LM733-PRODUCTION OPERATIONS MANAGEMENT LECTURE 4 LM733-PRODUCTION OPERATIONS MANAGEMENT By: OSMAN BIN SAIF

Summary of last Session The Global Environment and Operations Strategy Growth of World Trade Reasons to Globalize Improve the supply chain Attract and Retain Global Talent Cultural and Ethical Issues Developing Mission and Strategies Strategic for Competitive Advantage Global Operation Strategy Options

Agenda for this Session Case Study– Hard Rock Cafe Projects Why? Characteristics and Activities Work Break down structure Project Scheduling techniques Cost time trade offs Project Control reports

Case Study: Hard Rock Cafe Operation Management at Hard Rock Café

Operations Managers are the one who carry the task of providing the well-being of the world wide society by producing many products. These products can take any kind of forms. Operations Managers

The first Hard Rock Cafe Hard Rock cafe in the old days was a cafe and a bar but nowadays it became a famous restaurant.

Hard Rock Cafe Hard rock Cafe established in London in 1971, it’s one of the oldest and successful cafe. Eric Clapton a regular costumer marked his favorite bar stool by hanging his guitar in the London cafe.

Reputation Nowadays Hard Rock Café can be compared with whirlpool, DreamWorks, Disney world and universal studio. There are 129 restaurants in more than 40 countries and new restaurant opining each year and they served over 35 millions guest world wide every year. Hard rock Café in Orlando Florida served 3500 meal each day with more than 1500 people.

Operations managers duties in hard rock Operation managers in hard rock Cafe are considered to serve excellent food, attractiveness in the lay out. On the other hand they must be sure that the staff contribute to the efficient movement of people and materials to insure that proper portion are served. Hard rock create value in the form of good food and entertainment. Operations managers duties in hard rock

Operations managers duties in hard rock Operation managers in Hard rock Cafe from Universal Studio in Orlando there work goes into designing, testing and costing meals then evaluate the quality of the meals, well trained cooks, excellent staff and costumers satisfaction.

Conclusion Managers who successfully design and develop goods and services throughout the world understand operation the best. Not only operation managers can work in a restaurant they can also work in any place. Production is the creation of goods and services. Operations management is the set of activities that create value in the form of goods and services by transforming inputs into outputs.

10 Decisions of operations management Design of Goods and Services Hard Rock first built its business on rock service memorabilia utilizing the publicity and public recognition of Eric Clapton when he hung his guitar above his favorite bar stool. Since then Hard Rock focused on building their service based empire with a focus on food and retail. In order to keep up with a changing market, Hark Rock continuously updates its menu and music selections. It also has branched out to take advantages of other opportunities by expanding into the hotel, casino and concert arenas

10 Decisions of operations management (Contd.) Managing Quality Tough quality controls are in place for both the food’s quality and service provided to the customer. Customers are encouraged to fill out surveys after each visit. The surveys are based on a one to seven scale with seven being the best score. Anything given less than a seven score is seen to be as a failure by the staff. This process lets the customer define quality.

10 Decisions of operations management (Contd.) Process and Capacity Design The production process is defined from raw food receipt to plating to ensure product efficiency as well as a quality meal. This minimizes customer wait time and allows Hard Rock to serve more people in a day.

10 Decisions of operations management (Contd.) Location strategy About 75% of Hard Rock’s employees are people in the United States therefore a multi-domestic strategy works well for its Orlando headquarters.

10 Decisions of operations management (Contd.) Layout strategy The layout of the restaurant contributes to the efficient movement of people and material. Human resources and job design When Hard Rock hires employees, it seeks out the best people it can recruit and train. They seek out not only people that are passionate about music but have engaging personalities as well.

10 Decisions of operations management (Contd.) Supply-chain management Required products are analyzed for cost and quality of ingredients. Only ingredients from qualified suppliers are used.

10 Decisions of operations management (Contd.) Inventory, MRP, JIT Inventory is based on demand. Hard Rock serves over 3,500 meals a day and music memorabilia makes up 48% of profits.   Scheduling Hard Rock employees are scheduled to 15 minute intervals. To allows flexibility in scheduling to meet peak seasonal and dialing demand changes and increases the productivity of its scheduled staff.

Project Management

Why a separate topic ? If you look back to the product-process matrix, there is a focus on volume - as volume increases, we become more standardized and efficient - as volume decreases, we have more customization Project-based work is becoming increasingly prevalent for market-driven reasons - Growing project complexity - Collapsing product/service life cycles

Examples of Projects Building construction Software development Staging a play

Project management is a methodical approach to planning and guiding projectprocesses from start to finish. According to theProject Management Institute, the processes are guided through five stages: initiation, planning, executing, controlling, and closing.

Characteristics of Projects Single unit Relatively low frequency Defined starting points and ending points Defined outcomes / goals Complex interrelated tasks, often transcending functional boundaries Require special management tools It is helpful here to provide an expanded discussion of the activities.

