DR NAWAR KHAN FACULTY OF MANAGEMENT SCIENCES (FMS)

DR NAWAR KHAN FACULTY OF MANAGEMENT SCIENCES (FMS)
PhD Engineering Management, MSc Production Engineering, MBA (HRM), BSc Mechanical Engineering, PEC Accreditation Convener, ISO 9000 QMS Lead Auditor RIPHAH INTERNATIONAL UNIVERSITY FACULTY OF MANAGEMENT SCIENCES (FMS) RIPHAH SCHOOL OF LEADERSHIP (RSL) AL MIZAN CAMPUS, 274 Peshawar Road Rawalpindi, Pakistan Tel # Extn 256

PROFILE Possess 35 years of professional experience including academics, research and management Hold prestigious appointments in a large variety of Organizations and capacity Published a master level reviewed text book on TQM Published 107 plus research papers in different national / international reputed conferences and journals. Worked as PI and now member of technical committee of ‘Prime Minister Quality Award (PNQA)’. Supervised 58 x MS & 7 x PhD while 8 x MS and 1 x PhD are in progress

Establish Dept of Engg Mgmt at CEME for MS and PhD Degrees in Engg management at NUST CEME
Worked as QMR for ISO 9000 QMS Certification Director LQEC for 9 x years at CEME Conducted accreditation audit of engg programs of different universities Join Riphah International university as senior consultant (equivalent to professor) in FMS in November 2016 Working as focal faculty for MS in Engg Mgmt and MS Proj Mgmt

Published Master Level Reviewed Text Book

QUALITY MANAGEMENT SYSTEMS
PARTS OF THE BOOK TQM CONCEPTS TQM TOOLS & TECHNIQUES QUALITY MANAGEMENT SYSTEMS TQM AWARDS PART-I PART-II PART-III PART-IV CHAPTER: 1 - 5 CHAPTER: 6 - 9 CHAPTER: CHAPTER:

PART-I TQM CONCEPTS CHAPTER: 1 - 5 THE TQM PHILOSOPHIES AND CONCEPTS
THIS PART DEALS WITH TQM PHILOSOPHIES AND CONCEPTS. IT ALSO GIVES A SYNTHESIZED VIEW OF TQM FACTORS AND ELEMENTS.

PART-II TQM TOOLS & TECHNIQUES CHAPTER: 6 - 9
THE TQM TOOLS AND TECHNIQUES TQM TOOLS & TECHNIQUES CHAPTER: 6 - 9 THIS PART DEALS WITH TRANSFORMATION STRATEGY OF TQM PHILOSOPHIES INTO PRACTICES THROUGH APPLICATION OF TQM TOOLS AND TECHNIQUES.

QUALITY MANAGEMENT SYSTEMS
PART-III QUALITY MANAGEMENT SYSTEM QUALITY MANAGEMENT SYSTEMS CHAPTER: THIS PART DEALS WITH QUALITY MANAGEMENT SYSTEMS INCLUDING ISO 9000:2008 QMS STANDARDS

PART-IV TQM AWARDS CHAPTER: 15 - 20 THE TQM AWARD MODELS
THIS PART PRESENTS THE HOLISTIC PICTURE OF TQM PHILOSOPHY IN THE FORM OF PRESTIGIOUS NATIONAL AND REGIONAL QUALITY AWARD MODELS OF COUNTRIES LIKE JAPAN, USA, EUROPE AND PAKISTAN.

OPERATION MANAGEMENT

TYPES OF BUSINESSES AND OM REQUIREMENT
BROADER TO SPECIFIC TYPES OF BUSINESSES AND OM REQUIREMENT TYPES OF BUSINES FUNCTIONS INCLUDING OM OPERATION / PRODUCTION / PROCESS MODEL MANAGEMENT OPERATION MANAGEMENT

OPERATION MANAGEMENT MAJOR FOCUS;
TYPES OF BUSINESSES where OM is required BUSINESS FUNCTIONS where OM is playing its role OPERATION / PROCESS MODEL MANAGEMENT – Managerial functions CRITICAL DECISION AREAS OF OM

TYPES OF BUSINESSES Types of businesses where OM is employed
PRIMARY BUSINESS - PRODUCTION INDUSTRY SECONDARY BUSINESS – MANUFACTURING INDUSTRY TERTIARY BUSINESS - SERVICES INDUSTRY

PRIMARY BUSINESS INDUSTRIES
Major areas / fields Q - What are the OM requirement for primary industry Agriculture Forestry Fishing Livestock Quarries Mining Petroleum 15

