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Operations and Project Management (Overview)

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1 Operations and Project Management (Overview)
By Oral Ashley May 2017

2 Minimize interruptions
HOUSEKEEPING Participation Breaks Restrooms Cell Phones Minimize interruptions

3 Learning Outcomes Review and critique the effectiveness of Operations Management Understanding operations management Operations, Operations Management and Operations Managers Historical development of operations management Role of operations manager

4 Understanding operations management
These finished products went through a process…. The study of Operations deals with how goods and services that you consume and buy everyday are produced.

5 Operations Every organization has an operations function and the goal involves the production of goods and services. This involves: -Procurement, converting them into outputs then distribute them to end-users. The term operations embraces all the activities required to create and deliver an organization’s goods or services to its customers or clients. In private sector it is expressed in terms of profits, growth and competitiveness or even providing value for money

6 Operations Management
OM is concerned with the design, management and improvement of the systems that create the organization’s goods and services.

7 Work of an Operations Manager
Operations Management design, operation, and improvement of productive systems Operations a function or system that transforms inputs into outputs of greater value Transformation Process a series of activities along a value chain extending from supplier to customer activities that do not add value are superfluous and should be eliminated

8 Transformation Physical: as in manufacturing operations
Locational: as in transportation or warehouse operations Exchange: as in retail operations Physiological: as in health care Psychological: as in entertainment Informational: as in communication

9 Operations as a transformation Process
INPUT Material Machines Labor Management Capital Output Goods Services Transformation Process Feedback & Requirements

10 Operations Function Operations Marketing Finance and Accounting
Human Resources Outside Suppliers

11 How Operations affect other functions
Economics Marketing Finance Use of processes and pareto analysis to ensure operations are smooth The production and delivery of goods to the consumer are crucial to marketing efforts and consumer satisfaction Provides funding for capital expenditure on operations as well as most cost savings efforts are centered on operations

12 How Operations affect other functions
Ensures that the requisite control and procedures are in place to account for the operations Use of technology to implement systems to ensure smooth operations Lean management, scheduling, sales planning, constraint theory etc are all management tools that are tied to operations. Accounting Information Technology Management

13 Activity 1 For each of the following businesses, identify the main output of the operation: Brewery Publisher Hotel Insurance company Your organization

14 Historical Development of OM
Craft production process of handcrafting products or services for individual customers Division of labor dividing a job into a series of small tasks each performed by a different worker Interchangeable parts standardization of parts initially as replacement parts; enabled mass production

15 Historical Development of OM
Scientific management systematic analysis of work methods Mass production high-volume production of a standardized product for a mass market Lean production adaptation of mass production that prizes quality and flexibility

16 History of OM

17 History of OM

18 History of OM

19 History of OM

20 History of OM

21 Concept of Production • Production function is ‘the part of an organisation, which is concerned with the transformation of a range of inputs into the required outputs (products) having the requisite quality level’. • Production is defined as ‘the step-by-step conversion of one form of material into another form through chemical or mechanical process to create or enhance the utility of the product to the user’. • Some examples of production are: manufacturing custom-made products like, boilers with a specific capacity, constructing flats, some structural fabrication works for selected customers, etc., and manufacturing standardized products like, car, bus, motor cycle, radio, television, etc.

22 Characteristics of the Production System
Bennett (2015) identifies the following characteristics of the Production system: • Production is an organised activity, so every production system has an objective. • The system transforms the various inputs to useful outputs. • It does not operate in isolation from the other organisation system. • There exists a feedback about the activities, which is essential to control and improve system performance.

23 Operations System The operation system includes both manufacturing sector as well as service sector An operation was defined in terms of the mission for the organization, technology it employs and the human and managerial processes it involves. Operations in an organization can be categorized into Manufacturing Operations and Service operations.

24 Framework for Managing Operations
• Managing Operations involves planning, organizing, and controlling the activities, which affect human behaviour through models. • Planning is the activity that establishes a course of action and guide future decision-making. • Organizing is the activities that establish a structure of tasks and authority. • Controlling is the activities that assure the actual performance in accordance with planned performance. Controlling costs, quality, and schedules are the important functions here.

25 Benefits of OM Use of Best Practice Control risk Reduce costs
Improve efficiency Search and Analyse Capture and share information

26 Responsibilities of OM
• The operations managers have the prime responsibility for processing inputs into outputs. • They must bring together under production plan that effectively uses the materials, capacity and knowledge available in the production facility. • Control must be exercised over such parameters such as costs, quality and inventory levels. • The definition of the operations Management contains following keywords: Resources, Systems, transformation and Value addition Activities.

27 Review Questions Define Operations management.
Explain the key concepts of Operations management Distinguish between manufacturing and service operation with example. Define the term operations management. Briefly explain how service producers differ from goods producers in important aspects of their operations. State the important objectives of production management. Define the term productive system. Explain the concept of productivity.

28 References • Adam, Everett and Ebert, Ronald (1994), Production and Operations Management, Prentice-Hall of India Private Limited, 5th Edition. • Bennett, Claudette (2015) Operations Management Lecture Notes, Colbourne College Boundless. "Operations-Management Tools." Boundless Management Boundless, Invalid Date Invalid Date. Invalid Date. Retrieved ‎13 ‎May. ‎2017 from 31/operations-management-tools • Kumar, Anil and Suresh, N (2008) Production and Operations Management, New Age International (P) Limited Publishers, 2nd Edition. • Monks, Joseph (2004) Theory and Problems of Operations Management, Tata McGraw-Hill Publishing Company Limited, 2nd Edition. • Monks, Joseph (1987) Operations Management, McGraw-Hill International Edition, 3rd Edition. • Pannerselvam, R (2004) Production and Operations Management, Prentice-Hall of India Private Limited, 9th print. • Rexprocess.com (2016) Operations Management retrieved from /

