1. BA240: Operations Management Overview Manufacturing & Services Process Mapping The Role of Technology POM Software Demo Measuring Productivity Exercises

2. What is Operations Management? Operations management (OM) is defined as the design, operation, and improvement of the systems that create and deliver the firm’s primary products and services.

3. What is a Transformation Process? A transformation process is defined as a user of resources to transform inputs into some desired outputs.

4. Transformations Physical -- manufacturing Locational -- transportation Exchange -- retailing Storage -- warehousing Physiological -- health care Informational -- telecommunications

5. Value-Added The difference between the cost of inputs and the value or price of outputs. Inputs Land Labor Capital Transformation/ Conversion process Outputs Goods Services Control Feedback Value added

6. OM in the Organization Chart Operations Plant Manager Operations Manager Operations Manager Director Manufacturing, Production control, Quality assurance, Engineering, Purchasing, Maintenance, etc FinanceMarketing

7. Business Operations Overlap Operations Finance Marketing

8. Responsibilities of Operations Management Products & services Planning – Capacity – Location – – Make or buy – Layout – Projects – Scheduling Controlling/Improving – Inventory – Quality Organizing – Degree of centralization – Process selection Staffing – Hiring/laying off – Use of Overtime Directing – Incentive plans – Issuance of work orders – Job assignments – Costs – Productivity

9. OM Decisions 1.Product / Service Design 2.Quality Management 3.Process Strategy / Capacity Planning 4.Location Strategies 5.Layout Strategies 6.Human Resources 7.Supply Chain Management 8.Inventory Management 9.Scheduling 10.Maintenance

10. Core services are basic things that customers want from products they purchase. Core Services

11. Core Services Performance Objectives Operations Management Flexibility Quality Speed Price (or cost Reduction)

12. Value-added services differentiate the organization from competitors and build relationships that bind customers to the firm in a positive way Value-Added Services

13. Value-Added Service Categories Operations Management Information Problem Solving Sales Support Field Support

14. Manufacturing or Service? Tangible Act

15. Manufacturing vs Service CharacteristicManufacturingService Output Customer contact Uniformity of input Labor content Uniformity of output Measurement of productivity Opportunity to correct Tangible Low High Low High Easy High Intangible High Low High Low Difficult Low quality problems High

17. Productivity –A measure of the effective use of resources, usually expressed as the ratio of output to input Productivity ratios are used for –Planning workforce requirements –Scheduling equipment –Financial analysis

18. Productivity Partial measures – output/(single input) Multi-factor measures – output/(multiple inputs) Total measure – output/(total inputs) Productivity= Outputs Inputs

19. Productivity Growth Current Period Productivity – Previous Period Productivity Previous Period Productivity Productivity Growth =

20. Measures of Productivity Partial Output Output Output Output measures Labor Machine Capital Energy Multifactor Output Output measures Labor + Machine Labor + Capital + Energy Total Goods or Services Produced measure All inputs used to produce them

21. Units of output per kilowatt-hour Dollar value of output per kilowatt-hour Energy Productivity Units of output per dollar input Dollar value of output per dollar input Capital Productivity Units of output per machine hour machine hour Machine Productivity Units of output per labor hour Units of output per shift Value-added per labor hour Labor Productivity Examples of Partial Productivity Measures

22. Factors Affecting Productivity CapitalQuality TechnologyManagement

23. Standardization Quality Use of Internet Computer viruses Searching for lost or misplaced items Scrap rates New workers Other Factors Affecting Productivity

24. Safety Shortage of IT workers Layoffs Labor turnover Design of the workspace Incentive plans that reward productivity Other Factors Affecting Productivity

25. Bottleneck Operation Machine #2 Bottleneck Operation Bottleneck Operation Machine #1 Machine #3 Machine #4 10/hr 30/hr

26. Improving Productivity Develop productivity measures Determine critical (bottleneck) operations Develop methods for productivity improvements Establish reasonable goals Get management support Measure and publicize improvements Don’t confuse productivity with efficiency