Operations Management Operations and Productivity Professor Ahmadi Slide

Operations Management Operations and Productivity Professor Ahmadi Slide 1

Learning Objectives n n n n 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 Slide 2

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

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

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

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

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

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. Slide 8

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

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 Slide 10

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) Slide 11

Major Events in OM (Continued) • • CPM/PERT (Du. Pont 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) Slide 12

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

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

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

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

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

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

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 … Slide 19