1. Introduction to Operations Management Chapter 1 pp. 2-15; 22-37 June 25, 2012

2. Learning objectives LO 1 – define operations management LO 2 – understand how manufacturing and service differ LO 3 – be familiar with current trends in business that impact operations management

3. Operations Management Definitions – Operations – Operations management – Transformation process Series of activities along a “value chain”

4. Value Chain

6. The Transformation Process – Systems Theory Inputs Land Labor Capital Information Outputs Goods Services Transformation/ Conversion Process Control Feedback Value-Added

7. Transformation Process Physical: as in manufacturing operations Locational: as in transportation or warehouse operations Exchange: as in retail operations Physiological: as in health care Psychological: as in entertainment Informational: as in communication

8. The Transformation Process – Systems Theory Inputs Land Labor Capital Information Outputs Goods Services Transformation/ Conversion Process Control Feedback Value-Added

10. Supply Chain as Transformation Process

11. Tangible Act-Oriented GoodsServices Manufacturing vs. Service?

12. Key Differences in Goods and Services 1.Customer contact 2.Uniformity of input 3.Labor content of jobs 4.Uniformity of output 5.Measurement of productivity 6.Production and delivery 7.Quality assurance 8.Amount of inventory

13. Manufacturing (goods) 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 Intangible

14. Managing Services is Challenging Less structured jobs Customer contact Often low-skilled jobs and workers High turnover (especially in low-skill jobs) High input variability External factors

15. Process Management Definition – “one or more actions that transform inputs into outputs” Variety – Projects

17. Process Management Definition Types – Projects – Batch production

18. Process Management Definition Types – Projects – Batch production – Mass production chocolates – Mass customization It once was just a sneaker!

19. Customization (normally) More labor intensive More time consuming Requires more highly-skilled people Requires more flexible equipment Much lower volume of output Higher price tags

20. Process Management Definition Types – Projects – Batch production – Mass production – Mass customization It once was just a sneaker! – Continuous production

22. Process Variation. Four Sources of Variation Variety of goods or services being offered The greater the variety of goods and services offered, the greater the variation in production or service requirements. Structural variation in demand These are generally predictable. They are important for capacity planning. Random variation Natural variation that is present in all processes. Generally, it cannot be influenced by managers. Assignable variation Variation that has identifiable sources. This type of variation can be reduced, or eliminated, by analysis and corrective action.

23. Key Trends and Issues in Manufacturing E-Business & E-Commerce Management of Technology Globalization Management of Supply Chains Outsourcing Agility Ethical Behavior

24. Key trend: What is Manufacturing? Not your grandfather’s industry World's largest manufacturing economy, – US: 21% – China: 15% – Japan: 12% 11.7% GDP

25. Key trend: What is Manufacturing? 17 million US jobs (including support) – one in six private sector jobs – 12 million mfg jobs Avg $77,186 annually (pay and benefits) – average non-manufacturing = $56,436 annually. 66% of all R&D in the nation Would be the 8th largest economy

26. Key trend: What is Manufacturing? Who’s going to work there? – Jobs, but no people Jobs, but no people – and it's not just here and it's not just here

29. Key trend: Globalization/Offshoring access to international markets

31. Key trend: Globalization/Offshoring access to international markets response to changes in demand reliable sources of supply latest trends and technologies favorable cost

39. Key trend: Supply Chain Management Supply chain Suppliers’ suppliers Direct suppliers ProducerDistributor Final Customers

43. Historical Evolution of OM Industrial Revolution Scientific Management Human Relations Movement Decision Models and Management Science Influence of Japanese Manufacturers

44. “Japan, Inc.” Japanese manufacturing – Efficiency and quality TPS and JIT (lean) mfg

45. “lean” philosophy – Value or waste – Preserve value with less work – Increase efficiency, decrease waste, and measure TPS characteristics – Cost reductions by eliminating waste – Very low inventories (JIT)

46. It all has to fit

47. TPS and JIT (lean mfg) “lean” philosophy TPS characteristics – Cost reductions by eliminating waste – Very low inventories (JIT) – Short production cycle times – Order-based production

48. Advanced manufacturing Definition – Nanotechnology then is now