Production and Operations Management

Jiaqin Yang Department of Management Georgia College & State University

TopicTopic-1 Introduction to operations Management

Introduction to operations Management



Operations: All activities that involved in the Conversion Process of Input to Output (Goods/service) Management: The Process of Planning, Organizing and Controlling in achieving the desired objectives. University as an Example:

Introduction to Operations Management

Input Students Professor Planning & controlling Class Times Supportive Output Subsystems Bookstore Educated Students Research Outcomes Service to Public

Course Development Library School Regulations Computer Lab

Buildings

Operations as a System
Production System Conversion Subsystem
Control Subsystem

Inputs

Outputs

Operations Management as a Function

Internal Value-Chain Linkages Showing ValueWork and Information Flows

Support processes

External customers

External suppliers

New service/ product development process

Customer relationship process

Supplier relationship process

Order fulfillment process

Functions of Operations Management



Relationship between Operations and Other Functions:

Three Primary Functions in Business:

Finance


Production

Marketing

Broader Perspective of Operations Management:

An Integrated Production System Including: Inventory Control / Aggregate Planning / Demand Forecasting

Functions of Operations Management

Scheduling / Capacity Planning / Purchasing / Quality Control / Facility Location & Layout / Production and Process Design / Job Design / Maintenance / Project Management /


Operations Manager s Responsibility: (typically) 75% of the Firm s Investment 80% of the Firm s Personnel 85% of Firm s Expenditures for Materials

EntryEntry-Level Jobs in OM
  

  

Purchasing planner/buyer Production (or operations) supervisor Production (or operations) scheduler/controller Production (or operations) analyst Inventory analyst Quality specialist

Manufacturing vs Service


Manufacturing: Provide Tangible Goods (Cars / TV Sets / Foods / Service: Provide Intangible (Goods) (Education / Banking / Legal/Repairing / Medical Service / Transportations/ Four Major Differences between Manufacturing and Service:

Manufacturing vs Service
Manufacturing Service Measure of Productivity Measure of Quality Customer Involvement Ability to Inventory Easy Easy Low Yes Difficult Difficult High No

Most Principles and Techniques for Manufacturing can also be applied to Service Operations.

A Classification Scheme For Service Organizations



The Classification scheme is based upon the extent of customer contact in the creation of the service. Customer Contact---The physical presence of the Contact---The customer in the system. The extent of contact is the presence time of the customer must be in the system relative to the total time required to service the customer. Creation of the service---The work process that is service---The involved in providing the service.

A Classification Scheme For Service Organizations



High customer contact service system--systemMore difficult to control, customer can affect the time if demand, exact nature of service quality of service. More uncertainty, customer can disrupt service planning. Capacity unlikely to equal demand at any given time. Balance of work more difficult, must staff for demand close to peak rather than average. Skills of employees must include significant public relations component. Low customer contact service system--systemEasier to control. Customer usually has little impact on the system during the production process. Can more easily match capacity with demand.

Type contact High

Low

Service Organization Entertainment Centers Hospital / Clinics Hotels Public Transportation Schools Jails Restaurants Branch Offices of Banks Branch Offices of post offices Funeral Homes Police and Fire Protections Moving Companies Home Offices of Banks Central Post Offices Mail Order Services Durable Goods Factory Food Processing Plants Mining Companies Chemical Plants

Pure service

Increasing Efficiency in Designing Efficient Production Procedures

Strict Manufacturing

Operations Approaches to Improving Service Design

1.Substitute Technology for personnel



Automatic Banking Tellers

Scanners at Grocery and Department stores

   

Long Distance Direct Dialing Vending Machines Automatic Car Wash Computerized Legal Research System

Operations Approaches to Improving Service Design

2. Increasing Customer Involved in Production of Service:
     

Self Service Department Store Customer Reading of Utility meters Mail Order Shopping Customer Fills out Order Blank at Discount Store U-Frame-It Picture Frame Shops Frame.

Operations Approaches to Improving Service Design



General System Approach in Service Operations Color Coding of Food Wrappers at Fast Food Restaurants DriveDrive-In Claims Service in Insurance-Use of Rate InsuranceBooks Computerized Allocation of Police to Patrol Routes

Classification of Operations


1.Based on Demand Pattern:

a) Make-to-Order (e.g. Airplane / Film Make-toDeveloping/ ) Assembly-toAssembly-to-Order (e.g. Car/ Fast food/ ) b) Make-to-Stock (e.g. Clothes/ Toys/ Make-to) Assembly-toAssembly-to-Stock (e.g. Electronic Products/ TV Sets/ )

Classification of Operations


2.Based on Type of Conversion Process:

Goods
House Building

Type of Conversion 1.Project Shop 2.Job Shop (Batch Shop) 3.Assembly Line 4.Continuous Process

Service
Landscaping

Printing Shop Automobile Oil Refinery Food Process

Dept. Store Airport Gas Station TV Channels

Major Characteristics of Operations Process

Type of Conversion 1.Project Shop 2.Job Shop (Batch Shop) 3.Assembly Line 4.Continuous Process Product Mix Size Few Many (Several) Few Single Production Volume Single or Few Low (Medium) High Very High

Major Changes in Business, 1987-1997 1987A. The Changing Nature of the Workforce
    

1. 2. 3. 4. 5.

More Older Workforce More Women More Two-Career Families TwoMultiple Career Changes by Workforce Better Educated Force

Major Changes in Business, 1987-1997 1987B. Changing Value in the Workforce

 

 

1. Considerably Less Loyalty to Company 2. More Desire for Independence and Autonomy 3. Continuing Decline of Union Power 4. Need for Individual Motivation

Major Changes in Business, 1987-1997 1987C. Changing Nature of Competition  1. Increased International Competition  2. Emergence of New Third World Competitors D. Operations Consequences  1. Continued Emphasis on Productivity  2. Increase in Just-In-Time Production Just-In 3. Return to the Basics in Manufacturing

Major Changes in Business, 1987-1997 1987  

4. Continued Shift to Service Organizations 5. Dramatically Decreased Product Life Cycles. 6. Increased Emphasis of Human Factor in Manufacturing 7. Continuing Need to Match Technology with the Human Element. 8. Decrease in Direct Labor Component of Manufacturing Goods

Trends
Phase Period

Product Life World manufacturing Cycle

capacity / demand for manufactured goods capacity < demand

1 2

Mid 60s MidMid-60s -Mid 70s decreasing MidMid-70s

capacity > demand

Trends Impacting Operations Management

From
Massification Relatively simple task process Long delivery cycles (people can wait) Loyal employees (want to be let) Functional hierarchical, selfselfcontained units Customization

To

Complex, High-Tech Operations HighShort delivery cycles (time is money) Empowered employees (value(value-driven) Complex, cross-functional, crossmatrix (networked) organizations

From
Margins

To
afterafter-market (service) Service quality critical (uptime, customer interface) valueFew, strategic, value-added suppliers (service partners) costs less Competitive markets Global markets
Quality Margins

in production (manufacturing) Service quality important Multiple vendors (suppliers) competing on price (commodity) Quality costs more Regulated markets Domestic markets

Labor/management

Labor/management

conflicts
Controlled

collaboration situation
Ambiguity

& uncertainty blurred

Distinction

between customers, suppliers, competitors

Distinction