1. Production & Operations Management An Introduction

2. 2 Course Outline Highlight the importance of Production and Operations Management (POM) Define POM and its constituent elements Link operations with strategy Understand tools and techniques used to solve business problems Capture knowledge from actual cases

3. 3 Course Outline Course organized along seven lectures Content of each lecture: –Session 1: Introduction – Processes / Operations –Session 2: The beer game –Session 3: Supply chains / Inventories –Session 4: Inventory management –Session 5: Material Requirements Planning

4. 4 Course Outline Content of each lecture (continued): –Lecture 6: Just-in-time –Lecture 7: Facility layout and location Case studies and illustrative examples will be discussed in class Final exam will include both problem solving and question answering

5. 5 Textbooks The required textbook for the course is: –Krajewski, L. and L. Ritzman, 2007. Operations Management: Processes and Value Chains, Addison- Wesley, 8th Edition, Pearson Prentice Hall Additional textbook (not required) with emphasis on Manufacturing Systems is: –Hopp, W.J. and M.L. Spearman, 2001. Factory Physics: Foundations of Manufacturing Management, 2nd Edition, Irwin, Chicago

6. 6 POM Definition What is Production and Operations Management? –Function that enables enterprises to achieve their goals through efficient acquisition and utilization of resources –Realize bottom-line results (value-added to stakeholders) by linking strategy and every-day decisions

7. 7 The POM System Direction and control of the processes that transform inputs into finished goods-services

8. 8 The POM System Input examples: –Medical professionals, building, diagnostic equipment, pharmaceuticals, first aid material (Hospital) –Workers, managers, engineering blueprints, drills, lathes, metals, paints, energy (Manufacturer) –Financial professionals, checks, currency, building (Bank)

9. 9 The POM System Output examples: –Healed patients - hopefully! (Hospital) –Physical products (Manufacturer) –Financial products (Bank) Transformation examples: –Physiological, behavioural (Hospital) –Physical change of shape (Manufacturer) –Monetary (Bank)

10. 10 Manufacturing Vs. Services Similar in most aspects Differences:

11. 11 The POM Function POM is a distinct function within any enterprise organizational chart Draws expertise from multiple disciplines

12. 12 The POM Function Requires cross-functional coordination –Strongest connection with marketing –Accounting provides performance feedback –Finance influences investment –Human Resources recruits and trains personnel –Engineering design should match manufacturing capabilities Critical links with Information Systems and Organizational Structure

13. 13 POM and Decisions (Strategy) Decisions define the scope and content of POM – five categories: –Strategic choices (Strategy) –Processes –Quality –Capacity, Location, Layout –Operations

14. 14 POM and Decisions (Strategy) Strategic choices affect all POM categories and must be defined at all hierarchical enterprise levels: –What is the corporate strategy? –What are the competitive priorities? –What is the flow strategy? –What are the quality objectives? –What are the functional area strategies?

15. 15 POM and Decisions (Strategy) Customer-driven Core competencies Market Priorities Engineering Flow Trends

16. 16 POM and Decisions (Strategy) Competitive priorities: –Cost Basic food items – salt, flour, paper Consumer electronics –Quality High performance design (superior features, tight tolerances, greater durability, courteous service, convenient location, safety – Holmes Place Gyms) Consistent quality (frequency of conformance to specs)

17. 17 POM and Decisions (Strategy) Competitive priorities (continued): –Time (time-based competition) Fast delivery (FedEx) On-time delivery (General Motors) Product development speed (Zara, Japanese Auto Mfg) –Flexibility Customization – accommodate unique customer needs Volume flexibility – quick changes in production rates

18. 18 POM and Decisions (Strategy) Flow strategies: –Make-to-stock (Sony, Siemens, Delta) Finished goods held in stock for immediate delivery High volumes, standard products Production based on forecasted demand Supports low cost, consistent quality priority –Standardized services (FedEx, Postal Services) Services with little variety and high volumes Supports low cost, on-time delivery & consistent quality

19. 19 POM and Decisions (Strategy) Flow strategies (continued): –Assemble-to-order (Dell, Vodafone, IKEA) Assemblies & components held in stock Final assembly completed after customer selects options Large number of final configurations are possible Forecasting of customer demand for final products is impractical (multitude of combinations) Widely used in computer manufacturing Services: mobile providers (packages for individuals)

20. 20 POM and Decisions (Strategy) Flow strategies (continued): –Make-to-order (Home construction, Boeing) Most required materials are purchased when customer places the order Production based on individual customer specifications Requires flexibility at all levels (organization, processes, flows etc.) Supports customization as a competitive priority Automotive industry towards make-to-order

21. 21 POM and Decisions (Processes) Five categories (continued): –Processes What will be the product-service design? What work will be performed in-house? What will be the level of automation? How do we improve existing processes? Can we provide leadership in technological change? Degree of job enlargement – participatory mgt? Time estimates for work requirements

22. 22 POM and Decisions (Q-C-L-L) Five categories (continued): –Quality Objectives and means (Statistics – TQM) Ways for monitoring and improvement –Capacity, location and layout What system capacity is needed? Where should facilities be located? How should facility layouts be organized?

23. 23 POM and Decisions (Opns) Five categories (continued): –Operations Coordination of external and internal supply chains Forecasting methods (for demand) Inventory management Output control and staffing levels over time Purchasing and production tactics Work scheduling Priorities and operations mode

24. 24 POM and Decisions Operating decisions link strategy with every day tasks and compliment strategy with feedback from existing systems Operating decisions are also interconnected: –Purchasing and inventory management –Production and staffing levels –Forecasting and capacity requirements –Product design and process layout

25. 25 POM Trends Service sector growth in three areas –Public (governments, utilities) –Wholesale and retail firms –Transportation, communications, health, finance Keeping manufacturing a vital sector –Creates value and wealth –Complementary to services

26. 26 POM Trends Emphasis on productivity –Continuous improvement pursuit –Productivity links to standard of leaving –Global competition Competition based on quality, time and technology Environmental, ethical and work-force diversity issues

27. 27 Case Studies In-class discussion: –Chad’s Creative Concepts (from textbook, Chapter 1, page 29) Reading – think about –Custom Molds Inc. (from textbook, Chapter 3, pages 125-127)