Managing Operations ; Management Global Ed

Editor's Notes

• #1: If this PowerPoint presentation contains mathematical equations, you may need to check that your computer has the following installed: 1) MathType Plugin 2) Math Player (free versions available) 3) NVDA Reader (free versions available)
• #2: What is operations management? The term refers to the transformation process that converts resources into finished goods and services.
• #3: Exhibit MO-1 portrays the transformation process that converts resources into finished goods and services in a simplified fashion. The system takes in inputs—people, technology, capital, equipment, materials, and information—and transforms them through various processes, procedures, work activities, and so forth into finished goods and services. Long Description: It shows the Operations system as a “Transformation process” during which “Inputs” are converted to “Outputs.” The “Inputs” include: People Technology Capital Equipment Materials Information
• #4: Every organization produces something. Unfortunately, this fact is often overlooked except in obvious cases such as in the manufacturing of cars, cell phones, or lawnmowers. After all, manufacturing organizations produce physical goods. It’s easy to see the operations management (transformation) process at work in these types of organizations because raw materials are turned into recognizable physical products. But the transformation process isn’t as readily evident in service organizations that produce nonphysical outputs in the form of services. For instance, hospitals provide medical and health-care services that help people manage their personal health, airlines provide transportation services that move people from one location to another, a cruise line provides a vacation and entertainment service, military forces provide defense capabilities, and the list goes on. These service organizations also transform inputs into outputs, although the transformation process isn’t as easily recognizable as that in manufacturing organizations.
• #5: Productivity is a composite of people and operations variables. To improve productivity, managers must focus on both. The late W. Edwards Deming, a renowned quality expert, believed that managers, not workers, were the primary source of increased productivity. Some of his suggestions for managers included planning for the long-term future, never being complacent about product quality, understanding whether problems were confined to particular parts of the production process or stemmed from the overall process itself, training workers for the job they’re being asked to perform, raising the quality of line supervisors, requiring workers to do quality work, and so forth.
• #6: The strategic role that operations management plays in successful organizational performance can be seen clearly as more organizations move toward managing their operations from a value chain perspective, which we’re going to discuss next.
• #7: Value is defined as the performance characteristics, features, and attributes and any other aspects of goods and services for which customers are willing to give up resources (usually money). The value chain is the entire series of organizational work activities that add value at each step from raw materials to finished product. In its entirety, the value chain can encompass the supplier’s suppliers to the customer’s customer.
• #8: Value chain management is the process of managing the sequence of activities and information along the entire value chain. In contrast to supply chain management, which is internally oriented and focuses on efficient flow of incoming materials (resources) to the organization, value chain management is externally oriented and focuses on both incoming materials and outgoing products and services.
• #9: In value chain management, ultimately customers are the ones with power. They’re the ones who define what value is and how it’s created and provided. Using value chain management, managers hope to find that unique combination that offers customers solutions to truly meet their unique needs incredibly fast and at a price that can’t be matched by competitors. A good value chain involves a sequence of participants working together as a team, each adding some component of value—such as faster assembly, more accurate information, better customer response and service, and so forth—to the overall process.
• #12: Exhibit MO.2 shows the six main requirements of a successful value chain strategy. Long Description: The six requirements are: Coordination and Collaboration Technology Investment Organizational Processes Leadership Employees Organizational Culture and Attitudes
• #13: Value chain management radically changes organizational processes—that is, the ways that organizational work is done. When managers decide to manage operations using value chain management, old processes are no longer appropriate. There are numerous impacts on the firm and several areas that need to be flexible in order to implement a successful value chain management program.
• #14: Technology is making extensive collaboration possible. Technology is also allowing organizations to control costs, particularly in the areas of predictive maintenance, remote diagnostics, and utility cost savings. Managers who understand the power of technology to contribute to more effective and efficient performance know that managing operations is more than the traditional view of simply producing the product. Instead, the emphasis is on working together with all the organization’s business functions to find solutions to customers’ business problems. Even service providers understand the power of technology for these tasks.
• #15: Robots will be taking on parts of jobs that humans have been doing. They’ll be augmenting humans to make job performance more effective and efficient. For instance, surgeons will be using robots to perform complex surgical procedures with more precision, flexibility, and control. Surgeons’ jobs won’t be going away. They’ll just be able to do their jobs better.
• #16: How is quality achieved? That’s an issue managers must address. A good way to look at quality initiatives is with the management functions—planning, organizing, leading, and controlling—that need to take place. Managers must have quality improvement goals and strategies and plans to achieve those goals. Goals can help focus everyone’s attention toward some objective quality standard. Because quality improvement initiatives are carried out by organizational employees, it’s important for managers to look at how they can best organize and lead them. Quality improvement initiatives aren’t possible without having some way to monitor and evaluate their progress. Whether it involves standards for inventory control, defect rate, raw materials procurement, or other operations management areas, controlling for quality is important.
• #17: ISO 9001 is a series of international quality management standards established by the International Organization for Standardization (www.iso.org), which set uniform guidelines for processes to ensure that products conform to customer requirements. These standards cover everything from contract review to product design to product delivery. The ISO 9001 standards have become the internationally recognized standard for evaluating and comparing companies in the global marketplace. In fact, this type of certification can be a prerequisite for doing business globally. Achieving ISO 9001 certification provides proof that a quality operations system is in place. Very simply, Six Sigma is a quality program designed to reduce defects to help lower costs, save time, and improve customer satisfaction. It’s based on the statistical standard that establishes a goal of no more than 3.4 defects per million units or procedures. What does the name mean? Sigma is the Greek letter that statisticians use to define a standard deviation from a bell curve. The higher the sigma, the fewer the deviations from the norm—that is, the fewer the defects. At One Sigma, two-thirds of whatever is being measured falls within the curve. Two Sigma covers about 95 percent. At Six Sigma, you’re about as close to defect-free as you can get.
• #18: The term mass customization seems an oxymoron. However, the design-to-order concept is becoming an important operations management issue for today’s managers. Mass customization provides consumers with a product when, where, and how they want it. An intense focus on customers is also important to a lean organization, which is an organization that understands what customers want, identifies customer value by analyzing all activities required to produce products, and then optimizes the entire process from the customer’s perspective.