OM and Supply Chain Career Opportunities Operations manager Supply chain manager Production analyst Schedule coordinator Production manager Industrial engineer Purchasing manager Inventory manager Quality manager Student Slides 1-1

2 Design elegant products which can be flat packed efficiently Design Store Layout Site Location Storage Quality Some Activities of an Operations Manager

3 Today’s OM Environment Customers demand better quality, faster deliveries, and lower costs

4 Competitive Priorities- The Edge Four Important Operations Questions: Will you compete on – Cost? Quality? Time? Flexibility? All of the above? Some? Tradeoffs? Source: Reid and Sanders, 2005.

5 Measuring Productivity Productivity is a measure of how efficiently inputs are converted to outputs Productivity = output/input Total Productivity Measure Total Productivity = $sales/inputs $ Partial Productivity Measure Partial Productivity = cars/employee Multifactor Productivity Measure Multi-factor Productivity = sales/total $costs Source: Reid and Sanders, 2005.

OM – Add Value Finance – Allocation of resources – Invest for expansion – Increase profitability Marketing – Find info what customer wants – Redesign existing product/make new Importance of new product-why fb keeps on changing layout 6

Synergy: 1+1=more than 2 : whole is more than the sum of parts OM – How can we improve systems 7

Production is creation of Goods/Services OM – Match employee to right job – Provide training/feedback/incentive/motivation Innovation in products and processes often depends on advances in the physical science e.g Glass 8

If units produced=1000 & labour hr used=250, then productivity measurement=1000/250=4units/labour hr Don’t just this number but also quality If productivity goes down, understand why. E.g no electricity 9

Attract +retain global talent How many people/machine do you need. Need it all the time? Coca-cola is a global product. Does that mean that it is formulated in the same way throughout the world? Purchasing technology by acquiring firm 10

Supply Chain Make/Buy Decision Outsourcing Many vs few suppliers Real time tracking (inventory/location) Fed ex – use barcode – track shipment 11

Job Design & Work Measurement HR – Work schedule (flexi time/week) Job design/expansion/rotation/ Enrichment/enlargement. Employee empowerment Work environment (noise/dust etc) are incentives matched How much time it takes to complete task – industry standard OM – Mutual trust – employee commitment 12

Ergonomics: The study of human interface Some operations can not afford to have any down time – financial services – online financial information OM – RISK TAKER ? 13

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© 2011 Pearson Education Reasons to Globalize 1.Reduce costs (labor, taxes, tariffs, etc.) 2.Improve supply chain 3.Provide better goods and services 4.Understand markets 5.Learn to improve operations 6.Attract and retain global talent Tangible Reasons Intangible Reasons

© 2011 Pearson Education Reduce Costs Foreign locations with lower wage rates can lower direct and indirect costs World Trade Organization (WTO) North American Free Trade Agreement (NAFTA) APEC, SEATO, CAFTA European Union (EU)

© 2011 Pearson Education Improve the Supply Chain Locating facilities closer to unique resources Auto design to California Athletic shoe production to China Perfume manufacturing in France

© 2011 Pearson Education Provide Better Goods and Services Objective and subjective characteristics of goods and services On-time deliveries Cultural variables Improved customer service

© 2011 Pearson Education Companies Want To Consider National literacy rate Rate of innovation Rate of technology change Number of skilled workers Political stability Product liability laws Export restrictions Variations in language  Work ethic  Tax rates  Inflation  Availability of raw materials  Interest rates  Population  Number of miles of highway  Phone system

© 2011 Pearson Education Sample Missions Sample Company Mission To manufacture and service an innovative, growing, and profitable worldwide microwave communications business that exceeds our customers’ expectations. Sample Operations Management Mission To produce products consistent with the company’s mission as the worldwide low-cost manufacturer. Figure 2.3

© 2011 Pearson Education Sample Missions Figure 2.3 Sample OM Department Missions Product designTo design and produce products and services with outstanding quality and inherent customer value. Quality managementTo attain the exceptional value that is consistent with our company mission and marketing objectives by close attention to design, procurement, production, and field service operations Process designTo determine, design, and produce the production process and equipment that will be compatible with low-cost product, high quality, and good quality of work life at economical cost.

