Operations Management by UMBRELLA Corp 2008 Operations and

Operations Management by UMBRELLA Corp. 2008 Operations and Productivity Chapter 1 Power. Point Presentation to accompany Operations Management, 6 E (Heizer & Render) 1 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458 TASK 1 by UMBRELLA Corp. 2008

Outline ¨ Global company profile: Whirlpool ¨ What is Operations Management? The heritage of Operations Management ¨ Why study OM? ¨ What Operations Managers do ¨ ¨ Organizing to produce goods and services ¨ Where are the OM jobs? ¨ Exciting new trends in Operations Management ¨ Operations in the service sector ¨ The Productivity challenge Power. Point Presentation to accompany Operations Management, 6 E (Heizer & Render) 2 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458 TASK 1 by UMBRELLA Corp. 2008

Learning Objectives When you complete this chapter, you should be able to: ¨ Identify or Define: Production and productivity ¨ Operations Management (OM) ¨ What operations managers do ¨ Services ¨ ¨ Describe or Explain: A brief history of operations management ¨ The future of the discipline ¨ Measuring productivity ¨ Power. Point Presentation to accompany Operations Management, 6 E (Heizer & Render) 3 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458 TASK 1 by UMBRELLA Corp. 2008

Whirlpool Case Example ¨ Change in attitude - employees “live quality” ¨ Training - “use your heads as well as your hands” ¨ Flexible work rules ¨ Gain-sharing ¨ Global procurement ¨ Role of information/information technology 4 ¨ Adoption of a Worldwide strategy TASK 1 by UMBRELLA Corp. 2008 Power. Point Presentation to accompany Operations Management, 6 E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

What Is Operations Management? ¨ Production is the creation of goods and services according to Estimated Demand. ¨ Operations management is the set of activities that creates goods and services by transforming raw materials (inputs) into value products (outputs) Power. Point Presentation to accompany Operations Management, 6 E (Heizer & Render) 5 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458 TASK 1 by UMBRELLA Corp. 2008

OM New Vision ¨ Four important tasks: Determine customer needs 2. Develop Product Strategy 3. Estimate Demand & Secure Needed Materials 4. Manage Strategic Planning Process 1. Power. Point Presentation to accompany Operations Management, 6 E (Heizer & Render) 6 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458 TASK 1 by UMBRELLA Corp. 2008

Significant Events in OM ¨ Division of labor (Smith, 1776) ¨ Standardized parts (Whitney, 1800) ¨ Scientific management (Taylor, 1881) ¨ Coordinated assembly line (Ford 1913) ¨ Gantt charts (Gantt, 1916) ¨ Motion study (the Gilbreths, 1922) ¨ Quality control (Shewhart, 1924) Power. Point Presentation to accompany Operations Management, 6 E (Heizer & Render) 7 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458 TASK 1 by UMBRELLA Corp. 2008

Significant Events Continued ¨ CPM/PERT (Dupont, 1957) ¨ MRP (Orlicky, 1960) ¨ CAD ¨ Flexible manufacturing systems (FMS) ¨ Manufacturing automation protocol (MAP) ¨ Computer integrated manufacturing (CIM) Power. Point Presentation to accompany Operations Management, 6 E (Heizer & Render) 8 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458 TASK 1 by UMBRELLA Corp. 2008

Why Study OM? ¨ OM is changing fast by three components: 1. 2. 3. Information Technology Market’s Demand Increased globalism ¨ We want (and need) to know how, when and where, goods and services should be produced. ¨ We like to know what operations managers do ¨ OM is such a costly part of an 9 most important to be organization, but the TASK 1 by UMBRELLA Corp. 2008 Power. Point Presentation to accompany Operations Management, 6 E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

What Operations Managers Do ¨ Plan process according to Market changes ¨ Organize and Coordinate employees ¨ Control Staff ¨ Lead fair and impartial ¨. . and get work done through people Power. Point Presentation to accompany Operations Management, 6 E (Heizer & Render) 10 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458 TASK 1 by UMBRELLA Corp. 2008

Ten Critical Decisions ¨ 01 Service, product design ¨ 02 Quality management ¨ 03 Process, capacity design ¨ 04 Location ¨ 05 Layout design ¨ 06 Human resources, job design. ¨ 07 Supply-chain management ¨ 08 Inventory management ¨ 09 Scheduling ¨ 10 Maintenance Power. Point Presentation to accompany Operations Management, 6 E (Heizer & Render) 11 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458 TASK 1 by UMBRELLA Corp. 2008

Organizational Functions ¨Human resource Management ¨Marketing ¨ Creates global customers ¨Research & Development Process ¨ creates product or service according demand ¨Finance/Accounting ¨ Obtains funds ¨ Tracks money Power. Point Presentation to accompany Operations Management, 6 E (Heizer & Render) 12 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458 TASK 1 by UMBRELLA Corp. 2008

Where Are the OM Jobs? ¨ Technology/methods ¨ Facilities/space utilization ¨ Strategic issues ¨ Response time ¨ People/team development ¨ Customer service ¨ Quality ¨ Cost reduction ¨ Inventory reduction ¨ Productivity improvement ¨ Feedback Power. Point Presentation to accompany Operations Management, 6 E (Heizer & Render) 13 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458 TASK 1 by UMBRELLA Corp. 2008

