Download presentation
Presentation is loading. Please wait.
1
Operations and Productivity
Operations Management Chapter 1 Operations and Productivity
2
Outline Global Company Profile: Hard Rock Cafe
What Is Operations Management? Organizing To Produce Goods And Services Why Study OM? What Operations Managers Do
3
Outline - Continued The Heritage Of Operations Management
Operations In The Service Sector Differences Between Goods And Services Exciting New Trends In Operations Ethics And Social Responsibility Management
4
What Is Operations Management?
Production is the creation of goods and services Operations management (OM) is the set of activities that creates value in the form of goods and services by transforming inputs into outputs
5
Organizing to Produce Goods and Services
Essential functions: Marketing – generates demand Production/operations – creates the product Finance/accounting – tracks how well the organization is doing, pays bills, collects the money
6
Commercial Bank Operations Finance Marketing Teller Scheduling
Check Clearing Collection Transaction processing Facilities design/layout Vault operations Maintenance Security Finance Investments Security Real estate Accounting Auditing Marketing Loans Commercial Industrial Financial Personal Mortgage Trust Department
7
Airline Operations Finance/ accounting Marketing
Ground support equipment Maintenance Ground Operations Facility maintenance Catering Flight Operations Crew scheduling Flying Communications Dispatching Management science Finance/ accounting Accounting Payables Receivables General Ledger Finance Cash control International exchange Marketing Traffic administration Reservations Schedules Tariffs (pricing) Sales Advertising
8
Manufacturing Operations Finance/ accounting Marketing
Facilities Construction; maintenance Production and inventory control Scheduling; materials control Quality assurance and control Supply-chain management Manufacturing Tooling; fabrication; assembly Design Product development and design Detailed product specifications Industrial engineering Efficient use of machines, space, and personnel Process analysis Development and installation of production tools and equipment Finance/ accounting Disbursements/ credits Receivables Payables General ledger Funds Management Money market International exchange Capital requirements Stock issue Bond issue and recall Marketing Sales promotion Advertising Sales Market research
9
Why Study OM? OM is one of three major functions (marketing, finance, and operations) of any organization We want 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
10
Options for Increasing Contribution
Sales $100,000 $150,000 $100,000 $100,000 Cost of Goods – 80,000 – 120,000 – 80,000 – 64,000 Gross Margin 20,000 30,000 20,000 36,000 Finance Costs – 6,000 – 6,000 – 3,000 – 6,000 Subtotal 14,000 24,000 17,000 30,000 Taxes at 25% – 3,500 – 6,000 – 4,250 – 7,500 Contribution $ 10,500 $ 18,000 $ 12,750 $ 22,500 Finance/ Marketing Accounting OM Option Option Option Increase Reduce Reduce Sales Finance Production Current Revenue 50% Costs 50% Costs 20%
11
What Operations Managers Do
Basic Management Functions Planning Organizing Staffing Leading Controlling
12
Ten Critical Decisions
Ten Decision Areas Chapter(s) Service and product design 5 Quality management 6 6 Supplement Process and capacity design 7 Supplement Location 8 Layout design 9 Human resources, job design 10 Supplement Supply-chain management 11 Supplement Inventory management 12, 14, 16 Scheduling 13, 15 Maintenance 17
13
Where are the OM Jobs?
