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Adeyl Khan, Faculty, BBA, NSU Why some companies succeed While others fail Walmart Vs. Sears/JC Penny Boeing missed production deadline …

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Presentation on theme: "Adeyl Khan, Faculty, BBA, NSU Why some companies succeed While others fail Walmart Vs. Sears/JC Penny Boeing missed production deadline …"— Presentation transcript:

1 Adeyl Khan, Faculty, BBA, NSU Why some companies succeed While others fail Walmart Vs. Sears/JC Penny Boeing missed production deadline …

2 Adeyl Khan, Faculty, BBA, NSU Operations Management  Managing that part of the organization responsible for producing goods and services  Management of systems or processes that create goods and/or provide services 1-2 OM in the news Productivity Quality E-business Global Competition Customer Service OM Affects Companies’ ability to compete Nation’s ability to compete internationally

3 Adeyl Khan, Faculty, BBA, NSU An Organization The Three Basic Functions 1-3 Figure 1.1 OrganizationFinance Secure Fin. Resources BudgetingFunding …OperationsProducingMarketing Assess Customer needs Selling & Promoting … What is producing?

4 Adeyl Khan, Faculty, BBA, NSU 1-4 Value-Added Process The operations function involves the conversion of inputs into outputs Inputs * Land * Labor * Capital Transformation/ Conversion process Outputs Goods Services Control (Measurement) Feedback Value added Figure 1.2

5 Adeyl Khan, Faculty, BBA, NSU 1-5 Food Processor Table 1.2 InputsProcessingOutputs Raw Vegetables Metal Sheets Water Energy Labor Building Equipment Cleaning Making cans Cutting Cooking Packing Labeling Canned vegetables Scraps! What about services? Value-added = Value or price of outputs – Cost of inputs

6 Adeyl Khan, Faculty, BBA, NSU 1-6 Manufacturing or Service? Tangible Act

7 Adeyl Khan, Faculty, BBA, NSU 1-7 Automobile assembly, steel making Home remodeling, retail sales Automobile Repair, fast food Goods-service Continuum Figure 1.3 Computer repair, restaurant meal Song writing, software development GoodsService Surgery, teaching Grameen Cell phone Product/Service? Grameen Cell phone Product/Service?

8 Adeyl Khan, Faculty, BBA, NSU 1-8 Hospital Process Table 1.2 InputsProcessingOutputs Doctors, nurses Hospital Medical Supplies Equipment Laboratories Examination Surgery Monitoring Medication Therapy Healthy patients Product packages = Good(s) + service(s) Added Value

9 Adeyl Khan, Faculty, BBA, NSU Production of Goods vs. Delivery of Services  Production of goods  Tangible output  Production oriented  Delivery of services  An act Yet operations are similar! 1-9 Service job categories Government Wholesale/retail Financial services Healthcare Personal services Business services Education

10 Adeyl Khan, Faculty, BBA, NSU Goods vs Service CharacteristicGoodsService Customer contactLowHigh Uniformity of inputHighLow Labor contentLowHigh Uniformity of outputHighLow OutputTangibleIntangible Measurement of productivityEasyDifficult Opportunity to correct problemsHighLow InventoryMuchLittle EvaluationEasierDifficult PatentableUsuallyNot usual 1-10 Example!

11 Adeyl Khan, Faculty, BBA, NSU Scope of Operations Management  Forecasting  Capacity planning  Scheduling  Managing inventories  Assuring quality  Motivating & Training employees  Deciding where to locate facilities  Supply chain management  And more Example!

12 Adeyl Khan, Faculty, BBA, NSU 1-12 Types of Operations Table 1.4 OperationsExamples Goods ProducingFarming, mining, construction manufacturing, power generation Storage/Transport ation Warehousing, trucking, mail service, moving, taxis, buses, hotels, airlines ExchangeRetailing, wholesaling, banking, renting, leasing, library, loans EntertainmentFilms, radio and television, concerts, recording CommunicationNewspapers, radio and television, newscasts, telephone, satellites

13 Adeyl Khan, Faculty, BBA, NSU Decline in Manufacturing Jobs in US! Increase of Service Jobs  Productivity  Increasing productivity allows companies to maintain or increase their output using fewer workers  Outsourcing  Some manufacturing work has been outsourced to more productive companies 1-13 Bangladesh!

14 Adeyl Khan, Faculty, BBA, NSU Manufacturing Matters  More than half of the total R&D performed is in the manufacturing industries  When a California manufacturing job is lost, an average of 2.5 service jobs are lost  Accounts for most exports 1-14 What about Outsourcing What about Outsourcing

15 Adeyl Khan, Faculty, BBA, NSU Managing Services is Challenging  Service jobs are often less structured than manufacturing jobs  Customer contact is higher  Services hire many low-skill, entry-level workers  Employee turnover is higher  Input variability is higher  Service performance can be affected by worker’s personal factors 1-15

16 Adeyl Khan, Faculty, BBA, NSU Operations Management Planning and Decision Making Alternatives & Impact on Cost Profit Goal Mission, Vision …. Key Decisions of O. Managers What resources/amounts When needed/scheduled/ordered Where work-location How Designed/Done Who worker 1-16

