Managing operations
- 2. Team Introduction • Hassan Liaqat • Sarfraz Nasir • Umair Anjum
- 3. What is Management Operations? Productivity & Efficiency Mass Customization Traditional Production System Quality Management Managing Inventory Product Development and Commercialization
- 4. Operations management refers to the administration of business practices to create the highest level of efficiency possible within an organization. It is concerned with converting materials and labor into goods and services as efficiently as possible to maximize the profit of an organization.
- 5. Efficient and effective operations ensures: › Competitiveness › Overall organizational performance › Maintains quality › Maintains productivity
- 6. Productivity & Efficiency Productivity can be defined as the output produced by a given input: Productivity = Output/Input • The Productivity of Labor : It is typically measured by unit output divided by some measure of labor input, such as hours worked or number of employees. • The Productivity of Capital : It is usually measured by sales divided by the total capital invested in a business. • The Production system : In an organization, it refers to how the flow of work is configured. Production can be configured in a number of different ways, depending on the nature of the product, consumer requirements, and available production technologies.
- 7. By level of productivity we mean the units of analysis used to calculate or define productivity. For example -aggregate productivity: productivity achieved by a country. -industry productivity: productivity achieved by all the firms in a particular industry -Company productivity: productivity achieved by an individual company
- 8. It determines the organization’s level of profitability. It determines people’s standard of living within a particular country. Who has one of the highest level of productivity in the world? › The U.S.
- 10. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 18–10 Mass Customization › Is a design-to-order concept that provides consumers with a product when, where, and how they want it. › Makes heavy use of technology (flexible manufacturing techniques) and engages in a continual dialogue with customers. Benefits of Mass Customization › Creates an important relationship between the firm and the customer in providing loyalty-building value to the customer and in garnering valuable market information for the firm.
- 11. Traditional Production System Traditional production systems have been categorized into one of four main categories: Job Shop These systems are used when items are ordered individually and tend to be unique to the Production systems used requirements of a particular customer. Small Batch These production systems are used when customers order in small batches. Assembly-Line Production These systems are used to mass-produce large volumes of a standardized product. Continuous Flow Production Systems These systems continuously produce a standardized output that flows out of the system.
- 12. Optimizing Work Flow It is a way to reduce the cost of functioning without compromising product quality. Companies try to innovate to gain competitive edge over their rivals. Example NASA Vs. ISRO Asset Utilization Assets can be anything for a company. Tracks, Building, Equipment etc. Managing them in such a way to get their total utilization is called asset utilization. Example NASA Vs. ISRO again Dad with 2 Sons.
- 13. Quality Management • A quality management is a method of management to provide products , services or processes with characteristics in accordance to the standards and expectations of the clients . • Quality and productivity have become major determinants of business success or failure today. • achieving higher levels of quality is not an easy accomplishment. • What is needed for TQM?
- 14. • Competition Quality has become one of the most competitive points in business today • Productivity Managers have also come to recognize that quality and productivity are related • Costs Improved quality also lowers costs. Poor quality results in higher returns from customers
- 16. Inventory is the raw materials, component parts, work-in-process, or finished products that are held at a location in the supply chain. Costs of Inventory 1.Inventory Holding Costs 2. Component Devaluation cost 3. Price Reduction Cost 4. Return Cost 5. Obsolescence Cost 6. Stockout Cost Inventory turnover : Measured by number of days it takes to totally replace inventory. Examples : Walmart, Dell etc. Managing Inventory
- 17. Economic Order Quantity & Setup Time Economic order quantity It is the order quantity that minimizes total inventory holding costs and ordering costs. It is one of the oldest classical production scheduling models. The framework used to determine this order quantity is also known as Wilson EOQ Model or Wilson Formula. EOQ = SQRT(2 × Quantity × Cost Per Order / Carrying Cost Per Order) Setup Time The existence of a setup time enforces a constraint of time between the replenishments i.e. to ensure that there is time to make the setup and complete production before replenishment cycle expires.
- 18. Just In Time Inventory Pull (demand) driven inventory system in which materials, parts, sub-assemblies, and support items are delivered just when needed and neither sooner nor later. Its objective is to eliminate product inventories from the supply chain. As much a managerial philosophy as an inventory system, JIT encompasses all activities required to make a final product from design engineering onwards to the last manufacturing operation. Examples Fast-Food Restaurants, Computer Manufacturers Build To Order And Inventory Build to order (BTO)is a production approach where products are not built until a confirmed order for products is received. BTO is the oldest style of order fulfilment and is the most appropriate approach used for highly customized or low volume products. EXAMPLES :- Rolls Royce Build to stock, is a build-ahead production approach in which production plans may be based upon sales forecasts and/or historical demand.
- 19. Supply Chain Management and Information System Supply chain management (SCM) is the management of the flow of goods. It includes the movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption.
- 20. Product Development and Commercialization Commercialization the process of launching a new product; it may involve heavy promotion and filling the distribution networks with the product. Example Mahindra cars launched refined Scorpio 2014 with more aggressive look and efficient to maintain its SUV market. Design For Manufacturing The general engineering art of designing products in such a way that they are easy to manufacture. Example Toyota works on handles mounted on doors of cars to reduce number of parts from 34 to 5, which cuts costs by 40 percent and reduced installation time from 12 seconds to 3 seconds.
- 21. In Conclusion As we have seen, managing operations is a central task of an organization. The skilled and effective management of operations can increase productivity and lower costs, enabling a firm to outperform rivals and reach the efficiency frontier in its industry. The competitive advantage of many enterprises is based on their superior operating capabilities—their ability to achieve operating excellence—which in turn is the result of hard work by managers at the operating level.