Operations, Competitiveness & Quality & Cost &Flexibility& Speed Respond Roberta Russell

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e The Operations Function Operations as a transformation process Operations as a basic function Operations as the technical core

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Operations As A Transformation Process OUTPUT Material Machines Labor Management Capital Goods or Services INPUT Transformation process Feedback

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Transformation Processes Physical (manufacturing) Locational (transport/storage) Exchange (retail) Physiological(healthcare) Psychological (entertainment) Informational (communications)

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Operations As A Basic Function MARKETING FINANCE OPERATIONS

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Operations As The Technical Core Operations Finance Capital Markets, Stockholders Marketing Customers Workers Suppliers Purchasing Personnel

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Historical Events In Operations Manegement (OM) Industrial Revolution Scientific Management Human Relations Management Science Quality Revolution Information Age Globalization

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Historical Events In POM Industrial Revolution Steam engine1769 James Watt Division of labor1776Adam Smith Interchangeable parts1790Eli Whitney Scientific Management Principles1911Frederick W. Taylor Time / motion study1911Frank & Lillian Gilbreth Activity scheduling chart1912Henry Gant

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Human Relations Hawthorne studies1930Elton Mayo Motivation theories1940sAbraham Maslow 1950sFrederick Hertzberg 1960sDouglas McGregor Management Science Linear programming1947George Dantzig Digital computer1951Remington Rand Simulation, PERT/CPM, 1960Research groups Waiting line theory MRP1960sJoseph Orlicky, IBM

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Quality Revolution JIT1970sTaiichi Ohno, Toyota TQM 1980s W. Edwards Deming, Joseph Juran, et. al. Reengineering1990s Hammer, Champy Information Age EDI, EFT,1970sNumerous CIM 1980s individuals and 1990s companies Internet, World Wide Web1990sTim Berners-Lee

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Globalization Worldwide markets 1990s Numerous individuals and operations and companies Supply chain management Electronic commerce Mass customization

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e TGW (Things Gone Wrong) In First Eight Months Per 100 Cars Chrysler 285 GM256 Ford214 Japanese132 Toyota 55

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Quality Of Semiconductors U.S.Japan Defective on delivery16% 0% Failure after 1000 hrs14% 1%

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Quality Of Room Air Conditioners U.S.Japan Fabrication defects4.4% <0.1% Assembly line defects63.5%0.9% Service calls 10.5%0.6% Warranty cost 2.2%0.6% (% of sales)

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Quality Of Color TVs U.S.Japan Assembly defects Service calls (per set)

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Globalization Take advantage of favorable costs Gain access to foreign markets Reduced trade barriers Changing markets

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Hourly Wage Rates

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Growth in Volume of World Trade

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Impact of Trade Agreements

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Risks In Globalization Weak infrastructure Distinct languages, customs, trade barriers Inefficient distribution channels Instability of governments Poor economic conditions

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Competitiveness The degree to which a nation, can, under demanding and rapidly changing market conditions, produce goods and services that meet the test of international markets while simultaneously maintaining or expanding the real incomes of its citizens.

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Measures Of Competitiveness Gross domestic product (GDP) Import/export ratio Productivity = output / input

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Productivity Increases When Firms Become more efficient Downsize Expand Retrench Achieve breakthroughs

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 2/e Productivity In The ‘90s

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Changes In Input and Output..

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 2/e Competitive Industries Relatively equal in size and resources Standardized products and services Slow or exponential growth

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Measuring Competitiveness Number of major players Average market share Average profit margin

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Barriers To Entry Economies of scale Capital investment Access to supply and distribution channels Learning curves

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Issues & Trends In Operations 1. Intense competition 2. Global markets, global sourcing, and global financing 3. Importance of strategy 4. Product variety and mass customization 5. More services

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Issues & Trends In Operations 6. Emphasis on quality 7. Flexibility 8. Advances in technology 9. Worker involvement 10. Environmental and ethical concerns

Ch ©2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Primary Topics In Operations Management Deploying strategy Assuring quality Designing products & services Planning the production process Laying out the facility

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Primary Topics In Operations Management Designing jobs & work Managing the supply chain Forecasting demand for products & services Production planning & scheduling

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Organization Of Book Strategy of productive systems Designing productive systems Operating Productive systems

Ch ©2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 2/e Strategy Of Productive Systems –1. Introduction to Operations & competitiveness –2. Operations strategy –3. Quality management –4. Statistical quality control

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Designing Productive Systems –5. Product & service design –6. Process planning, analysis and reengineering –7. Facility layout –8. Human resources in operations management –9. Supply chain management

Ch ©2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Operating Productive Systems –10. Forecasting –11. Capacity planning & aggregate production planning –12. Inventory management –13. Materials requirements planning –14. Scheduling –15. Just-in-time systems –16. Waiting line models for service improvement –17. Project management

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Strategy Formulation 1. Define primary task 2. Assess core competency 3. Determine order winners & order qualifiers 4. Position the firm

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Competing On Cost Eliminate all waste Invest in –updated facilities & equipment –streamlining operations –training & development

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Competing On Quality Please the customer –Understand customer attitudes toward and expectations of quality

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Competing On Flexibility Produce wide variety of products Introduce new products Modify existing products quickly Respond to customer needs

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Competing On Speed Fast moves Fast adaptations Tight linkages

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Process-Centered Strategies Processes cut across functional lines and departments Strategy is led by competencies

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Changing Focus from Function to Process

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Exploiting Core Competencies Enhance value a competency provides to customers Transform internal competence into salable item Apply competencies to new products & services Create new ways of working & finding markets

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 2/e Policy Deployment Focuses employees on common goals & priorities Translates strategy into measurable objectives Aligns day-to-day decisions with strategic plan

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 2/e Strategic Planning Mission & Vision Business Strategy Marketing Strategy Operations Strategy Financial Strategy Voice of the Business Voice of the Customer

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Derivation of an Action Plan

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Operations Role In Corporate Strategy Provide support for overall strategy of a firm Serve as firm’s distinctive competence Must be consistent Must be consistent with overall strategy

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Operations Strategy Products Processes and Technology Capacity Human Resources Quality FacilitiesSourcing Services Operating Systems

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Products & Services Make-to-order –made to customer specifications after order received Make-to-stock –made in anticipation of demand Assemble-to-order –add options according to customer specification

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Processes & Technology Project –one-time production of product to customer order Batch production –process many jobs at same time in batch Mass production –produce large volumes of standard product for mass market Continuous processes –very high volume commodity product

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Product-Process Matrix Volume Low High Projects Batch production Mass production Continuous production Standardization

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Product-Process Matrix Labor Intensity Low High Professional Service Shop Mass Service Factory Customization

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Capacity & Facilities How much capacity to provide Size of capacity changes Handling excess demand Hiring/firing workers Need for new facilities

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Facilities Best size for facility? Large or small facilities Facility focus Facility location Global facility

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Human Resources Skill levels required Degree of autonomy Policies Profit sharing Individual or team work Supervision methods Levels of management Training

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Quality Target level Measurement Employee involvement Training Systems needed to ensure quality Maintaining quality awareness Evaluating quality efforts Determining customer perceptions

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Sourcing Degree of vertical integration Supplier selection Supplier relationship Supplier quality Supplier cooperation

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Operating Systems Execute strategy daily Information technology support Effective planning & control systems Alignment of inventory levels, scheduling priorities, & reward systems

Ch © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Purpose Of Text Gain an appreciation of the strategic importance of operations and how operations can provide a competitive advantage in the marketplace Understand the relationship between operations and other business functions Develop a working knowledge of the concepts and methods related to designing and managing operations