17 Adeyl Khan, Faculty, BBA, NSU Decision Making of an O. Manager Capacity Location Arrangement of departments Product and service planning Acquisition and placement of equipment System Design Personnel Inventory Scheduling Project Management Quality Assurance System operation 1-17

18 Adeyl Khan, Faculty, BBA, NSU Approaches (Make Informed Decision)  1- Models  2- Quantitative approaches  3- Analysis of trade-offs  4- Systems approach  5- Establishing priorities  Ethics 18

19 Adeyl Khan, Faculty, BBA, NSU A model is 1-19

20 Adeyl Khan, Faculty, BBA, NSU 1- Models  An abstraction of reality.  A simplified version (typically)  Physical ~ Crash test  Schematic ~ Blueprints  Mathematical ~ Statistical 1-20 Tradeoffs Models are not perfect Pros and cons of models

21 Adeyl Khan, Faculty, BBA, NSU 1-21 Advantages Easy to use, less expensive Require users to organize Increase understanding of the problem Enable “what if” questions Consistent tool for evaluation and standardized format Power of mathematics Limitations Quantitative information may be emphasized over qualitative Models may be incorrectly applied and results misinterpreted Nonqualified users may not comprehend the rules on how to use the model Use of models does not guarantee good decisions

22 Adeyl Khan, Faculty, BBA, NSU 2- Quantitative Approaches  Linear programming  Queuing Techniques  Inventory models  Project models  Statistical models 1-22 Vs. Qualitative Approaches Vs. Qualitative Approaches

23 Adeyl Khan, Faculty, BBA, NSU 3- Analysis of Trade-Offs  Decision on the amount of inventory to stock 1-23 CustomerCost Inventory Level of customer service

24 Adeyl Khan, Faculty, BBA, NSU Systems Approach “The whole is greater than the sum of the parts.” 1-24 Suboptimization

25 Adeyl Khan, Faculty, BBA, NSU 5- Establishing priorities Pareto Phenomenon A few factors account for a high percentage of the occurrence of some event(s). 80/20 Rule - 80% of problems are caused by 20% of the activities How do we identify the vital few?

26 Adeyl Khan, Faculty, BBA, NSU Ethical Issues  Consider how a decision will affect  Shareholders ~ Financial statements  Management  Employees ~ Worker safety, Hiring/firing workers, Worker’s rights  Customer ~ Quality, Product safety  Community ~ Closing facilities  Environment ~ Product safety 1-26

27 Adeyl Khan, Faculty, BBA, NSU 1-27 Business Operations Overlap Figure 1.5 OperationsFinanceMarketing

28 Adeyl Khan, Faculty, BBA, NSU Operations Interfaces 1-28 Public Relations Accounting Production Operations Marketing Personnel Purchasing Distribution MIS Legal Lead time

29 Adeyl Khan, Faculty, BBA, NSU Historical Evolution of Operations Management  Industrial revolution (1770’s)  End of craft production  Introduction of Machine Power  Scientific management (1911) & Ford Model T  Mass production  Interchangeable parts  Division of labor  Human relations movement ( )~ Hawthorne  Decision models (1915, ’s)~ IM Models, SPC  Influence of Japanese manufacturers (After WWII)  Quality revolution 1-29 Table 1.7

30 Adeyl Khan, Faculty, BBA, NSU Trends in Business impacting OM  The Internet, e-commerce, e-business  Management technology  Globalization  Management of supply chains  Outsourcing  Agility  Ethical behavior  Operations strategy  Working with fewer resources  Revenue management  Process analysis and improvement  Increased regulation and product liability  Lean production 1-30

31 Adeyl Khan, Faculty, BBA, NSU Discussion & Review Questions (P26-27) No. 4,5,7,10,15 Wegmans Food market (P30-32) Answer Q. No. 2 31

32 Adeyl Khan, Faculty, BBA, NSU 1-32 Suppliers’ Suppliers Direct Suppliers Producer Distributor Final Consumer Simple Product Supply Chain Figure 1.7 Supply Chain: A sequence of activities And organizations involved in producing And delivering a good or service

33 Adeyl Khan, Faculty, BBA, NSU 1-33 Stage of Production Value Added Value of Product Farmer produces and harvests wheat$0.15 Wheat transported to mill$0.08$0.23 Mill produces flour$0.15$0.38 Flour transported to baker$0.08$0.46 Baker produces bread$0.54$1.00 Bread transported to grocery store$0.08$1.08 Grocery store displays and sells bread$0.21$1.29 Total Value-Added$1.29 A Supply Chain for Bread

34 Adeyl Khan, Faculty, BBA, NSU Learning Objectives  Define the term operations management  Identify the three major functional areas of organizations and describe how they interrelate  Compare and contrast service and manufacturing operations  Describe the operations function and the nature of the operations manager’s job 1-34

35 Adeyl Khan, Faculty, BBA, NSU Learning Objectives  Differentiate between design and operation of production systems  Describe the key aspects of operations management decision making  Briefly describe the historical evolution of operations management  Identify current trends that impact operations management 1-35


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