Operations Management & Planning

Operations Management & Planning

Role of the Operations Manager • Managers that are responsible for the activities involved in producing the goods & services for a company • Their activities include the following: • Choosing a process for producing the company’s goods or services • Selecting a production site • Laying out the production facility • Design production workers’ jobs • Planning day-to-day production operations • Controlling costs • Monitoring inventories

Operating systems & activities • Operating system – consists of the processes and activities needed to produce goods or services. • Made up of people, materials, facilities, and information. • These inputs are combined to produce the company’s goods or services.

Types of operating systems • Continuous-flow systems • Operating systems that function all the time regardless of customer orders • McDonald’s makes a certain # of products based on sales history & hopes people will buy them • Intermittent-flow systems • Operating systems that operate only when an order needs to be filled • Taco Bell does not produce anything until a customer places an order

Continuous-Flow Systems • Used to produce standardized products that a business keeps in stock • Companies ship products to customers and store the remainder as inventory • Most large manufacturing companies use a continuous-flow system. • Allows them to keep their assembly line running all the time • Achieve maximum efficiency & high profits

Intermittent-Flow Systems • Used to produce customized products & services • No finished-goods inventory because all products are immediately shipped to the customers who ordered them. • Most service companies use this type of system • These kinds of businesses operate only in response to specific requests by customers

Computer technology for Operations Management • In many industries, computers have revolutionized the way businesses produce their products • Four Processes • Computer-Aided Design • Computer-Aided Engineering • Computer-Aided Manufacturing • Computer-Integrated Manufacturing Help businesses streamline their operations.

Computer-Aided Design • Designing products with the help of computers • Helps companies create better products because it allows them to try various product designs without actually manufacturing the product • Computer simulation helps businesses identify defects or problems at the design stage before they spend millions of dollars on production • CAD significantly reduced the time it takes companies to design new products

Computer-Aided Engineering • Using computers to engineer products • Used to analyze the performance of a product under different conditions

Computer-Aided Manufacturing • Computers are used to actually produce the products they make • Computers provide instructions to automated production equipment, such as robots • To use CAM, businesses collect and store data on how a process should be performed • The computer then programs equipment to perform particular tasks • Many of the tasks once performed by workers are now done by robots

Computer-Integrated Manufacturing • Using computers to integrate all manufacturing operations into a single, smoothly operating manufacturing system • Every aspect of manufacturing a product is aided by computers, including • Conception • Design & development • Production • Marketing • Product support Businesses use CIM because it lowers manufacturing costs & reduces production time. CIM also improves product quality

Process Selection • Selection of an operating system • Involves a wide range of decisions about the specific processes to use, the sequences in which to perform the processes, and the equipment to use • All operating processes require equipment. Managers must make decisions about purchasing or leasing equipment

Factors to consider in selecting equipment • Availability of production workers able to operate equipment • Training required to be able to operate equipment • Availability of parts & services • Availability of supplier assistance in installation and debugging • Compatibility of equipment with existing equipment • Maintenance record • Flexibility of equipment in handling changes to product • Safety • Expected delivery date • Warranty coverage • Price Choosing equipment for a company can be a difficult process.

Site Selection • Process of selecting a location for a business • Entrepreneurs may come up with excellent ideas for a business but locate the business in the wrong place. • Choosing a location that meets the needs of a business is a very important management decision

Labor costs (most impt) Cost of land Cost of plant construction Location of competitors Location of customers Transportation costs Cost of materials Taxes Availability of materials, supplies, & workers Strength of labor unions Community attitudes Political situation Laws Climate Living conditions Factors to consider in choosing a site

When a company outgrows its facilities, managers face three options for obtaining more space. They can: • Expand the site • Move the entire operation to another site • Add another facility elsewhere Many businesses first try to expand their current facilities in order to avoid the expense of moving or the inconvenience of operating more than one facility

Facilities Layout • Process of planning the physical arrangement of a facility • Includes identifying where office space, meeting rooms, customer service areas, eating areas, production areas, equipment, storage space, bathrooms, hallways, and other areas will be located

Materials handling • Network that receives, stores, & moves materials between processing points within a factory • Managers must closely coordinate the design & layout of their facilities with the design of the materials-handling system • Many factors, including the size, shape, weight, density, and flexibility of materials, affect a facility’s layout. • Some materials require special handling and storage • In designing the facilities layout, computer manufacturers must take these special factors into account • Operations managers also need to consider the equipment that will be needed to transport products. Ex. Companies that use forklifts must create wide aisles to accommodate them.

Types of layouts • Product layout - Groups equipment & staff based on the various steps involved in producing a product. Such layouts are often set up as assembly lines. This layout is efficient • Process layout – groups together equipment and staff that perform similar functions • Fixed-position layout - product is too large to move and remains in one place. This layout is inefficient • The kind of layout a business chooses depends on the type of product or service it products

Job design • Describes the work an individual or group of individuals is supposed to perform • Job designs can be described in terms of five key characteristics • Skill variety – refers to skills a worker needs to perform a job • Task identity – refers to the degree to which a job allows a worker to complete an entire task rather than just part of the task • Task significance- refers to the level of impact a job has on the whole organization • Autonomy- refers to the independence workers have to make decisions about how to perform their jobs • Feedback – involves the extent to which managers let workers know how they are performing

Importance of Job Design • The Core Job Characteristics on the previous slide lead to the following work outcomes: • High level of work motivation • High quality work performance • High satisfaction with work • Low absenteeism and turnover

Physical work environment • To attract and retain good workers, managers need to provide a satisfactory and pleasant physical work environment • Poor work environments may prevent employees from working efficiently • Ex. Too hot or cold, poorly ventilated, noisy, poorly lit, or crowded

Day-to-Day Operations Planning • Managers need to carefully plan day-to-day operations to ensure that production proceeds smoothly and that costs are low • Production planning involves three components: • Aggregate production planning • Resource allocation • Activity scheduling

Aggregate production planning • Uses an organization’s resources to produce enough goods or services to meet demand • Rely on company forecasts to make decisions about production planning • The number of workers & supplies needed can be estimated based on these forecasts

Resource allocation • Allocation of people, materials, & equipment to meet the operating system requirements • Allocating these resources efficiently will keep company costs low while producing quality goods

Activity scheduling • Creating a detailed production timetable. • Involves loading (assigning a job to a factory or department) and dispatching (scheduling of each task that is performed in the factory). • Scheduling increases efficiency & ensures that all workers understand their role in the production process

Operations Management & Planning