1 Design for Six-Sigma in the School of Computing, Engineering and Physical Sciences Operational management functions by Dr J. Whitty

2 Lessons structure The lessons will in general be subdivided in to eight number of parts, viz.: 1)Statement of learning objectives 2)Points of orders 3)Introductory material (Functionality) 4)Concept introduction (Operational functionality) 5)Development of related principles (Business activates) 6)Concrete principle examples via – reinforcement examination type exercises 7)Summary and feedback 8)Formative assessment, via homework task

3 Learning objectives Define & label the product life cycle Classify products within the product life cycle Describe the three types of business activities Classify products into these business activities Answer Examination/Assignment type questions involving product lives and business sectors. By the end of the session, are you able to:

4 Draw a graph of the product life cycle and plot the Following critical points; [5] (D) Decline, (G) Growth, (I) Introduction, (M) Maturity and (S) Saturation. Sales time Explain saturation for the product life cycle [2] [Manufacturing systems technology Examination: Tameside College Feb 2003] Point of order…

5 Management functionality As the company get bigger different departments need to be created to assume responsibility of certain cluster of processes. Often departments are organised around functional areas. Each function is specialised and requires own knowledge and set of skills, primary responsibilities, processes and decision domains. Regardless of how functions are separated they must remain interrelated (and many processes cut across boundaries). Coordination and effective communication are critical andare required to achieve the company’s goals.

6 Functionality of scale In large companies OM is usually responsible for transforming inputs into products and services. Accounting – collects, summarises and interprets financial information. Distribution - deals with movement, storage and handling of inputs and outputs. Engineering - develops products and services. Human resources - hires and trains people Marketing - generates demand for the company’s outputs.

7 Small operational scale... Some companies never need to perform certain functions, others save money by subcontracting out e.g. legal services or engineering. In other companies such as small business owners might manage more than one function. OM managers draw on many skills to do their job. It is good career path to move o the ladder in many companies.

8 Operations function management The analogous here is the old form or function when designing a specific product or service. This will be covered in a later lecture show it is worth pausing to discuss this a little further here...

9 Skill areas From an OM viewpoint functionality is usually described in terms of skill-sets, thus:

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11 Types of industrial sectors Primary Industry – extractive industry – extracting raw materials e.g. coal, fish Secondary Industry – manufactured and construction industries – processing raw materials into finished goods Tertiary Industry – providing a direct commercial service Direct service – offered direct to the public e.g. hairdressing, police service Commercial service – offered to other businesses e.g. recruitment service Some services can be both direct and commercial. Within the UK there is a high proportion of business in the tertiary sector than the primary and especially the secondary sector.

12 Deindustrialisation Deindustrialisation in terms of the sectors we have just discussed.Using the internet if required try to find a meaning to of the word Deindustrialisation in terms of the sectors we have just discussed.

13 Deindustrialisation A long term reduction in the manufacturing sector. Why is this? Less Government support given to manufacturing Increase in imported products Importance of leisure time – services increase Increase in small businesses – service sector popular for business start ups

14 The chain of production – the process of goods from primary industry through secondary and tertiary industry until the end product reaches the final consumer. Factors of production – the resources needed for the production of goods and services. They include: Land – natural resources I.e. from the earth or ocean e.g. wood, fish Labour – mental and physical effort e.g. employees Capital – money available to invest in the plant and machinery Enterprise – the business idea – brings the other factors of production together. All of these resources are sold to be scarce thus businesses have to decide how to make best use of these resources. There is always an opportunity cost to the decision made. Opportunity cost – the alternative that is scarified when a particular decision is made. For example if you have £25 to spend and you have a choice of a shirt or jumper. If you buy the jumper the opportunity cost is the shirt.

15 Types of Economy Deindustrialisation coupled with the activates of a business just outlined enable generally THREE types of economy to be set up; in your Buzz groups try to decide what these are.Deindustrialisation coupled with the activates of a business just outlined enable generally THREE types of economy to be set up; in your Buzz groups try to decide what these are.

16 Types of Economy All countries operate in an economic system. There are 3 economic systems: Market Economy An economy where there is NO Government intervention. Goods and services are provided in response to demand. Price is decided by supply and demand. The profit motives is very important to businesses. The problem can be that certain products and services may not be provided if they do not generate a profit. No real example, USA is the nearest Planned / Command Economy An economy where all decisions are government. They decide what to produce, how to produce it and in what quantities. All businesses are owned by the government. There can be a shortage of luxury products and services. E.g. Cuba Mixed Economy An economy where there is government (public) and private organisations operating together. Most economies are mixed economies but the production of that mix does vary. E.g. UK, France, Germany e.t.c.