14
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
15
Significant Events in OM
16
Characteristics of Goods
Tangible product Consistent product definition Production usually separate from consumption Can be inventoried Low customer interaction
17
Characteristics of Service
Intangible product Produced and consumed at same time Often unique High customer interaction Inconsistent product definition Often knowledge-based Frequently dispersed
18
Restaurant meal/auto repair investment management
Goods and Services Automobile Computer Installed carpeting Fast-food meal Restaurant meal/auto repair Hospital care Advertising agency/ investment management Consulting service/ teaching Counseling Percent of Product that is a Good Percent of Product that is a Service 100% % | | | | | | | | |
19
New Trends in OM Past Causes Future Local or national focus
Low-cost, reliable worldwide communication and transportation networks Global focus Batch (large) shipments Short product life cycles and cost of capital put pressure on reducing inventory Just-in-time shipments Low-bid purchasing Quality emphasis requires that suppliers be engaged in product improvement Supply-chain partners, Enterprise Resource Planning, e-commerce
20
New Trends in OM Past Causes Future Lengthy product development
Shorter life cycles, Internet, rapid international communication, computer-aided design, and international collaboration Rapid product development, alliances, collaborative designs Standardized products Affluence and worldwide markets; increasingly flexible production processes Mass customization with added emphasis on quality Job specialization Changing socioculture milieu; increasingly a knowledge and information society Empowered employees, teams, and lean production
21
New Trends in OM Past Causes Future Low-cost focus
Environmental issues, ISO 14000, increasing disposal costs Environmentally sensitive production, green manufacturing, recycled materials, remanufacturing
22
Ethics and Social Responsibility
Challenges facing operations managers: Developing safe quality products Maintaining a clean environment Providing a safe workplace Honouring community commitments
23
Operations Strategy in a Global Environment
Operations Management Chapter 1 – Operations and Productivity11 Chapter 2 Operations Strategy in a Global Environment
24
Outline Global Company Profile: Boeing A Global View of Operations
Cultural and Ethical Issues Developing Missions And Strategies Mission Strategy
25
Outline – Continued Achieving Competitive Advantage Through Operations
Competing On Differentiation Competing On Cost Competing On Response Ten Strategic OM Decisions Global Operations Strategy Options
26
Global Strategies Boeing – sales and production are worldwide
Benetton – moves inventory to stores around the world faster than its competition by building flexibility into design, production, and distribution Sony – purchases components from suppliers in Thailand, Malaysia, and around the world
27
Global Strategies Volvo – considered a Swedish company but it is controlled by an American company, Ford. The current Volvo S40 is built in Belgium and shares its platform with the Mazda 3 built in Japan and the Ford Focus built in Europe. Haier – A Chinese company, produces compact refrigerators (it has one-third of the US market) and wine cabinets (it has half of the US market) in South Carolina
28
Reasons to Globalize Reasons to Globalize Tangible Reasons
Reduce costs (labor, taxes, tariffs, etc.) Improve supply chain Provide better goods and services Understand markets Learn to improve operations Attract and retain global talent Tangible Reasons Intangible Reasons
29
Reduce Costs Foreign locations with lower wage rates can lower direct and indirect costs World Trade Organization (WTC) North American Free Trade Agreement (NAFTA) APEC, SEATO, MERCOSUR European Union (EU)
30
Improve the Supply Chain
Locating facilities closer to unique resources Auto design to California Athletic shoe production to China Perfume manufacturing in France
31
Provide Better Goods and Services
Objective and subjective characteristics of goods and services On-time deliveries Cultural variables Improved customer service
32
Understand Markets Interacting with foreign customer and suppliers can lead to new opportunities
33
Learn to Improve Operations
Remain open to the free flow of ideas General Motors partnered with a Japanese auto manufacturer to learn
34
Attract and Retain Global Talent
Offer better employment opportunities Better growth opportunities and insulation against unemployment Relocate unneeded personnel to more prosperous locations Incentives for people who like to travel
35
Developing Missions and Strategies
Mission statements tell an organization where it is going The Strategy tells the organization how to get there
36
Mission Mission - where are you going?
Organization’s purpose for being Answers ‘What do we provide society?’ Provides boundaries and focus
37
Hard Rock Café Our Mission: To spread the spirit of Rock ‘n’ Roll by delivering an exceptional entertainment and dining experience. We are committed to being an important, contributing member of our community and offering the Hard Rock family a fun, healthy, and nurturing work environment while ensuring our long-term success.
38
Factors Affecting Mission
Philosophy and Values Profitability and Growth Environment Customers Public Image Mission Benefit to Society
39
Organization’s Mission
Strategic Process Organization’s Mission Functional Area Missions Marketing Operations Finance/ Accounting
40
Strategy Action plan to achieve mission
Functional areas have strategies Strategies exploit opportunities and strengths, neutralize threats, and avoid weaknesses
41
Strategies for Competitive Advantage
Differentiation – better, or at least different Cost leadership – cheaper Quick response – more responsive
42
Competing on Differentiation
Uniqueness can go beyond both the physical characteristics and service attributes to encompass everything that impacts customer’s perception of value Safeskin gloves – leading edge products Walt Disney Magic Kingdom – experience differentiation Hard Rock Cafe – theme experience
43
Competing on Cost Provide the maximum value as perceived by customer. Does not imply low quality. Southwest Airlines – secondary airports, no frills service, efficient utilization of equipment Wal-Mart – small overheads, shrinkage, distribution costs Franz Colruyt – no bags, low light, no music, doors on freezers
44
Competing on Response Flexibility is matching market changes in design innovation and volumes Institutionalization at Hewlett-Packard Reliability is meeting schedules German machine industry Timeliness is quickness in design, production, and delivery Johnson Electric, Bennigan’s, Motorola
45
OM’s Contribution to Strategy
Operations Specific Competitive Decisions Examples Strategy Used Advantage Product Quality Process Location Layout Human resource Supply-chain Inventory Scheduling Maintenance FLEXIBILITY Sony’s constant innovation of new products………………………………....Design HP’s ability to follow the printer market………………………………Volume Southwest Airlines No-frills service……..…..LOW COST DELIVERY Pizza Hut’s five-minute guarantee at lunchtime…………………..…..……..Speed Federal Express’s “absolutely, positively on time”………………………..….Dependability QUALITY Motorola’s automotive products ignition systems…………………………......Conformance Motorola’s pagers………………………..….Performance IBM’s after-sale service on mainframe computers……....AFTER-SALE SERVICE Fidelity Security’s broad line of mutual funds………….BROAD PRODUCT LINE Response (Faster) Cost leadership (Cheaper) Differentiation (Better)
46
Strategy Development Process
Environmental Analysis Identify the strengths, weaknesses, opportunities, and threats. Understand the environment, customers, industry, and competitors. Determine Corporate Mission State the reason for the firm’s existence and identify the value it wishes to create. Form a Strategy Build a competitive advantage, such as low price, design, or volume flexibility, quality, quick delivery, dependability, after-sale service, broad product lines.
