Operations Management

1. Operations Management An Introduction

2. Course Outline • Highlight the importance of Production and Operations Management (POM) • Define POM and its constituent elements • Link operations with strategy • Understand tools and techniques used to solve business problems • Capture knowledge from actual cases

3. Course Outline • Course organized along eight sessions • Content of each session: • Session 1 (17/5): Introduction – Processes / Operations • Session 2 (24/5): Company Presentation – Thenamaris • Session 3 (31/5): Company Visit – ALMI Tankers • Session 4 (7/6): Company Visit – COSCO (15:30) • Session 5 (14/6): Beer Game

4. Course Outline • Content of each lecture (continued): • Session 6 (21/6): Supply Chain Management • Session 7 (31/6): Inventory Management • Session 8 (?): Company Presentation – Capstone-Shipping Operations • Case studies and illustrative examples will be discussed in class • Final exam will include both problem solving and question answering

5. Textbooks • The required textbook for the course is: • Operations Management: Processes and Supply Chains, 2015. 11th Edition, by Lee J. Krajewski, Manoj K. Malhotra and Larry P. Ritzman • Additional textbook (not required) with emphasis on Manufacturing Systems is: • Factory Physics, 2011. 3rd Edition, by Wallace J. Hopp and Mark L. Spearman • Grading: 80% final exam and 20% assignment

6. POM Definition • What is Production and Operations Management? • Function that enables enterprises to achieve their goals through efficient acquisition and utilization of resources • Realize bottom-line results (value-added to stakeholders) by linking strategy and every-day decisions

7. The POM System • Direction and control of the processes that transform inputs into finished goods-services

8. The POM System • Input examples: • Medical professionals, building, diagnostic equipment, pharmaceuticals, first aid material (Hospital) • Workers, managers, engineering blueprints, drills, lathes, metals, paints, energy (Manufacturer) • Financial professionals, checks, currency, building (Bank)

9. The POM System • Output examples: • Healed patients - hopefully! (Hospital) • Physical products (Manufacturer) • Financial products (Bank) • Transformation examples: • Physiological, behavioural (Hospital) • Physical change of shape (Manufacturer) • Monetary (Bank)

10. Manufacturing Vs. Services • Similar in most aspects • Differences:

11. The POM Function • POM is a distinct function within any enterprise organizational chart • Draws expertise from multiple disciplines

12. The POM Function • Requires cross-functional coordination • Strongest connection with marketing • Accounting provides performance feedback • Finance influences investment • Human Resources recruits and trains personnel • Engineering design should match manufacturing capabilities • Critical links with Information Systems and Organizational Structure

13. POM and Decisions • Decisions define the scope and content of POM – five categories: • Strategic choices (Strategy) • Processes • Quality • Capacity, Location, Layout • Operations

14. POM and Decisions • Strategic choices affect all POM categories and must be defined at all hierarchical enterprise levels: • What is the corporate strategy? • What are the competitive priorities? • What is the flow strategy? • What are the quality objectives? • What are the functional area strategies?

15. POM and Decisions • Customer-driven • Core competencies • Market • Priorities • Engineering • Flow • Trends

16. POM and Decisions • Competitive priorities: • Cost • Basic food items – salt, flour, paper • Consumer electronics • Quality • High performance design (superior features, tight tolerances, greater durability, courteous service, convenient location, safety – Holmes Place Gyms) • Consistent quality (frequency of conformance to specs)

17. POM and Decisions • Competitive priorities (continued): • Time (time-based competition) • Fast delivery (FedEx) • On-time delivery (General Motors) • Product development speed (Zara, Japanese Auto Mfg) • Flexibility • Customization – accommodate unique customer needs • Volume flexibility – quick changes in production rates

18. POM and Decisions • Flow strategies: • Make-to-stock (Sony, Siemens, Delta) • Finished goods held in stock for immediate delivery • High volumes, standard products • Production based on forecasted demand • Supports low cost, consistent quality priority • Standardized services (FedEx, Postal Services) • Services with little variety and high volumes • Supports low cost, on-time delivery & consistent quality

19. POM and Decisions • Flow strategies (continued): • Assemble-to-order (Dell, Vodafone, IKEA) • Assemblies & components held in stock • Final assembly completed after customer selects options • Large number of final configurations are possible • Forecasting of customer demand for final products is impractical (multitude of combinations) • Widely used in computer manufacturing • Services: mobile providers (packages for individuals)

20. POM and Decisions • Flow strategies (continued): • Make-to-order (Home construction, Boeing) • Most required materials are purchased when customer places the order • Production based on individual customer specifications • Requires flexibility at all levels (organization, processes, flows etc.) • Supports customization as a competitive priority • Automotive industry towards make-to-order

21. POM and Decisions • Five categories (continued): • Processes • What will be the product-service design? • What work will be performed in-house? • What will be the level of automation? • How do we improve existing processes? • Can we provide leadership in technological change? • Degree of job enlargement – participatory mgt? • Time estimates for work requirements

22. POM and Decisions • Five categories (continued): • Quality • Objectives and means (Statistics – TQM) • Ways for monitoring and improvement • Capacity, location and layout • What system capacity is needed? • Where should facilities be located? • How should facility layouts be organized?

23. POM and Decisions • Five categories (continued): • Operations • Coordination of external and internal supply chains • Forecasting methods (for demand) • Inventory management • Output control and staffing levels over time • Purchasing and production tactics • Work scheduling • Priorities and operations mode

24. POM and Decisions • Operating decisions link strategy with every day tasks and compliment strategy with feedback from existing systems • Operating decisions are also interconnected: • Purchasing and inventory management • Production and staffing levels • Forecasting and capacity requirements • Product design and process layout

25. POM Trends • Service sector growth in three areas • Public (governments, utilities) • Wholesale and retail firms • Transportation, communications, health, finance • Keeping manufacturing a vital sector • Creates value and wealth • Complementary to services

26. POM Trends • Emphasis on productivity • Continuous improvement pursuit • Productivity links to standard of leaving • Global competition • Competition based on quality, time and technology • Environmental, ethical and work-force diversity issues

27. Case Studies • In-class discussion: • Chad’s Creative Concepts (from textbook, Chapter 1, page 29) • Reading – think about • Custom Molds Inc. (from textbook, Chapter 3, pages 125-127)