17 Private and Public Sector Within the UK organisations can operate in the public and / or private sector. That is why we have a mixed economy. Private sectorPublic sector Sole traderNationalised industries partnershipCentral Government Limited companies – Plc and Ltd Local Government Franchises Co-operatives All of these organisations operate in a market.

18 Market Where buyers and sellers come together to exchange goods and services for a price. Types of market – these buy and sell the following: Consumer durable – long lasting goods e.g. washing machines Consumer non durable – goods consumed quickly e.g. food, clothes Industrial – goods and services to other businesses Labour – the use of people skills Capital - money

19 Class discussion time: Manufacturing and services The differences between manufacturing and service operations fall into seven categories, these being: 1. Physical nature 2. Inventories 3. Customer contact 4. Response time 5. Location 6. Size 7.Quality In your buzz groups discuss these and indentify any similarities that may exist between these types of business activities also.

20 Continuum of characteristics Physical, durable product Output that can be inventoried Low customer contact Long response time Regional, national, or international markets Large facilities Capital intensive Quality easily measured Intangible, perishable product Output that cannot be inventoried High customer contact Short response time Local markets Small facilities Labour intensive Quality not easily measured

21 Examination Type Questions The stages in producing and distributing the educational Books may be as follows: Timber felling Paper making Printing company Warehouse BookshopsSchools (5) 1. Carlton Press Ltd is a small publishing company specialising in educational books. Draw a diagram showing the typical stages of production and distribution of one of its books.

22 (b) There are three kinds of business activity involved in the production and distribution of the books – primary, secondary and tertiary. Describe each kind of business activity and give an example. Kind of business activityDescriptionExample Primary Secondary Tertiary (9) [Bolton Institute June 2000]

23 Summary and feedback Define & label the product life cycle Classify products within the product life cycle Describe the three types of business activities Classify products into these business activities Answer Examination/Assignment type questions involving product lives and business sectors. Have we met the following learning objectives? By which slide did you achieve each on?

24 Further Examination Type Questions 1.The table below shows the values of output and levels of employment for the secondary and tertiary sector in town of Woolford during the period 1988 to YearOutput £mSecondary sector employment Tertiary sector employment Total employment ,

25 (i)How many people were employed in the secondary sector in 1988? (1) (ii)What was the total number of people employed in the town of Woolford in 1989? Show your working. (2) (iii)During the period 1990 to 1992 what happened to: The value of output? (2) The total level of employment? (2) (iv)Using the figure in the table, describe what happened between 1990 and 1994 to each of the following: Employment in the secondary sector: (2) Employment in the tertiary sector: (2)

26 (b)Suzanne Hart had worked for Tastybread Bakeries ltd. In Woolford for eight years. She worked as a baker and later moved into the marketing department where she worked for three years before being made redundant. (i)What is meant by ‘being made redundant’? (2) (ii)Give TWO reasons why Suzanne may have been made redundant. (2) (c)After being unemployed for some time, Suzanne decided to start her own bakery, ‘Aunt Sue’s’, selling braed and confectionery from a small shop. (i) How might her experience with Tastybread Bakeries Ltd. Help her to start the new bakery? (4)

27 2. Give one example of a business activity in each of the following sectors. (3) SectorExample Primary Secondary Tertiary Another Examination Type Question

28 Value of Output by Sector Economy of Bowton Output (£m at 1968 prices) (b)The graph below shows the values of output by sector in 1968 and 1998 in the economy of the town of Bowton.

29 (i)Describe the main changes that have taken place. (4) (ii)What are the reasons for the changes in the tertiary sector? (4) (c)The table below shows the levels of employment by sector, in 1968 and 1998, in the economy of the town of Bowton. Working Population – by sector Economy of Bowton Primary sector Secondary sector Tertiary sector

30 (i)Describe the main changes in the levels of employment by sector that have taken place between 1968 and (4) (ii)Explain, why the changes in employment in the secondary sector may have occurred. (4) (iii)Are the changes in employment that have taken place a problem for the people of Bowton? Give reasons for your answer. (8)