Operations management 12th stevenson ch01 introduction to operations management

Chapter Introduction to Operations Management McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc All rights reserved Chapter 1: Learning Objectives  You should be able to: Instructor Slides Define the term operations management Identify the three major functional areas of organizations and describe how they interrelate Identify similarities and differences between production and service operations Describe the operations function and the nature of the operations manager’s job Summarize the two major aspects of process management Explain the key aspects of operations management decision making Briefly describe the historical evolution of operations management Characterize current trends in business that impact operations management 1-2 Operations Management What is operations?  The part of a business organization that is responsible for producing goods or services How can we define operations management?  The management of systems or processes that create goods and/or provide services Instructor Slides 1-3 Good or Service? Goods are physical items that include raw materials, parts, subassemblies, and final products • • • • Automobile Computer Oven Shampoo Services are activities that provide some combination of time, location, form or psychological value • • • • Air travel Education Haircut Legal counsel Instructor Slides 1-4 Operations Management  For example a bank’s operation activities may include  Forecasting  Capacity planning (How any tellers? Too few or too many tellers will have a negative impact to profit)  Scheduling  Inventory management  Quality assurance  Service design  Waiting lines  Location of facilities  Employee motivation and training  Layout  Process selection  More … Operations Management  PC manufacturer example Forecasting Capacity planning Scheduling Inventory management Quality assurance Product design Waiting lines Location of facilities Employee motivation and training Layout Process selection More … Operations Management This course is designed to acquaint the students with the area of operations management This is an overview course in operations management where the students will be exposed to the tools used by decision makers in both the service sector as well the manufacturing sector to improve the decision making process Supply Chain Supply Chain – a sequence of activities and organizations involved in producing and delivering a good or service Suppliers’ Suppliers’ suppliers suppliers Instructor Slides Direct Direct suppliers suppliers Producer Producer Distributor Distributor Final Final Customers Customers 1-8 Supply & Demand Operations & Operations & Supply Chains Sales & Marketing Sales & Marketing Supply Chains Wasteful Supply > Demand Wasteful Costly Costly Opportunity Loss Supply Supply Instructor Slides < Demand = Demand Opportunity Loss Customer Dissatisfaction Customer Dissatisfaction Ideal Ideal 1-9 Supply Chain for Bread Instructor Slides 1-10 Historical Evolution of OM Industrial Revolution Scientific Management Human Relations Movement Decision Models and Management Science Influence of Japanese Manufacturers Instructor Slides 1-41 Historical Evolution of Operations Management Craft production Industrial revolution (1770’s) Scientific management (1911) Human relations movement (1920-60)  Workers should be treated with dignity Decision models (1915, 1960-70’s) Influence of Japanese manufacturers  JIT, TQM, … Industrial Revolution  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 Instructor Slides 1-43 Historical Evolution of Operations Management Post Civil War  Labors coming to the cities  Increase in capitals by forming joint stock companies  Separation of capital from employer  Increase in production  Improved transportation Scientific Management  Movement was led by efficiency engineer, Frederick Winslow Taylor  Believed in a “science of management” based on 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 output Instructor Slides 1-45 Scientific Management - contributors  Frank Gilbreth - father of motion studies  Henry Gantt - developed the Gantt chart scheduling system and recognized the value of non-monetary rewards for motivating employees  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 1-46 Human Relations Movement The human relations movement emphasized the importance of the human element in job design  Lillian Gilbreth  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 1-47 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 Instructor Slides 1-48 Influence of Japanese Manufacturers  Refined and developed management practices that increased productivity  Credited with fueling the “quality revolution  Just-in-Time production Instructor Slides 1-49 Key Issues for Operations Managers Today Economic conditions Innovating Quality problems Risk management Competing in a global economy Instructor Slides 1-50 Environmental Concerns Sustainability  Using resources in ways that 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 Instructor Slides 1-51 Ethical Issues in Operations Ethical issues arise in many aspects of operations management: Instructor Slides  Financial statements  Worker safety  Product safety  Quality  The environment  The community  Hiring and firing workers  Closing facilities  Workers rights 1-52 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 Instructor Slides 1-53 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 Instructor Slides 1-54 Elements of Supply Chain Management  Customers – what products/services 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 Instructor Slides 1-55 ... Briefly describe the historical evolution of operations management Characterize current trends in business that impact operations management 1-2 Operations Management What is operations?  The part... course is designed to acquaint the students with the area of operations management This is an overview course in operations management where the students will be exposed to the tools used by decision... suppliers suppliers Instructor Slides Direct Direct suppliers suppliers Producer Producer Distributor Distributor Final Final Customers Customers 1-8 Supply & Demand Operations & Operations & Supply