Operations Management GPO 300

Transcription

1 Operations Management GPO 300 October 7, 2013

2 What is OM? (Reminder) Operations (function) : The arrangement of resources that are devoted to the production and delivery of products and services. Operations Management : The activities, decisions and responsibilities of managing (planning, coordinating, and controlling ) the production and delivery of products and services.

3 The activities of Operations Management Planning and controlling the operation: the activity of deciding what the operations resources should be doing, then making sure that they really are doing it. Improving the performance of the operation: to improve the performance of the operations. The social responsibilities of operations management: The general term for these aspects of business responsibility is corporate social responsibility or CSR. It should be of particular interest to operations managers, because their activities can have a direct and significant effect on society and environment.

4 What Operations Managers do? Operations Management has the most diverse organizational function and has many faces. Operations Managers haves different names such as : Vice manager President of operations Director of supply chains Manufacturing Plant manger Quality specialists, etc.

5 Responsibilities of Operations Managers Planning : Capacity Location Products & services Make or buy Layout Projects Scheduling Controlling Inventory Quality Organizing Degree of centralization Subcontracting Staffing Hiring/laying off Use of Overtime Directing Incentive plans Job assignments

6 Exercise The company WIZA achieves a sales revenue of $ for a total cost of production of $ The finance costs attain $ Taxes are fixed at a constant rate of 25%. Admitting that WIZA has 3 options to increase its profit: Marketing option : Increase sales revenue by 50% Finance option : Reduce finance costs by 50% Operations option : Reduce production costs by 20 % Which option provides the most important contribution? Indication : To answer this question, you will need to calculate for each of these three options : The gross margin and the net profit Solution

7 Solution Current situation Marketing Option Increase Sales revenu by 50% Finance Option OM Option Reduce finance costs by 50% Reduce Production costs by 20 % Sales Production cost Gross Margin Finance costs Subtotal Taxes (25%) Contribution

8 Historical Development of OM Many historical milestones have shaped OM. Some of these are the Industrial Revolution, scientific management, the human relations movement, management science, and the computer age. Taylor (1881) Ford (1913) Deming (1950) Adam Smith (1776) Eli Whitney (1800)

9 Historical Development of OM OM is highly important function in today s dynamic business environment. Among the trends with significant impact are just-in-time, TQM, reengineering, flexibility, time-based competition, SCM, global marketplace, and environmental issues

10 Wrap Up Operations management uses resources to appropriately create outputs that fulfill defined market requirements Sce : Slack, Chambers and Johnston, Operations Management 5th Edition

11 Products Vs Services Manufacturing Services Tangible product Product can be inventoried Low customer contact Longer response time Capital intensive Intangibility of products Simultaneity (of production and Consumption). Products cannot be inventoried High customer contact Short response time Labor intensive

12 Products Vs Services The output from most operations is a mixture of products and services Pure products Outputs that are exclusively tangible Pure services Outputs that are exclusively intangible Mixture of products and services Outputs that are a mixture of the tangible and the intangible

13 Labor force by occupation in the worlds (Manufacturing and services) Sce: Safalra (Stephen Morley)

14 Transformation model Inputs Processes Outputs Labor, capital information Transformation process Goods and services Feedback loop

15 Transformation Process OM s function focuses on adding value through the transformation process of converting inputs into outputs. Increase product value at each stage : Value added is the net increase between output product value and input material value Provide an efficient transformation : performing activities well for least possible cost For long-run success, companies must place much importance on their operations

16 Transformation process- Examples MMA

17 OM in Practice Case study Video :Emirates Flight Catering Operations

18 Transforming and transformed resources Transformed resources : Resources that are treated, transformed or converted in the process. Transforming resources : Resources which act upon the transformed resources. 2 types of Transforming resources : Facilities : the buildings, equipment, plant and process technology of the operation; Staff involved in all the levels of the operation : people who operate, maintain, plan and manage the operation.

19 Levels of operations Analysis 1. Supply Chain Supply Chain : Sequential system of suppliers and customers that begins with basic sources of inputs and ends with final customers of the system. Operations and supply chain are interdependent. OM W.J Stevenson / P5

20 Assignment Reading Operations Management, William J. Stevenson, 11 th edition Chapter 1 (Page 4 to 38) Review questions 1. Explain how each of these personalities contributed the evolution of operations management? - Adam Smith - Eli Whitney - Frederick W. Taylor - Taylor s Principles - Henry Ford - W. Edwards Deming 2. What are the similarities between all operations? 3. List five differences between goods production and service operations then list five similarities.