Operations Management: The Core of Production Excellence

1. Chapter 9 Production and Operations Management Asst. Prof. Dr. Serdar AYAN 1

3. Operations Management The planning and designing of the processes that transform resources into finished products; managing the transformation process; ensuring high quality of finished goods. Importance of Production & Operations Management

4. Development and administration of the activities involved in transforming resources into goods and services. Operations Management Operations Management (OM)

5. Historically called production or manufacturing Change to operations = focus on goods & services Emphasis on viewing the operations function as a whole Operations Management Operations Management (OM)

6. Manufacturing – activities and processes used in making tangible products (production) Production – activities and processes used in making tangible products (manufacturing) Operations – the activities and processes used in making both tangible and intangible products Production & Operations Management

7. Transformation Process of operations management Production & Operations Management

8. Inputs – Labor Money Materials Energy Outputs Goods Services ideas Transformation Process

9. Production & Operations Management Inputs, outputs, and transformation processes Manufacturing Oak Furniture

10. Operations Management Service Businesses – Airlines Colleges Nonprofit organizations OM in Service Businesses

11. Operations Management Service Businesses – 70% of all employment in the United States; fastest growth of jobs OM in Service Businesses

12. Operations Management Service Businesses – actions that are directed toward consumers who use them OM in Service Businesses

13. Operations Management Ideal Service Business - Customer contact High-tech High-touch OM in Service Businesses

14. Operations Management Service Business Output Intangible Perishable Difficult to gauge demand OM in Service Businesses

15. Operations Management Differences in Nature & Consumption of Output (Manufacturing vs. Service Providers) Nature and consumption of output Uniformity of inputs Uniformity of outputs Labor required Measurement of productivity

16. Planning & Designing Operations Systems Determine – What consumers want Design product to satisfy the want Marketing research Planning the Product

17. Planning & Designing Operations Systems Determine – Types and quantities of raw materials Skills & quantity of labor Processes for transformation to outputs Planning the Product

18. Designing the Operations Processes Standardization – the making of identical interchangeable components or products. Faster, reduces production costs Televisions Ballpoint pens Tortilla chips

19. Designing the Operations Processes Modular Design – creation of an item in self-contained units that can be combined or interchanged to create different products Personal computers -- CPU’s, motherboards, monitors

20. Designing the Operations Processes Customization – making products to meet a particular customer’s needs or wants Repair services Photocopy services Custom artwork Bridges Ships Computer software

21. Designing the Operations Processes Mass Customization – making products to meet needs or wants of a large number of individual customers. Customer selects Model, size, color, style, design Dell Computer Fitness program Travel packages

22. Planning Capacity Capacity – maximum load that an organizational unit can carry or operate Hershey’s production capacity 33 million Hershey’s kisses per day 12 billion per year

23. Planning Facilities Facility location Facility layout Technology

24. Managing Quality Quality – critical element of operations management. Degree to which a good or service meets the demands and requirements of customers.

25. Managing Quality Quality Control – processes an organization uses to maintain its established quality standards. Total Quality Management (TQM) – philosophy that uniform commitment to quality will promote a culture that meets customers’ perceptions of quality.