SECONDARY BUSINESS INDUSTRIES
Major areas / fields Q - What are the OM requirement for secondary industry Aerospace Food processing Apparel Glass, ceramics Automotive Heavy machinery Basic metals Paper Beverages Petroleum refining Building materials Pharmaceuticals Chemicals Plastic (Shaping) Computers Power utilities Construction Publishing Consumer appliances Textiles Electronics Equipment Tire and rubber Wood and furniture 16

TERTIARY BUSINESSES (SERVICES INDUSTRIES
Major areas / fields Q - What are the OM requirement for tertiary industry Banking Insurance Communications Legal Education Real estate Entertainment Repair and maintenance Financial services Restaurant Government Retail trade Health and medical Tourism Hotel Transportation Information Wholesale trade 17

INTEGRAL CHAIN OF INDUSTRIES
The primary, secondary and tertiary industries are linked together and work in tandem OUTPUT / INPUT OUTPUT / INPUT INPUT OUTPUT PRIMARY INDUSTRIES SECONDARYINDUSTRIES TERTIARY INDUSTRIES 18

BUSINESS FUNCTIONS Major functions of a business are; MARKETING HR
FINANCE PRODUCTION / OPERATION SALE / PURCHASE LEGAL HEALTHCARE

OPERATION / PROCESS MODEL
INPUTS PROCESS / OPERATION OUTPUTS FEEDBACK CONTROLLED ENVIRONMENT

A GENERIC PRODUCTION /OPERATION MODEL APPLICABLE TO ALL TYPES OF INDUSTRIES AND ALL TYPES OF BUSINESS FUNCTIONS

A GENERIC PRODUCTION /OPERATION MODEL APPLICABLE TO ALL TYPES OF INDUSTRIES
VALUE ADDITION OUTPUT VALUE INPUT VALUE PROCESS/ OPERATION

MANAGEMENT Major managerial functions are; PLANNING ORGANIZATING
STAFFING LEADING - command, coordination, communication and motivation CONTROLLING

10 CRITICAL DECISION AREAS OF OP

What Is Operations Management?
Production is the creation of goods and services Operations management (OM) is the set of activities that creates value in the form of goods and services by transforming inputs into outputs

Organizing to Produce Goods and Services
Essential business functions: Marketing – generates demand Production/operations – creates the product Finance/accounting – tracks how well the organization is doing, pays bills, collects the money

Organizational Charts
Commercial Bank Operations Teller Scheduling Check Clearing Collection Transaction processing Facilities design/layout Vault operations Maintenance Security Finance Investments Security Real estate Accounting Auditing Marketing Loans Commercial Industrial Financial Personal Mortgage Trust Department Figure 1.1(A)

Airline Operations Ground support equipment Maintenance Ground Operations Facility maintenance Catering Flight Operations Crew scheduling Flying Communications Dispatching Management science Finance/ accounting Accounting Payables Receivables General Ledger Finance Cash control International exchange Marketing Traffic administration Reservations Schedules Tariffs (pricing) Sales Advertising Figure 1.1(B)

Manufacturing Operations Facilities Construction; maintenance Production and inventory control Scheduling; materials control Quality assurance and control Supply-chain management Manufacturing Tooling; fabrication; assembly Design Product development and design Detailed product specifications Industrial engineering Efficient use of machines, space, and personnel Process analysis Development and installation of production tools and equipment Finance/ accounting Disbursements/ credits Receivables Payables General ledger Funds Management Money market International exchange Capital requirements Stock issue Bond issue and recall Marketing Sales promotion Advertising Sales Market research Figure 1.1(C)

Why Study OM? OM is one of three major functions (marketing, finance, and operations) of any organization We want (and need) to know how goods and services are produced We want to understand what operations managers do OM is such a costly part of an organization

Options for Increasing Contribution
Sales $100,000 $150,000 $100,000 $100,000 Cost of Goods – 80,000 – 120,000 – 80,000 – 64,000 Gross Margin 20,000 30,000 20,000 36,000 Finance Costs – 6,000 – 6,000 – 3,000 – 6,000 Subtotal 14,000 24,000 17,000 30,000 Taxes at 25% – 3,500 – 6,000 – 4,250 – 7,500 Contribution $ 10,500 $ 18,000 $ 12,750 $ 22,500 Finance/ Marketing Accounting OM Option Option Option Increase Reduce Reduce Sales Finance Production Current Revenue 50% Costs 50% Costs 20%

What Operations Managers Do
Basic Management Functions Planning Organizing Staffing Leading Controlling

10 Critical Decisions Ten Decision Areas Chapter(s)
Service and product design 5 Quality management 6 6 Supplement Process and capacity design 7 Supplement Location 8 Layout design 9 Human resources, job design 10 Supplement Supply-chain management 11 Supplement Inventory management 12, 14, 16 Scheduling 13, 15 Maintenance 17 Table 1.2

The Critical Decisions
Service and product design What good or service should we offer? How should we design these products and services? Quality management How do we define quality? Who is responsible for quality? Table 1.2 (cont.)

