Operations and SCMGoals:- Optimize production - Reduce cost- Control inventories - Increase efficiencies Goals:- Optimize production - Optimize distribution/servicesGoals:- Optimize all
3/29/20 LOGO CHAPTER 4: MAKING MsC Bui Thi Bich Lien MsC Bui Thi Bich Lien Contents Introduction Operation management perspectives Production Capability Management Need for new products Lean Production MsC Bui Thi Bich Lien MsC Bui Thi Bich Lien 3/29/20 Objective of learning vOutline the role of Production management and OM in business strategy vDetail the 10 strategic decisions of OM vFind the good locations for facilities vKnow how to manage the Production capability vUnderstand the process of producing new product vApplying of Lean production MsC Bui Thi Bich Lien Introduction Make product MsC Bui Thi Bich Lien MsC Bui Thi Bich Lien 3/29/20 Introduction vProduct and process § Products: The way products are designed determines the processes that are available to make them § Process: The product design and the process determine the quality and cost of the product • Quality and cost determine the profitability of the company MsC Bui Thi Bich Lien Definition of Production The processes and methods used to transform tangible inputs (raw materials, semi-finished goods, subassemblies) and intangible inputs (ideas, information, knowledge) into goods or services Resources are used in this process to create an output that is suitable for use or has exchange value http://www.businessdictionary.com/definition/prod uction.html MsC Bui Thi Bich Lien MsC Bui Thi Bich Lien 3/29/20 Input: Human resources, capital, technical, raw materials, land, energy, information Output: product, service, wages, environmental impact MsC Bui Thi Bich Lien Role of production Enterprise: provide variable good and service to enhance living standard of whole society Country: Manufacturing ability including productivity and production efficiency Supply chain: Value creation MsC Bui Thi Bich Lien MsC Bui Thi Bich Lien 3/29/20 MsC Bui Thi Bich Lien Classify production systems Classify Production volume and repeatability - Single production - Mass production - Batch production Production organizing form - Flow shop - Job shop - Production by project Production models related to customers - MTS MTO ATO ETO MsC Bui Thi Bich Lien MsC Bui Thi Bich Lien 3/29/20 MsC Bui Thi Bich Lien 2.Operation management perspectives Production Management Goals: - Optimize production - Control inventories Operations management Goals: - Optimize production - Optimize distribution/services Operations and process management Goals: - Optimize all business functions Operations and SCM Goals: - Optimize/integrate all planning - Optimize/integrate supply chain - Reduce cost - Increase efficiencies MsC Bui Thi Bich Lien MsC Bui Thi Bich Lien 3/29/20 Production management Definition The design, execution, and control of operations that convert resources into desired goods and services, and implement a company's business strategy http://www.businessdictionary.com/definition/oper ations-management.html Nature of production management - Establish production system - Manage the process of converting inputs into outputs - Meet the requirement of customers and company’s objectives MsC Bui Thi Bich Lien Role of production management Ensuring outputs provided based on operating resources effectively, and meet the highest requirement of customers - Ensuring the product and service quality suitable to customer’s demand - Ensuring the right quantity - Minimize the unit cost - Shorten production time and service provision - Building a dynamic and flexible production system - Building a compact system and method of management MsC Bui Thi Bich Lien MsC Bui Thi Bich Lien 3/29/20 Basic activities of production management - Forecasting production demand - Product design and technology process - Managing production capacity of enterprises - Factory positioning - Production layout in the enterprise - Planning resources - Production moderation MsC Bui Thi Bich Lien Operation Management vOperations management is responsible for producing the products and services the customer wants, when wanted, with the required quality, at minimum cost and maximum effectiveness and productivity MsC Bui Thi Bich Lien MsC Bui Thi Bich Lien 3/29/20 The scope of Operation Management functions Strategy Generating strategies that create distinctive operations competencies consistent with corporate strategies Quality Setting quality levels for products and services consistent with corporate strategies Product design Translating customer requirements into product and service designs while ensuring high quality and reasonable cost Process design Designing processes that leverage operations competencies and optimize plant and delivery Facilities Generating strategies that create distinctive operations competencies consistent with corporate strategies MsC Bui Thi Bich Lien The scope of Operation Management functions Human resources Project Management SCM Forecasting Planning and scheduling MsC Bui Thi Bich Lien Establishing a motivated, skilled, committed, innovative and customer-focused work force Using effective techniques to manage projects that ensure they are completed on time and within budget Structuring a “chain” of suppliers, producers, and distributors capable of acting as a single source to satisfy the customer Using methods and quantitative techniques to forecast estimates of demand on operations resources Using manufacturing and distribution planning systems to assist operations to determine inventory and capacity requirements MsC Bui Thi Bich Lien 3/29/20 Ten strategic OM decisions v Product and service design: defining products and service that optimize OM resources and competencies v Quality: Matching quality specifications and customer expectations v Process and capacity design: Determining OM process technologies, quality, human capital and maintenance v Location selection: Locating manufacturing and