Lecture 3 MBF2213 Operations Management Prepared by Dr Khairul Anuar. L3: Operations Performance

Transcription

1 Lecture 3 MBF2213 Operations Management Prepared by Dr Khairul Anuar L3: Operations Performance 1

2 Slack et al. s model of operations management Operation s performance Operations strategy Operations strategy Design Operations management Improvement Planning and control 2

3 Key operations questions Operations performance Slack et al. identify the following key questions: Why is operations performance important in any organization? How does the operations function incorporate all stakeholders objectives? What does top management expect from the operations function? What are the performance objectives of operations and what are the internal and external benefits which derive from excelling in each of them? How do operations performance objectives trade off against each other? 3

4 Operations management can make or break any organization 4

5 Stakeholder groups with a legitimate interest in the operation s activities Lobby / interest groups Shareholders Society Directors / top management Suppliers Staff Staff representative bodies Customers Government Regulatory bodies 5

6 Operations and process management contribution to strategy Capabilities for future innovation Lower costs Process efficiency Opportunities for process learning Operations and processes excellence Enhanced service Secure revenue Reduced errors, better resilience Lower operational risk Higher capacity utilization Lower capital requirements 6

7 The five competitive objectives Quality Being RIGHT Speed Being FAST Dependability Being ON TIME Flexibility Cost Being ABLE TO CHANGE Being PRODUCTIVE 7

8 The benefits of excelling at the five objectives Minimum price, highest value Quick delivery Error-free products and services Speed Quality Fast throughput Minimum cost, maximum value Error-free processes Cost Internal benefits Ability to change Reliable operation External benefits Dependability Flexibility Dependable delivery Frequent new products, maximum choice 8

9 What does Quality mean in a hospital? Patients receive the most appropriate treatment. Treatment is carried out in the correct manner. Patients are consulted and kept informed. Staff are courteous, friendly and helpful. 9

10 What does Quality mean in (Continued) an automobile plant? All assembly is to specification. Product is reliable. All parts are made to specification. The product is attractive and blemish-free. 10

11 What does Quality mean in (Continued) a bus company? The buses are clean and tidy. The buses are quiet and fume-free. The timetable is accurate and user-friendly. Staff are courteous, friendly and helpful. 11

12 What does Quality mean in (Continued) a supermarket? The store is clean and tidy. Décor is appropriate and attractive. Goods are in good condition. Staff are courteous, friendly and helpful. 12

13 Two common meanings of Quality Quality as the specification of a product or service e.g. Lower Hurst Farm produces organic meat raised exclusively on its own farm. Quality as the conformance with which the product or service is produced e.g. Quick service restaurants like McDonalds may buy less expensive meat, but its conformance must be high. 13

14 External and internal benefits of conformance quality Irrespective of a product or service s specification quality, producing it in a way that it conforms to its specification consistently brings benefits to any operation Externally it enhances the product or service in the market, or at least avoids customer complaints. Internally it brings other benefits to the operation. It prevents errors slowing down throughput speed. It prevents errors causing internal unreliability and low dependability. It prevents errors causing wasted time and effort, therefore saving cost. 14

15 External and internal benefits of conformance quality (Continued) Cost Speed Internal benefits Dependability Quality Flexibility On-specification products and services External benefits 15

16 What does Speed mean in a hospital? The time between requiring treatment and receiving treatment is kept to a minimum. The time for test results, X-rays, etc. to be returned is kept to a minimum. 16

17 What does Speed mean in (Continued) an automobile plant? Time between dealers requesting a vehicle of a particular specification and receiving it is minimized. Time to deliver spares to service centres is minimized. 17

18 What does Speed mean in (Continued) a bus company? The time between customer setting out on the journey and reaching his or her destination is kept to a minimum. 18

19 What does Speed mean in (Continued) a supermarket? The time for the total transaction of going to the supermarket, making the purchases and returning is minimized. The immediate availability of goods. 19

20 External and internal benefits of speed Speed again has different interpretations externally and internally Externally it means the elapsed time between a customer asking for a product or service and getting it (in a satisfactory condition). It often enhances the value of the product or service to customers. Internally it brings other benefits to the operation. It helps to overcome internal problems by maintaining dependability. It reduces the need to manage transformed resources as they pass through the operation, therefore saving cost. 20

21 External and internal benefits of speed (Continued) Quick delivery Speed Cost Dependability Internal benefits Quality Flexibility External benefits 21

22 What does Dependability mean in (Continued) a hospital? Proportion of appointments that are cancelled is kept to a minimum. Keeping appointment times. Test results, X-rays, etc. are returned as promised. 22