Process and capacity design What process and what capacity will these products require? What equipment and technology is necessary for these processes? Location Where should we put the facility? On what criteria should we base the location decision? Table 1.2 (cont.)

Layout design How should we arrange the facility and material flow? How large must the facility be to meet our plan? Human resources and job design How do we provide a reasonable work environment? How much can we expect our employees to produce? Using this and subsequent slides, you might go through in more detail the decisions of Operations Management. While greater detail is provided by these slides than the earlier one, you may still decide to have the students contribute examples from their own experience. Table 1.2 (cont.)

Supply-chain management Should we make or buy this component? Who are our suppliers and who can integrate into our e-commerce program? Inventory, material requirements planning, and JIT How much inventory of each item should we have? When do we re-order? Table 1.2 (cont.)

Intermediate and short–term scheduling Are we better off keeping people on the payroll during slowdowns? Which jobs do we perform next? Maintenance Who is responsible for maintenance? When do we do maintenance? Table 1.2 (cont.)

Where are the OM Jobs? Figure 1.2

Where are the OM Jobs? Technology/methods Facilities/space utilization
Strategic issues Response time People/team development Customer service Quality Cost reduction Inventory reduction Productivity improvement

Significant Events in OM
Figure 1.3

The Heritage of OM Division of labor (Adam Smith 1776; Charles Babbage 1852) Standardized parts (Whitney 1800) Scientific Management (Taylor 1881) Coordinated assembly line (Ford/ Sorenson/Avery 1913) Gantt charts (Gantt 1916) Motion study (Frank and Lillian Gilbreth 1922) Quality control (Shewhart 1924; Deming 1950)

The Heritage of OM Computer (Atanasoff 1938) CPM/PERT (DuPont 1957)
Material requirements planning (Orlicky 1960) Computer aided design (CAD 1970) Flexible manufacturing system (FMS 1975) Baldrige Quality Awards (1980) Computer integrated manufacturing (1990) Globalization (1992) Internet (1995)

Eli Whitney Born 1765; died 1825 In 1798, received government contract to make 10,000 muskets Showed that machine tools could make standardized parts to exact specifications Musket parts could be used in any musket

Frederick W. Taylor Born 1856; died 1915
Known as ‘father of scientific management’ In 1881, as chief engineer for Midvale Steel, studied how tasks were done Began first motion and time studies Created efficiency principles

Taylor’s Principles Management Should Take More Responsibility for:
Matching employees to right job Providing the proper training Providing proper work methods and tools Establishing legitimate incentives for work to be accomplished

Frank & Lillian Gilbreth
Husband-and-wife engineering team Further developed work measurement methods Applied efficiency methods to their home and 12 children! Book & Movie: “Cheaper by the Dozen,” book: “Bells on Their Toes”

Henry Ford Born 1863; died 1947 In 1903, created Ford Motor Company
In 1913, first used moving assembly line to make Model T Unfinished product moved by conveyor past work station Paid workers very well for 1911 ($5/day!)

W. Edwards Deming Born 1900; died 1993 Engineer and physicist
Credited with teaching Japan quality control methods in post-WW2 Used statistics to analyze process His methods involve workers in decisions

Contributions From Human factors Industrial engineering
Management science Biological science Physical sciences Information science

New Challenges in OM From To Local or national focus Global focus
Batch shipments Low bid purchasing Lengthy product development Standard products Job specialization Global focus Just-in-time Supply chain partnering Rapid product development, alliances Mass customization Empowered employees, teams To

Characteristics of Goods
Tangible product Consistent product definition Production usually separate from consumption Can be inventoried Low customer interaction

Characteristics of Service
Intangible product Produced and consumed at same time Often unique High customer interaction Inconsistent product definition Often knowledge-based Frequently dispersed

Industry and Services as Percentage of GDP
Australia Canada China Czech Rep France Germany Hong Kong Japan Mexico Russian Fed South Africa Spain UK US 90 − 80 − 70 − 60 − 50 − 40 − 30 − 20 − 10 − 0 − Services Manufacturing

