Let’s Watch Ops in Action

1. Let’s Watch Ops in Action • Feeding Folks in the Air

2. Why Study OM? • Every aspect of business affects or is affected by operations • Many service jobs are closely related to operations • Financial services • Marketing services • Accounting services • Information services • There is a significant amount of interaction and collaboration among the functional areas • It provides an excellent vehicle for understanding the world in which we live 1-2

3. Systems Approach • System - a set of interrelated parts that must work together • The business organization is a system composed of subsystems • marketing subsystem • operations subsystem • finance subsystem • The systems approach • Emphasizes interrelationships among subsystems • Main theme is that the whole is greater than the sum of its parts • The output and objectives of the organization take precedence over those of any one subsystem Instructor Slides

4. Historical Evolution of OM • Industrial Revolution • Scientific Management • Human Relations Movement • Decision Models and Management Science • Influence of Japanese Manufacturers 1-4

5. Pre-Industrial Revolution Craft production - System in which highly skilled workers use simple, flexible tools to produce small quantities of customized goods Some key elements of the industrial revolution Began in England in the 1770s Division of labor - Adam Smith, 1776 Application of the “rotative” steam engine, 1780s Cotton Gin and Interchangeable parts - Eli Whitney, 1792 Management theory and practice did not advance appreciably during this period Industrial Revolution 1-5

6. Movement was led by efficiency engineer, Frederick Winslow Taylor -Key aspects: observation, measurement, analysis and improvement of work methods, and economic incentives“Management is responsible for planning, carefully selecting and training workers, finding the best way to perform each job, achieving cooperate between management and workers, and separating management activities from work activities”Emphasis was on maximizing outputMass productionInterchangeable partsDivision of labor Scientific Management

7. Scientific Management - contributors • Frank Gilbreth - father of motion studies (nice guy, wife was more interesting) • Henry Gantt - developed the Gantt chart scheduling system and recognized the value of non-monetary rewards for motivating employees 1-7

8. More Scientific Management Guys • Harrington Emerson - applied Taylor’s ideas to organization structure • Henry Ford - employed scientific management techniques to his factories • Moving assembly line • Mass production Instructor Slides

9. Human Relations Movement Emphasized the importance of the human element in job design – first contributor was… Lillian Gilbreth (Frank “Motion Studies” Gilbreth’s wife) The Mother of Modern Management 1-9

10. Lillian Moller Gilbreth -1878-1972 • Engineer • Industrial psychologist • Mother of 12 – One of her kids wrote “Cheaper by The Dozen” • Referred to as a “genius in the art of living” • Husband, Frank, was partner—he never went to college Instructor Slides

11. Within the Gilbreth Marriage We find a blend of the scientific/human relations approach. • -Frank was concerned with the technical aspects of worker efficiency - Lillian was concerned with the human aspects of time management. Instructor Slides

12. -Her ideas were not widely adopted during her lifetime, but set direction to future but set direction of future -She recognized that workers are motivated by indirect incentives (among which she included money) and direct incentives, such as job satisfaction. -Her work with Frank helped create job standardization, incentive wage-plans, and job simplification. -Finally, she was among the first to recognize the effects of fatigue and stress on time management. Instructor Slides

13. Other Important Human Relations Contributors… • Elton Mayo – Hawthorne studies on worker motivation, 1930 • Abraham Maslow – motivation theory, 1940s; hierarchy of needs, 1954 • Frederick Hertzberg – Two Factor Theory, 1959 • Douglas McGregor – Theory X and Theory Y, 1960s • William Ouchi – Theory Z, 1981 Instructor Slides

14. Maslow

15. Influence of Japanese Manufacturers Refined and developed management practices that increased productivity • Credited with fueling the “quality revolution” • Just-in-Time production 1-15

16. Decision Models & Management Science • F.W. Harris – mathematical model for inventory management, 1915 • Dodge, Romig, and Shewart – statistical procedures for sampling and quality control, 1930s • Tippett – statistical sampling theory, 1935 • Operations Research (OR) Groups – OR applications in warfare • George Dantzig – linear programming, 1947 1-16

17. Economic conditions Innovating Quality problems Risk management Competing in a global economy Today’s OM still has traces of its past, combined in new ways Key Issues for Operations Managers Today 1-17

18. Environmental Concerns • Sustainability • Using resources in ways that do not harm ecological systems that support human existence Sustainability measures often go beyond traditional environmental and economic measures to include measures that incorporate social criteria in decision making • All areas of business will be affected • Product and service design • Consumer education programs • Disaster preparation and response • Supply chain waste management • Outsourcing decisions 1-18

19. Financial statements Worker safety Product safety Quality The environment The community Hiring and firing workers Closing facilities Workers rights Ethical issues arise in many aspects of operations management: Ethical Issues in Operations 1-19

20. The Need for Supply Chain Management • In the past, organizations did little to manage the supply chain beyond their own operations and immediate suppliers which led to numerous problems: • Oscillating inventory levels • Inventory stockouts • Late deliveries • Quality problems 1-20

21. What Does The Study of SCM and OM Offer? The ability to grasp the many complexelements of Supply Chain Management. Those without an introduction to the specialty would not know where to begin… Never mind how to address the challenges of operating a goods or service organization from a high level.

