Production Operation Management Dr. Winfred S William Xavier Institute of Management

SESSION-2&3

Goods and services The operation’s competitive role and position INPUT OUTPUT Planning and control ImprovementDesign Operations strategy Input transformed resources Materials Information Customers Facilities Staff Input transforming resources The operation’s strategic objectives Environment A general model of operations management

Volume Variety Variation in demand Customer contact High Low High repeatability Specialization Systemization Capital intensive Low unit costs Flexible Complex Match customer needs High unit cost Changing capacity Anticipation Flexibility In touch with demand High unit cost Short waiting tolerance Satisfaction governed by customer perception Customer contact skills needed Received variety is high High unit cost Time lag between production and consumption Standardized Low contact skills High staff utilization Centralization Low unit costs Stable Routine Predictable High utilization Low unit costs Well defined Routine Standardized Regular Low unit costs Low repetition Each staff member performs more of job Less systemization High unit costs A typology of operations

Low Variety High Flow is intermittent Flow becomes continuous Volume LowHigh Regular flow more feasible Regular flow more important Fixed-position layout Process layout Cell layout Product layout The volume-variety process position of an operation influences its layout and in turn the flow of transformed resources

Fixed position Process Cell Product Use fixed position Use process Use cell Use product (a)(b) Costs Volume Fixed position Process Cell Product Volume Use product Use cell or product Use process or cell or product Use process or cell Use process Use fixed position or process Use fixed position ????

Operations Strategy Example Strategy Process Customer Needs Corporate Strategy Operations Strategy Decisions on Processes and Infrastructure More Product Increase Org. Size Increase Production Capacity Build New Factory

Operations Strategy Framework Customer Needs New : Old product : product Competitive dimensions & reqs. Quality, Dependability, Speed, Flexibility, and Price Operations & Supplier capabilities TechnologyPeopleSystemsR&DCIMJITTQMDistribution Support Platforms Financial management Human resource management Information management Enterprise capabilities

. Differentiation (better) Cost Leadership (cheaper) Quick Response (faster) Quality Product Process Location Layout Human resource Supply chain Inventory Scheduling Maintenance Operations Examples of Specific Competitive Decisions Success Strategy Used Advantage FLEXIBILITY : Sony’s constant innovation of new products…… Design Compaq Computer’s ability to follow the PC market………………………………………………………………Volume Southwest Airlines no-frills service……………..LOW PRICE DELIVERY: Pizza Hut’s five minute guarantee at lunchtime…….Speed Federal Express’s “absolutely, positively on time”…………………………………………..Dependability QUALITY : Motorola automotive products ignition systems…………………………………………………………..Conformation Motorola pagers……………………………………………….Performance IBM after-sale service on main frame computers………………………………………….AFTER-SALE SERVICE Fidelity Security’s broad line of mutual funds………………………………………………..BROAD PRODUCT LINE OPERATION MANAGEMENT’S CONTRIBUTION TO STRATEGY

Introduction OM strategy/IssuesCompany strategy/Issues Internet Color copiers CD-ROM Cellular phones Mutual funds Fax machines Drive-thru restaurants Color monitors Text books 3 ½” Floppy disks 5 ¼” Floppy disks GrowthMaturityDecline Best period to increase market share R&D are critical Practice to change price or quality image Marketing critical Strengthen niche Poor time to increase Market share or change Image, price, or quality Cost control critical Product design and development critical Frequent product and process design changes Overcapacity Short production runs High-skilled labor High production cost Limited number of models Utmost attention to quality Quick elimination of defects in design Forecasting critical Product and process reliability Competitive product improvements and options Increase capacity Shift toward product oriented Enhance distribution Standardization Less rapid product Changes-more minor annual model changes Optimum capacity Increasing stability of Manufacturing process Lower labor skills Long production runs Attention to product Improvement and cost Cutting Reexamination of necessity of design compromises Little product differentiation Cost minimization Overcapacity in the industry Prune line to eliminate Items not returning good Margin Reduce capacity STRATEGY AND ISSUES DURING A PRODUCT’S LIFE

MAKE-TO-STOCK VERSUS MAKE-TO-ORDER CHARACTERISTICS MAKE-TO-STOCKMAKE-TO-ORDER Product Producer-specified Low variety Inexpensive Customer specified High variety Expensive Objective Main operation problems Manage delivery Lead times and Capacity Balance inventory Capacity, and service Delivery promises Delivery time Forecasting Planning production Central of inventory

Degree of Customer Interaction and Customization Degree of Labor Intensity Low High LowHigh Service Factory Airlines Trucking Hotels Resorts & Recreation Professional Service Doctors Lawyers Accountants Architects Mass Service Retailing Wholesaling Schools Retail Aspects of Commercial Banking Service Shop Hospitals Auto Repair Printing Shop Other Repair Shops

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