23 What does Dependability mean in (Continued) an automobile plant? On-time delivery of vehicles to dealers. On-time delivery of spares to service centres. 23

24 What does Dependability mean in (Continued) a bus company? Keeping to the published timetable at all points on the route. Constant availability of seats for passengers. 24

25 What does Dependability mean in (Continued) a supermarket? Predictable opening hours Proportion of goods out of stock kept to a minimum Keeping to reasonable queuing times Constant availability of parking. 25

26 External and internal benefits of Dependability Externally it enhances the product or service in the market, or at least avoids customer complaints. Internally it brings other benefits to the operation. It prevents late delivery slowing down throughput speed. It prevents lateness causing disruption and wasted time and effort, thereby saving cost. 26

27 External and internal benefits of Dependability (Continued) Cost Dependable delivery Speed Dependability Internal benefits Quality Flexibility External benefits 27

28 Flexibility has several distinct meanings but is always associated with an operation s ability it change Change what? Flexibility What does it mean? The products and services it brings to the market Product/service flexibility The mix of products and services it produces at any one time Mix flexibility The volume of products and services it produces Volume flexibility The delivery time of its products and services Delivery flexibility 28

29 What does flexibility mean in. a hospital? Introducing new treatments A wide range of treatments The ability to adjust the number of patients treated The ability to reschedule appointments. 29

30 What does flexibility mean in (Continued) an automobile plant? The introduction of new models A wide range of options The ability to adjust the number of vehicles manufactured The ability to reschedule manufacturing priorities. 30

31 What does flexibility mean in (Continued) a bus company? The introduction of new routes and excursions A large number of locations served The ability to adjust the frequency of services The ability to reschedule trips. 31

32 What does flexibility mean in (Continued) a supermarket? The introduction of new goods A wide range of goods stocked The ability to adjust the number of customers served The ability to get out-of-stock items. 32

33 External and internal benefits External and internal benefits of flexibility Short delivery lead-time Speed Cost Dependability Reliable delivery On-specification products and services Quality Flexibility Frequent new products/services Wide range Volume and delivery changes 33

34 External and internal benefits of flexibility (Continued) Cost Speed Dependability Quality Internal benefits External benefits Flexibility Frequent new products/services Wide range Volume and delivery changes 34

35 What does Cost mean in a hospital? Bought-in materials and services 35

36 What does Cost mean in (Continued) an automobile plant? Bought-in materials and services 36

37 What does Cost mean in (Continued) a bus company? Bought-in materials and services Technology and facilities costs Staff costs 37

38 What does Cost mean in (Continued) a supermarket? Bought-in materials and services Technology and facilities costs Staff costs 38

39 Cost The cost of producing products and services is obviously influenced by many factors such as input costs, but two important sets are The 4 V s volume variety variation visibility The internal performance of the operation at quality speed dependability flexibility 39

40 External and internal benefits of performance objectives Low price, high margin, or both Short delivery lead-time Cost Reliable delivery Speed Dependability Quality Internal benefits Flexibility External benefits On-specification products and services Frequent new products/services Wide range Volume and delivery changes 40

41 Polar diagrams Polar diagrams are used to indicate the relative importance of each performance objective to an operation or process. They can also be used to indicate the difference between different products and services produced by an operation or process. Cost Speed Dependability Quality Flexibility 41

42 Polar diagrams for a taxi service versus a bus service Taxi service Cost Bus service Speed Dependability Quality Flexibility 42

43 Polar diagrams for a proposed police performance method Required performance Reassurance Actual performance Efficiency Crime reduction Working with Criminal justice agencies Crime detection 43

44 Polar diagrams for newspaper collection and general recycling services Newspaper collection service Cost General recycling service Speed Dependability Quality Flexibility 44

45 Trade-offs Do you want it good, or do you want it Tuesday? No such thing as a free lunch. You can t have an aircraft which flies at the speed of sound, carries 400 passengers and lands on an aircraft carrier. Operations are just the same. (Skinner) Trade-offs in operations are the way we are willing to sacrifice one performance objective to achieve excellence in another. 45

46 Variety Variety The efficient frontier view of trade-offs A B The efficient frontier A B The new efficient frontier B1 X C X C D D Cost efficiency Cost efficiency 46

47 Variety The efficient frontier view of trade-offs (Continued) Improvement through focus or improvement through overcoming trade-offs Improvement through increasing focus on variety P1 P Improvement through overcoming the tradeoff between variety and cost efficiency Cost efficiency Q Improvement through increasing focus on cost Q1 efficiency 47

48 Variety The efficient frontier view of trade-offs (Continued) Focus strategies can change the trade-off curve from convex to concave Cost efficiency 48