Goods Versus Services Can be resold Can be inventoried
Some aspects of quality measurable Selling is distinct from production Product is transportable Site of facility important for cost Often easy to automate Revenue generated primarily from tangible product Attributes of Goods (Tangible Product) Attributes of Services (Intangible Product) Reselling unusual Difficult to inventory Quality difficult to measure Selling is part of service Provider, not product, is often transportable Site of facility important for customer contact Often difficult to automate Revenue generated primarily from the intangible service Table 1.3

Restaurant meal/auto repair investment management
Goods and Services Automobile Computer Installed carpeting Fast-food meal Restaurant meal/auto repair Hospital care Advertising agency/ investment management Consulting service/ teaching Counseling Percent of Product that is a Good Percent of Product that is a Service 100% % | | | | | | | | | Figure 1.4

Organizations in Each Sector
Service Sector Example % of all Jobs Professional Services, Education, Legal, Medical Notre Dame University, San Diego Zoo, Arnold Palmer Hospital 25.5 Trade (retail, wholesale) Walgreen’s, Wal-Mart, Nordstrom’s 20.6 Utilities, Transportation Pacific Gas & Electric, American Airlines, Santa Fe R.R., Roadway Express 7.1 Table 1.4

Service Sector Example % of all Jobs Business and Repair Services Snelling and Snelling, Waste Management, Pitney-Bowes 6.9 Finance, Insurance, Real Estate Citicorp, American Express, Prudential, Aetna, Trammel Crow 6.7 Food, Lodging, Entertainment McDonald’s, Hard Rock Café, Motel 6, Hilton Hotels, Walt Disney, Paramount Pictures 5.4 Public Administration U.S., State of Alabama, Cook County 4.5 Table 1.4

Manufacturing Sector Example % of all Jobs General General Electric, Ford, U.S. Steel, Intel 13.3 Construction Bechtel, McDermott 7.1 Agriculture King Ranch 2.5 Mining Homestake Mining 0.4 Sector Percent of all jobs Service 76.7% Manufacturing 23.3% Table 1.4

Development of the Service Economy
100 90 80 70 60 50 40 30 20 10 Services Manufacturing Agriculture Figure 1.5 (A)

30 – 25 – 20 – 15 – 10 – 5 – 0 – – 150 – 125 – 100 – 75 – 50 – 25 – 0 Employment (millions) Index: 1997 = 100 Industrial production Manufacturing employment Estimate Figure 1.5 (B)

New Trends in OM Past Causes Future Local or national focus
Low-cost, reliable worldwide communication and transportation networks Global focus Batch (large) shipments Short product life cycles and cost of capital put pressure on reducing inventory Just-in-time shipments Low-bid purchasing Quality emphasis requires that suppliers be engaged in product improvement Supply-chain partners, Enterprise Resource Planning, e-commerce Figure 1.6

New Trends in OM Past Causes Future Lengthy product development
Shorter life cycles, Internet, rapid international communication, computer-aided design, and international collaboration Rapid product development, alliances, collaborative designs Standardized products Affluence and worldwide markets; increasingly flexible production processes Mass customization with added emphasis on quality Job specialization Changing socioculture milieu; increasingly a knowledge and information society Empowered employees, teams, and lean production Figure 1.6

New Trends in OM Past Causes Future Low-cost focus
Environmental issues, ISO 14000, increasing disposal costs Environmentally sensitive production, green manufacturing, recycled materials, remanufacturing Figure 1.6

Productivity Challenge
Productivity is the ratio of outputs (goods and services) divided by the inputs (resources such as labor and capital) The objective is to improve this measure of efficiency Important Note! Production is a measure of output only and not a measure of efficiency

The Economic System Model
Inputs VALUE Labor, capital, management Processes The U.S. economic system transforms inputs to outputs at about an annual 2.5% increase in productivity per year. The productivity increase is the result of a mix of capital (38% of 2.5%), labor (10% of 2.5%), and management (52% of 2.5%). Outputs VALUE Goods and services Feedback loop Figure 1.7

Increasing Productivity – The LA Motor Pool
Before: Cost $120 million annually 21,000 vehicles 30% of the 900 trash trucks were in repair 11% of police cars were in repair Actions: Created team assignments Assigned parking places for trucks Tires checked and trucks emptied each night Standard customer pickups established Computerized fleet management Mechanics moved to night shift

Increasing Productivity – The LA Motor Pool
Before: Actions: Results: Total fleet reduced by 500 vehicles Parts inventory dropped 20% reducing cost by $5.4 million annually Standardized pickups reduced costs by $12 million annually Out of service garbage trucks dropped to 18% Cost $120 million annually 21,000 vehicles 30% of the 900 garbage trucks were in repair 11% of police cars were in repair Creating team assignments Assigned parking places for trucks Tire checked and trucks emptied each night Standard customer pickups established Computerized fleet management Mechanics moved to night shift