service resources that optimize marketplace needs v Layout design: Maximizing plant material flows, capacity needs, personnel levels, technology decisions, and inventory requirements MsC Bui Thi Bich Lien Lighthouse company need to choose a place to build site There are options: A, B and C The infomation of places as follow: - Reasoning suitable location according to production output - Which location should the company choose if it produces 2000 products per year Table: fixed cost and variable cost of each location Location Fixed cost per year Var cost per year MsC Bui Thi Bich Lien MsC Bui Thi Bich Lien 10 3/29/20 Ten strategic OM decisions v Job design and work measurement: developing and measuring OM workforce, skills, talents and innovative thinking v SCM: networking customers and suppliers with OM to promote mutual trust, quality, delivery and innovation v Inventory: leveraging inventory to optimize customer satisfaction, supplier capabilities, production schedules and workforce planning v Scheduling: Integrating product and service requirements with feasible production and purchasing schedules v Maintenance: Utilizing schedules of preventive maintenance to prevent equipment failure and MsC Bui Thi Bich Lien downtime Production Capability Management Definition Production capacity Production capability is the ability to produce the amount of product in a unit of time, measured by the production capacity - Production capacity of equipment or technological line in a unit of time - Measurement unit: T, kg, m, currency value… MsC Bui Thi Bich Lien MsC Bui Thi Bich Lien 12 3/29/20 Capacity planning Balance between capacity and demand Avoid waste due to excess capacity Proceed when there are activities: - Human resource changing - Additional equipment - Increase/decrease product - Redesign production process - Flexibility enhancing - Production cost reduce MsC Bui Thi Bich Lien Capacity planning Capacity planning Capacity planning process ü ü ü ü ü ü Current capacity evaluation Capacity demand estimation Additional capacity determination Capacity plans determination Selecting suitable capacity plan Evaluating economics and social effectiveness MsC Bui Thi Bich Lien MsC Bui Thi Bich Lien 13 3/29/20 Production moderating Allocating resources over time to perform production tasks Definition Capacity planning ü Long – term: year ü Resources determination: equipment Production planning ü Mid – term: Quarter, month ü Using equipment, labor Production schedule ü Mid – term: week ü Material planning, production planning Production moderating ü Short – term: day, hour ü Task order, completion time MsC Bui Thi Bich Lien Role ü Minimize completion time ü Maximize equipment utilizing ü Minimize doing tasks ü Minimize delay Benefit ü Balance supply and demand in enterprise ü Make the adaption in Supply chain MsC Bui Thi Bich Lien MsC Bui Thi Bich Lien 14 3/29/20 Priority Rules MsC Bui Thi Bich Lien Example vThere are orders that need to be processed as follows: Task Processing time Lead-time A B C 18 D 15 E 23 MsC Bui Thi Bich Lien MsC Bui Thi Bich Lien 15 3/29/20 RESULTS COMPARED BY PRINCIPLES vAverage completion time = Total time line / number of jobs vAverage Job Number = Total Time Line / Total Processing Time vAverage delay time = Total number of late day/ job number MsC Bui Thi Bich Lien Evaluation of production process Productivity ü Productivity is a measurement for the effectiveness of task ü Evaluating the effectiveness of business MsC Bui Thi Bich Lien MsC Bui Thi Bich Lien 16 3/29/20 Productivity measurement Part measurement Output Labor number Many factors measurement Total measurement Output Materials Output Capital Output Labor + material Output Energy Output Capital + Energy Number of product or services made Total input MsC Bui Thi Bich Lien Improve productivity Productive improvement= RSTUVWXYZYX[ (X)\ RSTUVWXYZYX[ (X\*) RSTUVWXYZYX[ (X\*) Enterprise (Increase Profit) Government (Increase tax, GDP) Improve productivity Customer (High Quality, suitable price) Labor (Increase income) MsC Bui Thi Bich Lien MsC Bui Thi Bich Lien 17 3/29/20 Factors to Improve productivity MsC Bui Thi Bich Lien Selecting strategy to improve productivity Downsizing production Output Input Reduce cost Output Input Enhance Effectiveness Output Input Promote growth Output Input Creative, innovative Output Input MsC Bui Thi Bich Lien MsC Bui Thi Bich Lien 18 3/29/20 Need for new products vThree ways for maintaining profitability in decline phase § Introduce new products § Improve existing products § Improve the methods of production MsC Bui Thi Bich Lien New product development process MsC Bui Thi Bich Lien MsC Bui Thi Bich Lien 19 3/29/20 Product Design process flow TIÊU ĐỀ Concept generation Form design Determine physical appearance of the product Target customer and service experience Concept development Functional design Analyze feasibility of proposed new products Determine performance specifications of the product Productional design Determine processing specificaitons of the product Production Rollout General product release Final design and testing Perform prototype testing, establish final designs, launch marketing campaign MsC Bui Thi Bich Lien Product development principles 1) Customer focus: § Products and services should always be designed to satisfy customers’ wants or needs from their perspective 2) Simplification § The emphasis is not cutting out products simply to reduce variety, but to remove unnecessary products and variations 3) Standardization § Standardization is the way parts fit together If the designs of assemblies are standardized so various models or products are assembled in the same way, the mass production is possible 4) Specialization § In product specialization, a firm may produce and market only one or a limited range of similar products This leads to process and labor specialization, which increases productivity and decreases costs MsC Bui Thi Bich Lien MsC Bui Thi Bich Lien 20