© 2011 Pearson Education Sample Missions Figure 2.3 Sample OM Department Missions LocationTo locate, design, and build efficient and economical facilities that will yield high value to the company, its employees, and the community. Layout designTo achieve, through skill, imagination, and resourcefulness in layout and work methods, production effectiveness and efficiency while supporting a high quality of work life. Human resourcesTo provide a good quality of work life, with well-designed, safe, rewarding jobs, stable employment, and equitable pay, in exchange for outstanding individual contribution from employees at all levels.

© 2011 Pearson Education Sample Missions Figure 2.3 Sample OM Department Missions Supply-chain management To collaborate with suppliers to develop innovative products from stable, effective, and efficient sources of supply. InventoryTo achieve low investment in inventory consistent with high customer service levels and high facility utilization. SchedulingTo achieve high levels of throughput and timely customer delivery through effective scheduling. MaintenanceTo achieve high utilization of facilities and equipment by effective preventive maintenance and prompt repair of facilities and equipment.

© 2011 Pearson Education Product Life Cycle Product design and development critical Frequent product and process design changes Short production runs High production costs Limited models Attention to quality IntroductionGrowthMaturityDecline OM Strategy/Issues Forecasting critical Product and process reliability Competitive product improvements and options Increase capacity Shift toward product focus Enhance distribution Standardization Fewer product changes, more minor changes Optimum capacity Increasing stability of process Long production runs Product improvement and cost cutting Little product differentiation Cost minimization Overcapacity in the industry Prune line to eliminate items not returning good margin Reduce capacity Figure 2.5

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© 2011 Pearson Education 3 3 Managing Projects PowerPoint presentation to accompany Heizer and Render Operations Management, 10e, Global Edition Principles of Operations Management, 8e, Global Edition PowerPoint slides by Jeff Heyl

© 2011 Pearson Education Examples of Projects  Building Construction  Research Project

© 2011 Pearson Education Management of Projects 1. Planning - goal setting, defining the project, team organization 2. Scheduling - relates people, money, and supplies to specific activities and activities to each other 3. Controlling - monitors resources, costs, quality, and budgets; revises plans and shifts resources to meet time and cost demands

© 2011 Pearson Education  Planning  Objectives  Resources  Work break-down structure  Organization  Scheduling  Project activities  Start & end times  Network  Controlling  Monitor, compare, revise, action Project Management Activities

© 2011 Pearson Education  Establishing objectives  Defining project  Creating work breakdown structure  Determining resources  Forming organization Project Planning

© 2011 Pearson Education The Role of the Project Manager Highly visible Responsible for making sure that: 1.All necessary activities are finished in order and on time 2.The project comes in within budget 3.The project meets quality goals 4.The people assigned to the project receive motivation, direction, and information

© 2011 Pearson Education Ethical Issues 1.Offers of gifts from contractors 2.Pressure to alter status reports to mask delays 3.False reports for charges of time and expenses 4.Pressure to compromise quality to meet schedules  Project managers face many ethical decisions on a daily basis  The Project Management Institute has established an ethical code to deal with problems such as:

© 2011 Pearson Education Many – One of them is  Gantt chart Project Management Techniques

© 2011 Pearson Education A Simple Gantt Chart Time J F M A M J J A S Design Prototype Test Revise Production

© 2011 Pearson Education Service For a Delta Jet Figure 3.4 Passengers Baggage Fueling Cargo and mail Galley servicing Lavatory servicing Drinking water Cabin cleaning Cargo and mail Flight services Operating crew Baggage Passengers Deplaning Baggage claim Container offload Pumping Engine injection water Container offload Main cabin door Aft cabin door Aft, center, forward Loading First-class section Economy section Container/bulk loading Galley/cabin check Receive passengers Aircraft check Loading Boarding Time, Minutes