Productivity Efficiency = output /input Only in resource perspective
1.Total Productivity = Total Units produced Total Input used In resource and time perspective Quality is constant Efficiency = output /input Only in resource perspective No time is acconted for Quality is considered

Productivity Measure of process improvement
1.Total Productivity = Total Units produced Total Input used 2. Partial Productivity = Total Units produced Partial Input used Measure of process improvement Represents output relative to input Only through productivity increases can our standard of living improve

Productivity Calculations
Labor Productivity, Rupee productivity etc Labour Productivity = Units produced Labor-hours used = = 4 units/labor-hour 1,000 250

Multi-Factor Productivity
Output Labor + Material + Energy + Capital + Miscellaneous Productivity = Also known as total factor productivity Output and inputs are often expressed in dollars

Collins Title Productivity
Staff of 4 works 8 hrs/day 8 titles/day Payroll cost = $640/day Overhead = $400/day Old System: 8 titles/day 32 labor-hrs = Old labor productivity

Staff of 4 works 8 hrs/day 8 titles/day Payroll cost = $640/day Overhead = $400/day Old System: 8 titles/day 32 labor-hrs = Old labor productivity = .25 titles/labor-hr

Staff of 4 works 8 hrs/day 8 titles/day Payroll cost = $640/day Overhead = $400/day Old System: 14 titles/day 32 labor-hrs 14 titles/day Overhead = $800/day New System: 8 titles/day 32 labor-hrs = Old labor productivity = .25 titles/labor-hr = New labor productivity

Staff of 4 works 8 hrs/day 8 titles/day Payroll cost = $640/day Overhead = $400/day Old System: 14 titles/day Overhead = $800/day New System: 8 titles/day 32 labor-hrs = Old labor productivity = .25 titles/labor-hr 14 titles/day 32 labor-hrs = New labor productivity = titles/labor-hr

Staff of 4 works 8 hrs/day 8 titles/day Payroll cost = $640/day Overhead = $400/day Old System: 8 titles/day $ 14 titles/day Overhead = $800/day New System: = Old multifactor productivity

Staff of 4 works 8 hrs/day 8 titles/day Payroll cost = $640/day Overhead = $400/day Old System: 14 titles/day Overhead = $800/day New System: 8 titles/day $ = Old multifactor productivity = titles/dollar

Staff of 4 works 8 hrs/day 8 titles/day Payroll cost = $640/day Overhead = $400/day Old System: 14 titles/day Overhead = $800/day New System: 14 titles/day $ 8 titles/day $ = Old multifactor productivity = titles/dollar = New multifactor productivity

Staff of 4 works 8 hrs/day 8 titles/day Payroll cost = $640/day Overhead = $400/day Old System: 14 titles/day Overhead = $800/day New System: 8 titles/day $ = Old multifactor productivity = titles/dollar 14 titles/day $ = New multifactor productivity = titles/dollar

Measurement Problems Quality may change while the quantity of inputs and outputs remains constant External elements may cause an increase or decrease in productivity Precise units of measure may be lacking

Productivity Variables
Labor - contributes about 10% of the annual increase Capital - contributes about 32% of the annual increase Management - contributes about 52% of the annual increase

Key Variables for Improved Labor Productivity
Basic education appropriate for the labor force Diet of the labor force Social overhead that makes labor available Maintaining and enhancing skills in the midst of rapidly changing technology and knowledge

Labor Skills About half of the 17-year-olds in the US cannot correctly answer questions of this type Figure 1.8

Investment and Productivity in Selected Nations
10 8 6 4 2 Percent increase in mfg productivity Percentage investment US UK Canada Italy Belgium France Netherlands Japan

Service Productivity Typically labor intensive
Frequently focused on unique individual attributes or desires Often an intellectual task performed by professionals Often difficult to mechanize Often difficult to evaluate for quality

Productivity at Taco Bell
Improvements: Revised the menu Designed meals for easy preparation Shifted some preparation to suppliers Efficient layout and automation Training and employee empowerment

Productivity at Taco Bell
Improvements: Revised the menu Designed meals for easy preparation Shifted some preparation to suppliers Efficient layout and automation Training and employee empowerment Results: Preparation time cut to 8 seconds Management span of control increased from 5 to 30 In-store labor cut by 15 hours/day Stores handle twice the volume with half the labor Fast-food low-cost leader

Ethics and Social Responsibility
Challenges facing operations managers: Developing safe quality products Maintaining a clean environment Providing a safe workplace Honoring community commitments

DR NAWAR KHAN FACULTY OF MANAGEMENT SCIENCES (FMS)

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