Project Management Activities Planning Objectives Resources Work break-down structure Organization Scheduling Project activities Start & end times Network Controlling Monitor, compare, revise, action A useful project management technique must contribute in all areas.

Project Planning, Scheduling & Controlling © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

WBS – Work Breakdown Structure A statement of all work that has to be completed. A list of all activities or tasks that constitute the project. Project Major tasks in the project Subtasks in the major tasks Activities (or work packages) to be completed

Project Scheduling Identifying precedence relationships Sequencing activities Determining activity times & costs Estimating material & worker requirements Determining critical activities © 1995 Corel Corp. J F M A Month Activity Design Build Test

Project Management Techniques Gantt chart Critical Path Method (CPM) Program Evaluation & Review Technique (PERT) As you discuss the various project scheduling techniques, you should include at least: - the basic assumptions of the technique - problems typically encountered in applying it - the nature of the effort required to keep the tool current - sources of problems - the nature of the decisions supported by the tool - the nature of the management effort and cost associated with using the tool. © 1984-1994 T/Maker Co.

Gantt Chart J F M A Time Period Activity Design Build Test

PERT / CPM Network planning methods that generate: Relationship between activities Project duration Critical path Slack for non – critical activities Crashing (cost / time trade-offs) Resource usage

St. Paul’s Hospital Immediate Activity Description Predecessor(s) A Select administrative and medical staff. B Select site and do site survey. C Select equipment. D Prepare final construction plans and layout. E Bring utilities to the site. F Interview applicants and fill positions in nursing, support staff, maintenance, and security. G Purchase and take delivery of equipment. H Construct the hospital. I Develop an information system. J Install the equipment. K Train nurses and support staff. — A B C D E,G,H F,I,J

St. Paul’s Hospital AON Network Immediate Finish Start A B C D E F G H I J K Immediate Activity Description Predecessor(s) A Select administrative and medical staff. B Select site and do site survey. C Select equipment. D Prepare final construction plans and layout. E Bring utilities to the site. F Interview applicants and fill positions in nursing, support staff, maintenance, and security. G Purchase and take delivery of equipment. H Construct the hospital. I Develop an information system. J Install the equipment. K Train nurses and support staff. — A B C D E,G,H F,I,J

St. Paul’s Hospital Completion Time Immediate Finish Start K 9 I 15 F 10 C D E 24 G 35 H 40 J 4 A 12 B Immediate Activity Description Predecessor(s) A Select administrative and medical staff. B Select site and do site survey. C Select equipment. D Prepare final construction plans and layout. E Bring utilities to the site. F Interview applicants and fill positions in nursing, support staff, maintenance, and security. G Purchase and take delivery of equipment. H Construct the hospital. I Develop an information system. J Install the equipment. K Train nurses and support staff. — A B C D E,G,H F,I,J

St. Paul’s Hospital Path Expected Time (wks) A-I-K 36 A-F-K 31 A-C-G-J-K 70 B-D-H-J-K 72 B-E-J-K 46 St. Paul’s Hospital Critical Path Completion Time Finish Start K 9 I 15 F 10 C D E 24 G 35 H 40 J 4 A 12 B Immediate Activity Description Predecessor(s) A Select administrative and medical staff. B Select site and do site survey. C Select equipment. D Prepare final construction plans and layout. E Bring utilities to the site. F Interview applicants and fill positions in nursing, support staff, maintenance, and security. G Purchase and take delivery of equipment. H Construct the hospital. I Develop an information system. J Install the equipment. K Train nurses and support staff. — A B C D E,G,H F,I,J

Critical Path The longest path in the network Defines the shortest time project can be completed Critical path activity delay project delay

Completion Time for Noncritical Activities Variability of times for activities on non-critical paths must be considered when determining the probability of finishing in a specified time. Variation in non-critical activity may cause change in critical path.

Cost / Time Trade-offs Most activities can be done faster if you pay more money Work overtime / hire more people / rent extra equipment / incentive contracts PERT / CPM have the ability to crash a schedule – to shorten activity time in a network to reduce project completion time.

Cost / Time Relationship 8000 — 7000 — 6000 — 5000 — 4000 — 3000 — 0 — Crash cost Activity B Direct cost (dollars) Normal cost | | | | | | 5 6 7 8 9 10 11 Crash time Normal time

Project Control Reports Performance vs. schedule Expected time to project completion Cost vs. budget Detailed cost breakdowns for each task and organization Expected total project cost Resource reports Corrective action / contingency reports

Summary Project management requires special tools PERT / CPM – Network planning methods that generate relationship between activities, project duration, critical path, slack for non-critical activities, crashing (cost / time trade-offs), and resource usage Project-based work is becoming increasingly prevalent for market-driven reasons - Growing project complexity - Collapsing product/service life cycles People with these skills are in demand We have only scratched the surface of the topic– if you are interested, take the Project Management course.

Summary for this Session Case study Hard Rock Cafe Projects Why? Characteristics and Activities Work Break down structure Project Scheduling techniques Cost time trade offs Project Control reports

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