New Challenges in OM From ¨ Local or national focus ¨ Batch shipments ¨ Low bid purchasing To ¨ Global focus ¨ Just-in-time ¨ Supply chain partnering ¨ Lengthy product development ¨ Standard products ¨ Job specialization Power. Point Presentation to accompany Operations Management, 6 E (Heizer & Render) 14 ¨ Rapid product development, alliances ¨ Mass customization ¨ Empowered employees, TASK 1 by UMBRELLA Corp. 2008 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

New Challenges in OM ¨ Technological Challenges - Bio-genetic - Miniaturization ¨ Societal Challenges - Intellectual property - The environment - Financial Reporting ¨ Geopolitical Challenges - China - Japan Power. Point Presentation to accompany Operations Management, 6 E (Heizer & Render) 15 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458 TASK 1 by UMBRELLA Corp. 2008

Characteristics of Goods ¨ Tangible product ¨ Consistent product definition ¨ Production usually separate from consumption ¨ Can be inventoried ¨ Low customer interaction Power. Point Presentation to accompany Operations Management, 6 E (Heizer & Render) 16 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458 TASK 1 by UMBRELLA Corp. 2008

Characteristics of Service ¨ Intangible product ¨ Produced & consumed at same time ¨ Often unique ¨ High customer interaction ¨ Inconsistent product definition ¨ Often knowledge-based ¨ Frequently dispersed Power. Point Presentation to accompany Operations Management, 6 E (Heizer & Render) 17 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458 TASK 1 by UMBRELLA Corp. 2008

Goods Versus Services Goods Service ¨ Can be resold ¨ Can be inventoried ¨ Some aspects of quality measurable ¨ Selling is distinct from Power. Point Presentation to accompany Operations Management, 6 E (Heizer & Render) ¨ Reselling unusual ¨ Difficult to inventory ¨ Quality difficult to measure ¨ Selling is part of service 18 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458 TASK 1 by UMBRELLA Corp. 2008

Goods Versus Services Continued Goods ¨Service Product is ¨ Provider, not transportable product is transportable ¨ Site of facility important for cost ¨ Site of facility important for customer contact ¨ Often easy to ¨ Often difficult to automate ¨ Revenue generated ¨ Revenue primarily from generated tangible product 19 primarily from TASK 1 service. by UMBRELLA Corp. 2008 intangible Power. Point Presentation to accompany Operations Management, 6 E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Development of the Service Economy U. S. Employment, % Share 80 Services as a Percent of GDP United States %70 60 Services 50 40 Industry 20 10 Canada 250 France 200 Italy 150 Britain 30 100 Japan Farming 0 1850 75 1900 25 U. S. Exports of Services In Billions of Dollars 50 W Germany 50 75 2000 1970 1991 40 50 60 70 Percent 0 1970 75 80 85 90 95 2000 Year 2000 data is estimated Power. Point Presentation to accompany Operations Management, 6 E (Heizer & Render) 20 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458 TASK 1 by UMBRELLA Corp. 2008

The Economic System Transforms Inputs to Outputs Input s Land, Labor, Capital, Manageme nt Process Outputs The economic system transforms inputs to outputs at about an annual 1. 7% increase in productivity (capital 38% of 1. 7%), labor (10% of 1. 7%), management (52% of 1. 7%) Goods and Services Feedback loop Power. Point Presentation to accompany Operations Management, 6 E (Heizer & Render) 21 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458 TASK 1 by UMBRELLA Corp. 2008

Productivity ¨ Measure of process improvement ¨ Represents output relative to input Productivity = Units produced Input used ¨ Productivity increases improve standard of living ¨ From 1889 to 1973, U. S. productivity increased at a 2. 5% annual rate Power. Point Presentation to accompany Operations Management, 6 E (Heizer & Render) 22 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458 TASK 1 by UMBRELLA Corp. 2008

Measurement Problems ¨ Quality may change while the quantity of inputs and outputs remains constant - Freshness, Reliability, Durability, Safety, Environmental Friendly, Serviceability, Aesthetics, Attribute Consistency. ¨ External elements may cause an increase or decrease in productivity ¨ Precise units of measure may be lacking 23 TASK 1 by UMBRELLA Corp. 2008 Power. Point Presentation to accompany Operations Management, 6 E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

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 Power. Point Presentation to accompany Operations Management, 6 E (Heizer & Render) 24 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458 TASK 1 by UMBRELLA Corp. 2008

Jobs in the U. S Power. Point Presentation to accompany Operations Management, 6 E (Heizer & Render) 25 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458 TASK 1 by UMBRELLA Corp. 2008

% per year Productivity Growth 19711992 Labor Whole Economy Power. Point Presentation to accompany Operations Management, 6 E (Heizer & Render) Manufacturing 26 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458 TASK 1 by UMBRELLA Corp. 2008

Service Productivity ¨ Typically labor intensive ¨ Frequently individually processed ¨ Often an intellectual task performed by professionals ¨ Often difficult to mechanize ¨ Often difficult to evaluate for quality Power. Point Presentation to accompany Operations Management, 6 E (Heizer & Render) 27 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458 TASK 1 by UMBRELLA Corp. 2008