SCM 302 OPERATIONS MANAGEMENT. Operations & Productivity

Transcription

1 SCM 302 OPERATIONS MANAGEMENT Operations & Productivity

2 2 Agenda for Today Welcome! Introductions Syllabus and Class Policies & Procedures Learning Objectives What is operations management? How does operations management relate to other functional areas of business? Distinguish between goods and services and how operations are managed for each. Define production and productivity. Compute single-factor productivity. Compute multifactor productivity What are the critical variables in enhancing productivity?

3 3 Industry Question: Spartan Tomatoes Suppose that you decided to enter the tomato business What is your product? Who are your customers? What key functions should the farm should have? What are your inputs? What is your strategy for how to succeed? What does quality mean to your business? Where will you locate the business? How will you get the product to the customer?

4 4 What is Operations Management? All businesses create a value-added product Pizza, cars, computers, banking services, insurance policies Product is made by transforming inputs into output(s) The final product or service is the output The transformation is value-adding Operations management: managing this transformation Managing input resources, converting to output, delivering the product to customers Input Steel, iron, yarn, meat business Output Software, cars, pizza, clothes Value adding

5 5 Two different businesses Cars Hospitals Input Processes Output

6 6 Three Major Functions of Every Business Marketing: Manages customer demand, generates sales Finance: Manages cash flows, investments, current assets Operations: Manages product supply, people, technology, equipments, materials, and information to produce/deliver goods and services

7 7 Operations in the Value Chain Support Functions Finance / Accounting Human Resources Research & Development, Information Systems Obtain Inputs Transform End Product Deliver Product Sell Product Generate Demand Operations Sales and Marketing Derived from Porter s Value Chain

8 Where are Finance, Marketing and Operations? 8

9 Examples of Operations and Marketing Interactions 9 Needs to deliver new products/processes Identifies market for new products Operations Marketing Identifies opportunity to deliver product better than competitors Needs to determine if customers will pay more for the product GM is betting that high fuel prices and eco concerns will create demand for an electric car.

10 Examples of Operations and Corporate Finance Interactions Needs to lower operations costs Identifies profitability issue in particular product line 10 Operations Finance Identifies need for new services/equipment Needs to determine best way to finance these needs GM was planning to invest $370 million in a plant to build engines for Volt and Cruze

11 11 The Supply Chain A global network of organizations and activities that supply a firm with goods and services Members of the supply chain collaborate to achieve high levels of customer satisfaction, efficiency and competitive advantage. Figure 1.2 Farmer Syrup Bottler Distributor Retailer producer

12 12 Manufacturing vs. Service Manufacturing Service Products that are principally useful physical objects Products can be touched, seen and stored for future customer demand. Low degree of customer contact See TABLE 1.3 Products that are not tangible objects Products are instead useful activities, or pieces of information, or experiences High degree of customer contact

13 13 Service? Manufacturing? Advertising Pharmaceutical Colleges Apparel Airlines Personal computer Furniture Banks Hospital Hair Salon

14 Percent of Workforce SCM Operations & Productivity 14 Manufacturing vs. Services Figure (est.) Agriculture Services Manufacturing

15 15 What our inputs and outputs? Why do we produce goods and services? Where do we produce goods and services? How do we learn OPERATIONS MANAGEMENT??? Operations Mgmt (Ch. 1) How do we produce goods and services? Process Strategy, Layout, (Ch 7 and Ch 9) Ops. Strategy (Ch. 2) How many goods (services) can we produce? Process Strategy (Ch 7) Capacity Mgmt (Ch S7) Globalization, Location (Ch. 2 & Ch. 8) How much product (or service) is demanded? Forecasting (Ch 4) WE ASK THE RIGHT QUESTIONS! How much to order? When to order? Inventory Mgmt (Ch 12) SOP (Ch 13) MRP (Ch 14) Who are our partners? Who s in our network? Supply Chain Mgmt (Ch 11 & Ch 11s) How do we make the product better? Quality Management (Ch 6 and 6S) How do we make the process better? TPS/JIT/Lean (Ch 16) How do we make a better impact? Sustainability (Ch 5) How do we make the product on schedule? Project Mgmt (Ch 3)

16 16 Back to Spartan Tomatoes You have been in business for a few years now. You are trying to determine whether to invest in the new Tomato Squeezer 3000 to help the farm workers work more efficiently. What factors would you consider before making your decision? After implementation, how would you determine if the Tomato Squeezer 3000 actually led to increased productivity?

17 17 Productivity Measures process improvement Output Produced Productivity = Input Used Multi-factor productivity: combine all inputs using $. Output Produced Productivity = $Labor + $Material + $Capital + $Energy The U.S. economic system transforms inputs to outputs at about an annual 2.5% increase in productivity per year. The productivity increase is the result of a mix of Capital (38% of 2.5%) Labor (10% of 2.5%) Management (52% of 2.5%). What are some problems with measuring productivity?

18 18 Collins Title Productivity Old System New System Staff 4 4 Hours Per Day 8 8 Output per Day 8 14 Payroll $640 $640 Overhead $400 $800 Labor Productivity = 8 Multi-factor Productivity = = 0.25 titles/labor hr = = titles / $ = = titles/labor hr = titles / $

19 19 Ethics, Social Responsibility, Sustainability Challenges facing operations managers: Globalization Rapid product development Mass customization Develop and produce safe, high-quality green products Train, retrain, and motivate employees in a safe workplace Honor stakeholder commitments

20 Key Takeaways: If you remember nothing else Operations Management is about the management of processes that transform inputs to outputs 20 Operations is one of the three major business functions and it interacts heavily with other business functions Manufacturing organizations have tangible products and low degree of customer contact whereas service organizations have intangible products and high degree of customer contact Production measures output. Productivity is a ratio of outputs to inputs one input (single-factor) or more (multi-factor) Labor, capital and management are 3 key variables which contribute to productivity.

21 21 What our inputs and outputs? Why do we produce goods and services? Where do we produce goods and services? How do we learn OPERATIONS MANAGEMENT??? Operations Mgmt (Ch. 1) How do we produce goods and services? Process Strategy, Layout, (Ch 7 and Ch 9) Ops. Strategy (Ch. 2) How many goods (services) can we produce? Process Strategy (Ch 7) Capacity Mgmt (Ch S7) Globalization, Location (Ch. 2 & Ch. 8) How much product (or service) is demanded? Forecasting (Ch 4) WE ASK THE RIGHT QUESTIONS! How much to order? When to order? Inventory Mgmt (Ch 12) SOP (Ch 13) MRP (Ch 14) Who are our partners? Who s in our network? Supply Chain Mgmt (Ch 11 & Ch 11s) How do we make the product better? Quality Management (Ch 6 and 6S) How do we make the process better? TPS/JIT/Lean (Ch 16) How do we make a better impact? Sustainability (Ch 5) How do we make the product on schedule? Project Mgmt (Ch 3)

22 22 APPENDIX

23 23 Organizational Charts

24 24 The Economic System Inputs Transformation Outputs Labor, capital, management The U.S. economic system transforms inputs to outputs at about an annual 2.5% increase in productivity per year. The productivity increase is the result of a mix of capital (38% of 2.5%), labor (10% of 2.5%), and management (52% of 2.5%). Goods and services Feedback loop Figure 1.6