1. © Fred Van Bennekom 2005Slide 1 Introduction to Operations Management

2. © Fred Van Bennekom 2005Slide 2 Operations Management q Create operational systems. q Manage (plan, organize, staff, direct and control) the activities relating to the production of goods and/or services with maximum efficiency (at the lowest cost) and effectiveness (in the eyes of the customer). q Improve those processes continuously to create competitive advantage.

3. © Fred Van Bennekom 2005Slide 3 The Operations System The operations system transforms inputs into desired goods and services. OUTPUTSINPUTSPROCESS EXTERNAL FACTORS FEEDBACK Material flow Information Flow

4. © Fred Van Bennekom 2005Slide 4 Operations Management ~ The Context Business Unit Strategy Marketing Strategy 4 Ps Place Product Price Promotion Competitive Priorities & Positioning Cost, Quality, Time, Flexibility, Service Customer Satisfaction (Internal & External) Market Share Quality Measures Cost Measures Performance Measures Execution Processes Operations Strategy Structural Facility Location Capacity Vertical Integration Process Technology Infrastructural Workforce Quality Policies/Procedures Organizational Structure Corporate Strategy

5. © Fred Van Bennekom 2005Slide 5 Manage the Process InputsOutputs >>>>> Conversion Improve the Process Operations Management Create the Process New Product Development Innovation Quality Management Planning & Control Infrastructural Elements Workforce Organization Technology Vertical Integration Structural Elements Capacity Facilities Cost Quality TimeFlexibility Service Evaluate On

6. © Fred Van Bennekom 2005Slide 6 Types of Conversions q Physical q Chemical q Locational q Educational q Entertained

7. © Fred Van Bennekom 2005Slide 7 Competitive Priorities for the Operational Function q Price or Cost q Quality –Short Run: Conformance, Design (Fitness for Use) –Long Run: Continuous Improvement Thru the Learning Organization q Flexibility –Product Mix: make various products and adjust mix –Handle volume Surge  Time - Dependability –Speed of Delivery (Lead Time) –Speed to Market (New Product Development Time) q Service –Delivering a comprehensive solution – products & augmenting services – to the customer’s needs

8. © Fred Van Bennekom 2005Slide 8 Theory of Slack Ropes Quality FlexibilityPrice Service Time By pulling on one priority, the others tend to get pulled along with it. Source: Duncan McDougall

9. © Fred Van Bennekom 2005Slide 9 Interfunctional Strategies Marketing Strategy Order Qualifiers Characteristics of the product- service bundle that gain entry to and maintain a company’s position in a market. Operations Strategy Order Winners Characteristics that win orders in the marketplace: product design, new product introduction speed, lead time, product quality, service. Where does price fit in this scenario? versus

10. © Fred Van Bennekom 2005Slide 10 Process Choice, Design, & Analysis q Operational Design components –People… following –Process and Procedures… applying –Technologies and Resources q Drivers of design choice –Characteristics of the Product –Characteristics of Demand –Competitive Priorities driven by corporate strategic analysis No one best way to deliver a product. Congruence about design elements is key.

11. © Fred Van Bennekom 2005Slide 11 Process-Product Matrix Project Job Shop Batch Line Flow Continuous Discrete Flow Patterns Jumbled Consistent Product Each Unique – Wide Variety Commodity– Little Variety ???? Opportunities for real advantage

12. © Fred Van Bennekom 2005Slide 12 Significant Developments q Division of Labor q Standardized Parts q Scientific Management –Time and Motion Study –Efficiency Improvement –Wage Incentives q Assembly Lines q Motivation and Behavioral Issues

13. © Fred Van Bennekom 2005Slide 13 Significant Developments q Operations Research q Computers and Information Technology - Computer Aided Design (CAD) - Computer Aided Manufacture (CAM) - Computer Integrated Manufacture (CIM) q Flexible Manufacturing Systems (FMS) q Cellular Manufacturing q JIT, Lean Manufacturing q Total Quality Management, Six Sigma q Mass Customization