PRODUCTION PLANNING AND CONTROL ( ) Dr. Akram AlSukker

Transcription

1 PRODUCTION PLANNING AND CONTROL ( ) Dr. Akram AlSukker

2 TEXT BOOKS Operations Management: Processes and supply chains. Krajewski, L., Ritzman, L. and Malhotra, M., Pearson Prentice Hall, 10th Edition, 2012

3 OPERATIONS MANAGEMENT? The systematic design, direction, and control of processes that transform inputs into services and products for internal, as well as external, customers Inputs products/services internal/external customers SUPPLY CHAIN MANAGEMENT? The synchronization of a firm s processes with those of its suppliers and customers to match the flow of materials, services, and information with customer demand.

4 ROLE OF OPERATIONS IN THE ORGANIZATION Integration between Different Functional Areas of a Business

5 Process: Any activity or group of activities that takes one or more inputs, transforms them, and provides one or more outputs for its customers. A PROCESS VIEW

6 SERVICE &MANUFACTURING PROCESSES More like a manufacturing process More like a service process Physical, durable output Output can be inventoried Low customer contact Long response time Capital intensive Quality easily measured Intangible, perishable output Output cannot be inventoried High customer contact Short response time Labor intensive Quality not easily measured Differ Across Nature of Output and Degree of Customer Contact

7 THE SUPPLY CHAIN VIEW Each activity in a process should add value to the preceding activities; waste and unnecessary cost should be eliminated.

8 THE SUPPLY CHAIN VIEW Supplier relationship process A process to select the suppliers of services, materials, and information and facilitate the flow of these into the firm. New service/product development A process to design and develop new services or products from customer or market inputs. Order fulfillment process A process to produce and deliver services or products to the external customer. Customer relationship process A process that identifies, attracts and builds relationships with external customers and facilitates the placement of orders. Support Processes - Processes like Accounting, Human Resources, Engineering, and Information Systems that provides vital resources and inputs to the core processes

9 OPERATIONS VS CORPORATE STRATEGY Specifies the means by which operations implements corporate strategy and helps build a customer-driven firm Corporate strategy provides an overall direction that serves as the framework for carrying out all the organization's functions

10 COMPETITIVE PRIORITIES AND CAPABILITIES Competitive Priorities : The critical dimensions that a process or supply chain must possess to satisfy its internal or external customers, both now and in the future. To be more competitive, and what the market wants Competitive capabilities : The cost, quality, time, and flexibility dimensions that a process or supply chain actually possesses and is able to deliver.

11 PRIORITIES COST Definition Process Considerations Example Low-cost operations Delivering a service or a product at the lowest possible cost Processes must be designed and operated to make them efficient Costco achieves low costs by designing all processes for efficiency

12 PRIORITIES QUALITY Definition Process Considerations Example Top quality Delivering an outstanding service or product May require a high level of customer contact and may require superior product features Rolex known globally for top-quality precision timepieces QUALITY Definition Process Considerations Example Consistent quality Producing services or products that meet design specifications on a consistent basis Processes designed and monitored to reduce errors and prevent defects McDonald s standardizes work methods, staff training processes to achieve consistency.

13 PRIORITIES TIME Definition Process Considerations Example Delivery speed Quickly filling a customer s order Design processes to reduce lead time Dell engineered processes to deliver reliable and inexpensive computers with short lead times On-time delivery Meeting delivery-time promises Development speed Quickly introducing a new service or a product Planning processes to increase percent of customer orders shipped when promised Cross-functional integration and involvement of critical external suppliers United Parcel Service (UPS) uses expertise in logistics and warehousing processes to deliver on-time. Zara known by its ability to bring fashions from the runway to market quickly

14 PRIORITIES FLEXIBILITY Definition Process Considerations Example Variety Handling a wide assortment of services or products efficiently Capable of larger volumes than processes supporting customization Amazon.com uses information technology along with order fulfillment processes to deliver a vast variety of items to customers Volume flexibility Customization Accelerating or decelerating the rate of production of service or products quickly to handle large fluctuations in demand Satisfying the unique needs of each customer by changing service or products designs Processes must be designed for excess capacity Low volume, close customer contact, and easily reconfigured The United States Postal Service (USPS) can have severe demand peak fluctuations. Ritz Carlton Luxury Hotels and Resorts customizes services to individual customers.

15 ORDER WINNERS AND QUALIFIERS Order Winners :The criterion customers use to differentiate the services or products of one firm from those of another. Cost, quality, time, and flexibility after-sale support reputation Order Qualifiers: The minimum level required from a set of criteria for a firm to do business in a particular market segment. will only position the firm to compete in the market (competitive success?)

16 Relationship of Order Qualifiers to Competitive Priorities

17 Matching capabilities to priorities OPERATIONS STRATEGY ASSESSMENT OF THE BILLING AND PAYMENT PROCESS Competitive Priority Measure Capability Gap Action Low-cost operations Cost per billing statement $ Target is $0.06 Eliminate microfilming and storage of billing statements Weekly postage $17,000 Target is $14,000 Develop Web-base process for posting bills Consistent quality Percent errors in bill information 0.90% Acceptable No action Delivery speed Percent errors in posting payments Lead time to process merchant payments 0.74% Acceptable No action 48 hours Acceptable No action Volume flexibility Utilization 98% Too high to support rapid increase in volumes Acquire temporary employees Improve work methods

18 PRODUCTIVITY Productivity: measure of performance The value of outputs (services and products) produced divided by the values of input resources (wages, costs of equipment, etc.) Productivity = Output Input

19 Example

20 Example

21 Application 1.1

22 Trends in Operations Management Global Competition Advantages: Increased market penetration balance cash flows from other regions of the world when economic conditions are less robust in the home country locating production facilities in foreign countries to give a local presence Comparative cost advantages China and India: low cost but skilled Disadvantages: Political risks take over a firm s assets without paying compensation Lower skilled workers Vulnerability to supply chain disruptions Japanese Earthquake in March 2011

23 Trends in Operations Management Ethical, Workforce Diversity, and Environmental Issues Ethical decision-making in different countries conflicts of interest, bribery, discrimination against minorities Environmental concerns Toxic waste, poisoned drinking water, poor air quality

24 Problem 1 Student tuition at XYZ University is $150 per semester credit hour. The state supplements school revenue by $100 per semester credit hour. Average class size for a typical 3-credit course is 50 students. Labor costs are $4,000 per class, material costs are $20 per student per class, and overhead costs are $25,000 per class. a. What is the multifactor productivity ratio for this course process? a. If instructors work an average of 14 hours per week for 16 weeks for each 3-credit class of 50 students, what is the labor productivity ratio?

25 Multifactor productivity? A: 2.25 B:1.44 C: 1.25 Multifactor productivity = Value of output Labor cost + Materials cost + Overhead cost

26 Problem 1

27 Problem 1

28 Problem 2 Natalie Attire makes fashionable garments. During a particular week employees worked 360 hours to produce a batch of 132 garments, of which 52 were seconds (meaning that they were flawed). Seconds are sold for $90 each at Attire s Factory Outlet Store. The remaining 80 garments are sold to retail distribution at $200 each. What is the labor productivity ratio of this manufacturing process?

29 Labor productivity? A: $33.00 in sales per hour B:$57.44 in sales per hour C:$73.33 in sales per hour Labor productivity = Policies processed Employee hours

30 Problem 2