Operations Management
Operations Management Broad range of business activities Manufacturing & Production E.g. Harley Davidson, automotive industry Service E.g. H&R Block, Schwab, Merrill Lynch Distribution FedEx, Maersk Processes Aetna, IRS How FedEx works Apple and Foxnet
Importance of Operations Productivity Quality Inventory management Cost control Lead to profitability
Designing Operations Systems Product-service mix Range of products impacts costs E.g. number of parts, processes Capacity Affects costs and profitability E.g. Telcos, Randy’s on the River
Designing Operations Systems Facilities Location – how many and where Degree of automation Layout Product layout Process layout (functional) Fixed-position layout Cellular A cell might create similar products or components E.g. picture frames
Manufacturing Technology Automation Often specialized machines “Feedback loop” CAD, computer aided manufacture CAM, computer aided design 3D printing Robotics Assembly Material handling Medical
Service Technology Computers in Banking Insurance Education Restaurants
Supply Chain Management Managing operations and inventory Purchasing management Procurement Balance cost and inventory (tradeoff) Inventory management Materials control Cost of too much or too little Continuous management Vendor-controlled JIT, just-in-time
Managing Quality What is quality? ISO 9000 Malcolm Baldridge Award Importance Competition Meet Differentiate Productivity Costs
Total Quality Management, TQM Also “quality assurance” Requires top level strategic commitment There will be costs to transition Needs to be more than lip service Employee commitment Work teams, quality circles Technology Materials Methods & processes
TQM Tools and Techniques Value-added analysis Evaluate all work flows to determine value they add for customers Benchmarking Compare to competition Buy competitive products Visit competitors Reverse engineer Outsourcing Focus on core competencies Reduce cycle time Speed can improve quality
TQM Tools and Techniques Statistical Quality Control, SQC Sample inputs In-process sampling Acceptance sampling “Acceptance” refers to final product Establish acceptance criteria May include documentation, features, performance, maintainability, etc. Six Sigma Three errors per million Analyze root causes of errors and eliminate
Managing Productivity Aggregate productivity Productivity of a country Industry productivity Company productivity Individual productivity Productivity = outputs / inputs or Productivity = outputs / direct labor
Improving Productivity R&D New products Automate/revamp production Increase employee involvement E.g. the ‘red button’ Training Rewards