process that can not be split up into smaller operations and processes • Macro – An operation or process that can be split up into smaller operations and processes • All Macro operations are made up of many Micro operations 15
- 16. Internal Customer Concept • To treat internal suppliers and customers as if they were independent external organisations • Each micro-operation should identify its internal customers and internal suppliers 16
- 17. The Four V’s • Volume of demand – How many the organisation makes – Service vs. Mass Production • Variety in operations – The ability to adapt the transformation process to meet needs of the customer – Taxi vs. Train • Variation in demand – Adapting to changing demand • Visibility of transformation – How much of the operations functions are visible to the customer – Some operations have mixed high/low visibility eg Restaurant Front and Kitchen 17
- 18. A Typology of Operations Electricity generator Television plant factory Fast food restaurant Gourmet restaurant Pioneering surgery Low Volume High Routine surgery Taxi service Mass rapid transport Bespoke tailor Off-the-peg suit plant University tutorials University lectures Corporate tax advice High Variety Low Financial audits Department store Jeans shop Electricity utility Bread bakery Financial audits Variation Consultancy advice Emergency service High Low Shopping mall security London underground in Demand Trucking operation Health care Most manufacturing "Cook at your Prepackaged sandwich table" restaurant maker Dentist High Visibility Low Dental technicians Music teacher Distance learning 18