22. The Study Helps You Define and Refine Your Professional Goal • This type of class give you a “bird’s eye” view of the way business operates • Later, you may choose to specialize in one or more areas of operations management

23. The Broad Elements of OM/SCM • Customers – what products/services do customers want • Forecasting – predicting timing and volume of customer demand • Design – incorporating customer wants, manufacturability, and time to market • Capacity planning – matching supply and demand • Processing – controlling quality, scheduling work • Inventory – meeting demand requirements while managing costs • Purchasing – evaluating potential suppliers, supporting the needs of operations on purchased goods and services • Suppliers – monitoring supplier quality, on-time delivery, and flexibility; maintaining supplier relations • Location – determining the location of facilities • Logistics – deciding how to best move information and materials 1-23

24. Supply Chain Issues • The need to improve operations • Increasing levels of outsourcing • Increasing transportation costs • Competitive pressures • Increasing globalization • Increasing importance of e-business • The complexity of supply chains • The need to manage inventories 1-24

25. Today, We Measure More Carefully- Apply Performance Metrics To Prevent Control Problems (“Events”) • Measurements of performance • Often used in industry as measuring sticks • Units produced • OSHA reportable Incidents • Product defects by shift

26. Pareto Phenomenon • A few factors account for a high percentage of the occurrence of some event(s). • 80/20 Rule - 80% of problems are caused by 20% of the activities. How do we identify the vital few, the source of the majority of our “events”?

27. Process Management • Definition = one or more actions that turn inputs into outputs. Instructor Slides

28. Process Management 1-28

29. The operations function includes many interrelated activities, e.g.- Forecasting Capacity planning Facilities and layout Scheduling Managing inventories Assuring quality Motivating employees Deciding where to locate facilities And more . . . Scope of Operations Management The scope of operations management ranges across the organization. 1-29

30. Instructor Slides

31. Role of the Operations Manager The Operations Function consists of all activities directly related to producing goods or providing services. A primary function of the operations manager is to guide the system by decision making. • System Design Decisions • System Operation Decisions 1-31

32. System Operation Decisions • System Operation -These are generally tactical and operational decisions • Management of personnel • Inventory management and control • Scheduling • Project management • Quality assurance • Operations managers spend more time on system operation decision than any other decision area • They have a vital stake in system design! 1-32

33. Let’s stop a second…. • What, really, does tactical mean? • Understand the differences between strategy and tactics in order to grasp what a “tactical” manager is.

34. Strategy Tactic Future NOW Planning Doing Journey Task Broad perspective FOCUS Purpose Urgent Anticipation Immediate

35. System Design Involves strategic decisions that • usually require long-term commitment of resources • determine parameters of system operation –physical and other scope limits • Capacity (how much) • Facility location (where) • Facility layout (how organized for task work) • Product and service planning • Acquisition and placement of equipment

36. Decision Making in SC/OM Has, as Its Goal… The creation of a stable, consistent, quality operation, process, product, service • “We aim for no surprises!” Instructor Slides

37. Goal: Avoid Process Variation Variations can be disruptive to operations and supply chain processes. They may result in additional costs, delays and shortages, poor quality, and inefficient work systems. Instructor Slides

38. To design a system, we need to understand what we set out to accomplish as an organization (mission) – e.g., this class started with something like this:

39. Systems Are Everywhere!

40. Decisions Making In Systems Design Most operations decisions involve many alternatives that can have quite different impacts on costs or profits. Typical operations decisions include: • What: What resources are needed, and in what amounts? • When: When will each resource be needed? When should the work be scheduled? When should materials and other supplies be ordered? • Where: Where will the work be done? • How: How will he product or service be designed? How will the work be done? How will resources be allocated? • Who: Who will do the work?

41. General Approach to Decision Making • Modeling is a key tool used by all decision makers. Model - an abstraction of reality; a simplification of something. Common features of models: • They are simplifications of real-life phenomena • They omit unimportant details of the real-life systems they mimic so that attention can be focused on the most important aspects of the real-life system 1-41

42. Model as Abstraction of Reality

43. Models…

44. Benefits of Models Are MANY • Easier to use and less expensive than dealing with the real system • Require users to organize and sometimes quantify information • Increase understanding of the problem – as part of process! • Enable managers to analyze “What if?” questions • Serve as a consistent tool for evaluation and provide a standardized format for analyzing a problem • Enable users to bring the power of mathematics to bear on a problem. 1-44

45. Models • Types of Models: • Physical Models • Look like their real-life counterparts • Schematic Models • Look less like their real-life counterparts than physical models • Mathematical Models • Do not look at all like their real-life counterparts 1-45

46. Schematic Example – A relatively Simple Sketch of Something Complex Instructor Slides

47. “What We Can Measure, We Must” When a mathematically optimal ideal is sought , we rely on qualitative methodologies • Linear programming • Queuing techniques – recall Disney example • Inventory models – recall Just in Time disc. • Project models • Forecasting techniques – coming up • Statistical models Instructor Slides

48. 1-48

49. Supply Demand Wasteful Costly > Opportunity Loss Customer Dissatisfaction Supply Demand < Supply Demand = Ideal Supply & Demand – Three Elements Work Together to Keep The Company Stable… Operations & Supply Chains Sales & Marketing 1-49

50. Business Operations Overlap Figure 15 Operations Marketing Finance