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Operations Management Operations and Productivity

Operations Management Operations and Productivity. Professor Ahmadi. Learning Objectives. Definition of Operations Management (OM) Organizational Functions Why Study OM? A brief history of operations management The future of the discipline Goods Versus Services Measuring productivity

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Operations Management Operations and Productivity

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  1. Operations Management Operations and Productivity Professor Ahmadi

  2. Learning Objectives • Definition of Operations Management (OM) • Organizational Functions • Why Study OM? • A brief history of operations management • The future of the discipline • Goods Versus Services • Measuring productivity • Career opportunities in operations management

  3. What Is Operations Management? • Production is the creation of goods and services • Operations management is the set of activities that creates value in the form of goods and services by transforming inputs into outputs

  4. Organizing to Produce Goods and Services(Organizational Functions) • Essential functions: • Operations –creates the product • Marketing – generates demand • Finance/accounting – tracks organizational performance, pays bills, collects money

  5. Commercial Bank Finance/ Marketing Operations Accounting Transactions Teller Check Security Scheduling Clearing Processing Functions - Bank

  6. Airline Finance/ Marketing Operations Accounting Flight Ground Facility Catering Operations Support Maintenance Functions - Airline

  7. Manufacturing Finance/ Marketing Operations Accounting Production Quality Manufacturing Purchasing Control Control Functions - Manufacturer

  8. Why Study OM? • OM is one of three major functions (marketing, finance, and operations) of any organization. • We want (and need) to know how goods and services are produced. • We want to understand what operations managers do. • OM is such a costly part of an organization.

  9. What Operations Managers Do • Basic Management Functions • Planning • Organizing • Staffing • Leading • Controlling

  10. The Critical Decisions • Quality management • Service and product design • Process and capacity design • Location • Layout design • Human resources and job design • Supply chain management • Inventory, material requirements planning, • Intermediate, short term, and project scheduling • Maintenance

  11. Major Events in OM • Standardized parts (Eli Whitney 1800) • Scientific Management (Frederick Taylor 1881) • Coordinated assembly line ( Henry Ford 1903) • Gantt charts (Gantt 1916) • Motion study (Frank and Lillian Gilbreth 1922) • Quality control (Deming 1950)

  12. Major Events in OM (Continued) • CPM/PERT (DuPont 1957) • Material requirements planning (Orlicky 1960) • Computer aided design (CAD 1970) • Flexible manufacturing system (FMS 1975) • Baldrige Quality Awards (1980) • Computer integrated manufacturing (1990) • Globalization (1992) • Internet (1995)

  13. New Challenges in OM • Local or national focus • Batch shipments • Low bid purchasing • Lengthy product development • Standard products • Job specialization FromTo • Global focus • Just-in-time • Supply chain partnering • Rapid product development • Mass customization • Empowered employees, teams • Others: • Environmental Sensitivity • Ethics

  14. Goods Versus Services • Can be resold • Can be inventoried • Some aspects of quality measurable • Selling is distinct from production GoodsServices • Reselling unusual • Difficult to inventory • Quality difficult to measure • Selling is part of service

  15. Goods Versus Services - Continued • Product is transportable • Site of facility important for cost • Often easy to automate • Revenue generated primarily from tangible product GoodsServices • Provider, not product is transportable • Site of facility important for customer contact • Often difficult to automate • Revenue generated primarily from intangible service.

  16. Units produced Input used Productivity = Productivity Measurement • Measure of process improvement • Represents output relative to input • Only through productivity increases can our standard of living improve

  17. Output Labor + Material + Energy + Capital + Miscellaneous Productivity = Multi-Factor Productivity • Also known as total factor productivity • Output and inputs are often expressed in dollars

  18. Productivity Variables • Labor - contributes about 10% of the annual increase • Capital- contributes about 32% of the annual increase • Management - contributes about 52% of the annual increase

  19. Entry-Level Jobs in OM • Purchasing planner/buyer • Production (or operations) supervisor • Production (or operations) scheduler/controller • Production (or operations) analyst • Inventory analyst • Quality specialist • Others …

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