© 2011 Pearson Education Project Management Software  There are several popular packages for managing projects  Primavera  MacProject  Pertmaster  VisiSchedule  Time Line  Microsoft Project

© 2011 Pearson Education Using Microsoft Project Program 3.1

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© 2011 Pearson Education 5 5 Product Design PowerPoint presentation to accompany Heizer and Render Operations Management, 10e, Global Edition Principles of Operations Management, 8e, Global Edition PowerPoint slides by Jeff Heyl

© 2011 Pearson Education Product Life Cycles  May be any length from a few hours to decades  The operations function must be able to introduce new products successfully

© 2011 Pearson Education Product Life Cycles Negative cash flow IntroductionGrowthMaturityDecline Sales, cost, and cash flow Cost of development and production Cash flow Net revenue (profit) Sales revenue Loss Figure 5.1

© 2011 Pearson Education Product Life Cycle Introductory Phase  Fine tuning may warrant unusual expenses for 1.Research 2.Product development 3.Process modification and enhancement 4.Supplier development

© 2011 Pearson Education Product Life Cycle Growth Phase  Product design begins to stabilize  Effective forecasting of capacity becomes necessary  Adding or enhancing capacity may be necessary

© 2011 Pearson Education Product Life Cycle Maturity Phase  Competitors now established  High volume, innovative production may be needed  Improved cost control, reduction in options, paring down of product line

© 2011 Pearson Education Product Life Cycle Decline Phase  Unless product makes a special contribution to the organization, must plan to terminate offering

© 2011 Pearson Education New Product Opportunities 1.Understanding the customer 2.Economic change 3.Sociological and demographic change 4.Technological change 5.Political/legal change 6.Market practice, professional standards, suppliers, distributors Brainstorming is a useful tool

© 2011 Pearson Education  Using computers to design products and prepare engineering documentation  Shorter development cycles, improved accuracy, lower cost  Information and designs can be deployed worldwide Computer Aided Design (CAD)

© 2011 Pearson Education Computer-Aided Manufacturing (CAM)  Utilizing specialized computers and program to control manufacturing equipment  Often driven by the CAD system (CAD/CAM)

© 2011 Pearson Education Virtual Reality Technology  Computer technology used to develop an interactive, 3-D model of a product from the basic CAD data  Allows people to ‘see’ the finished design before a physical model is built  Very effective in large-scale designs such as plant layout

© 2011 Pearson Education Ethics, Environmentally Friendly Designs, and Sustainability  It is possible to enhance productivity and deliver goods and services in an environmentally and ethically responsible manner  In OM, sustainability means ecological stability

© 2011 Pearson Education The Ethical Approach  Goals 1.Developing safe end environmentally sound practices 2.Minimizing waste of resources 3.Reducing environmental liabilities 4.Increasing cost-effectiveness of complying with environmental regulations 5.Begin recognized as a good corporate citizen

© 2011 Pearson Education Guidelines for Environmentally Friendly Designs 1. Make products recyclable 2. Use recycled materials 3. Use less harmful ingredients 4. Use lighter components 5. Use less energy 6. Use less material

© 2011 Pearson Education Time-Based Competition  Product life cycles are becoming shorter and the rate of technological change is increasing  Developing new products faster can result in a competitive advantage

© 2011 Pearson Education Acquiring Technology  By Purchasing a Firm  Speeds development  Issues concern the fit between the acquired organization and product and the host  Through Joint Ventures  Both organizations learn  Risks are shared  Through Alliances  Cooperative agreements between independent organizations

© 2011 Pearson Education Transition to Production  Know when to move to production  Product development can be viewed as evolutionary and never complete  Product must move from design to production in a timely manner  Most products have a trial production period to insure producibility  Develop tooling, quality control, training  Ensures successful production