47
Four International Operations Strategies
Import/export or license existing product Examples U.S. Steel Harley Davidson International Strategy Cost Reduction Considerations High Low Local Responsiveness Considerations (Quick Response and/or Differentiation)
48
Four International Operations Strategies
Cost Reduction Considerations High Low Local Responsiveness Considerations (Quick Response and/or Differentiation) International Strategy Import/export or license existing product Examples U.S. Steel Harley Davidson
49
Four International Operations Strategies
Standardized product Economies of scale Cross-cultural learning Examples Texas Instruments Caterpillar Otis Elevator Global Strategy Cost Reduction Considerations High Low Local Responsiveness Considerations (Quick Response and/or Differentiation) International Strategy Import/export or license existing product Examples U.S. Steel Harley Davidson
50
Four International Operations Strategies
Cost Reduction Considerations High Low Local Responsiveness Considerations (Quick Response and/or Differentiation) Standardized product Economies of scale Cross-cultural learning Examples Texas Instruments Caterpillar Otis Elevator Global Strategy International Strategy Import/export or license existing product U.S. Steel Harley Davidson
51
Four International Operations Strategies
Use existing domestic model globally Franchise, joint ventures, subsidiaries Examples Heinz McDonald’s The Body Shop Hard Rock Cafe Multidomestic Strategy Cost Reduction Considerations High Low Local Responsiveness Considerations (Quick Response and/or Differentiation) Standardized product Economies of scale Cross-cultural learning Examples Texas Instruments Caterpillar Otis Elevator Global Strategy International Strategy Import/export or license existing product U.S. Steel Harley Davidson
52
Four International Operations Strategies
Cost Reduction Considerations High Low Local Responsiveness Considerations (Quick Response and/or Differentiation) Standardized product Economies of scale Cross-cultural learning Examples Texas Instruments Caterpillar Otis Elevator Global Strategy International Strategy Import/export or license existing product U.S. Steel Harley Davidson Multidomestic Strategy Use existing domestic model globally Franchise, joint ventures, subsidiaries Heinz The Body Shop McDonald’s Hard Rock Cafe
53
Four International Operations Strategies
Move material, people, ideas across national boundaries Economies of scale Cross-cultural learning Examples Coca-Cola Nestlé Transnational Strategy Cost Reduction Considerations High Low Local Responsiveness Considerations (Quick Response and/or Differentiation) International Strategy Import/export or license existing product Examples U.S. Steel Harley Davidson Multidomestic Strategy Use existing domestic model globally Franchise, joint ventures, subsidiaries Heinz The Body Shop McDonald’s Hard Rock Cafe Standardized product Economies of scale Cross-cultural learning Texas Instruments Caterpillar Otis Elevator Global Strategy
54
Four International Operations Strategies
Cost Reduction Considerations High Low Local Responsiveness Considerations (Quick Response and/or Differentiation) Standardized product Economies of scale Cross-cultural learning Examples Texas Instruments Caterpillar Otis Elevator Global Strategy Transnational Strategy Move material, people, ideas across national boundaries Coca-Cola Nestlé International Strategy Import/export or license existing product U.S. Steel Harley Davidson Multidomestic Strategy Use existing domestic model globally Franchise, joint ventures, subsidiaries Heinz The Body Shop McDonald’s Hard Rock Cafe
Similar presentations