29 Operations and Project Management
By Oral Ashley May 2017

30 Learning Outcome 1 Oversee the design, implementation and effectiveness of an operations function Utilise control systems and contingencies to ensure efficiency The use of Six Sigma and Lean principles to improve efficiency and effectiveness

31 Business Process Business process modelling, often called process modelling, is the analytical representation or illustration of an organization’s business processes. • Along with business process discovery, process modelling is widely viewed as a critical component in successful business process management (BPM). It is used to map out an organization’s current (or “as-is”) processes to create a baseline for process improvements and to design future (or “to-be”) processes with those improvements incorporated. Process modelling often uses Business Process Modelling Notation (BPMN), a standard method of illustrating processes with flowchart-like diagrams that can be easily understood by both IT and business managers.

32 Process Model Example

33 Purpose of Process Model
Process models are used to lump processes of the same type into a model so that you can see how those processes can work together. It shows the activities organization typically performs and the kind of information it needs to successfully perform those activities, to transform inputs to goods and services. Better business process discovery and modelling lead to better business process management.

34 Business Process Model
• The term Business Process Model (also abbreviated to BPM) is the noun form of Business Process Modelling, and refers to a structural representation, description or diagram, which defines a specified flow of activities in a particular business or organisational unit (businessball.com, 2016). • A business process model should define the following elements: The goal of the process Specific inputs and outputs Consumed resources Activities and the order in which they are performed Significant events that drive or affect the process

35 Business Process Modelling
• The aim of modelling is to illustrate a complete process, enabling managers, consultants and staff to improve the flow and streamline the process. • The outcomes of a business process modelling project are essentially: • Value for the customer, and • Veduced costs for the company, leading to increased profits. • Other secondary consequences arising from successful Business Process Modelling can be increased competitive advantage, market growth, and better staff morale and retention. • There are no absolute rules for the scope or extent of a Business Process Model in terms of departments and activities covered.

36 Adding Value for Customers
• Adding value for customers, whether internal or external customers, is at the centre of a Business Process Model. It starts with a customer need and ends with the satisfaction of that need. Unlike a workflow diagram, which is generally focused on departmental activities, a BPM spans departments and the whole organisation. This point about customers being internal as well as external is crucial: Staff are among the internal customers of modern right-minded organisations. If you approach Business Process Modelling purely from a systems and 'things' viewpoint with a fixation on costs and profitability, and squeezing every activity to its theoretical optimum, then people (notably staff) tend to get squeezed too. Organisations work well when people enjoy and support the processes that they are required to perform, and you will only add sustainable value for your customers, when you also add value for your staff too. Successful BPM added value for customers is self-sustaining because for staff it contains the magical WIIFM element - (What's In It For Me).

37 Example-BPM added value
An example could be the actions involved in processing a customer order from an internet-based mail order company. • Starting with a customer placing an order (the customer need) • send IT-based information to the warehouse • stock picking • packing and recording • sending the appropriate IT-based information to the distribution hub • sending IT-based information to the accounts department • generation of an invoice • allocation and organisation of shipment for the vehicle drivers • delivery of the item and invoicing (the customer need fulfilled). • This is a simple 'high-level' example. In practice each part or sub-process (for example, stock-picking) may require a 'low-level' BPM of its own.

38 Process Hierarchy Process Hierarchy Level 1 Business Process
• A high level aggregation of company functionality 2. Level 2 Major Processes • A bundle of processes that belong to the same area of responsibility dealing with similar tasks and activities for functional or other reasons Level 3 Business Sub process • Ful-fill the same business mission but in a different manner or with a different application Level 4 Business Process Activities • Activities at the lowest level that needs to be fulfill at the end of the step.

39 Characteristic of Operations Process
• Volume: Key to how business organized, for example McDonalds high volume low cost hamburger and fast food production. • Variety: Flexibility in service, for example choice between taxi and a bus service • Variation: Customized products, for example homes for sales with different number of rooms • Visibility: Customers ability to see, track their experience or order through the operation process

40 Different Process Types
Manufacturing Process types: •Project, jobbing, batch, mass, continuous. Service Process types: • Professional services, service shops, mass services 3. Basic types of layouts: • Process layout or functional layout, product layout, fixed-position layout, group or cell layout, hybrids and mixed layout.

41 Need for Management Control Systems
Difference between success and failure Critical to efficiency and effectiveness Business must monitor Production schedules Productivity Waste

42 Need for Management Control Systems
Inventory Rework The control cycle is a period of time where an activity is planned, measured, corrected and replanned

43 Lean Principles: Operations Management
Lean Manufacturing System designed to eliminate waste, ensure quality and involve employees in designing and managing their work Five key principles Define value from customer’s perspective Identify and map the value stream Reduce and eliminate waste Establish production levels from forecasted demand not arbitrary inventory levels Pursue perfection by repeating the process periodically

44 Lean Principles: Operations Management
Reducing/eliminating waste – seven methods Stop overproduction Manage inventory to prevent holding Streamline transportation of materials Optimize motion and actions personnel – efficient work spaces Reduce waiting times for parts – ie. Reduce idle time Reduce/eliminate defects Reduce or stop overprocessing by eliminating unnecessary product features that do not add value

45 Six Sigma: Operations Management
A process-improvement method that focuses on statistical methods to reduce the number of defects in a process. The Six Sigma program accomplishes this by identifying and removing the causes of defects (errors) and by minimizing the variability present in manufacturing and business processes. Supported by quality-management methods, such as statistical analytics, and creates a special infrastructure of employees within an organization (e.g., "Black Belts," "Green Belts") who are experts in these methods

46 Six Sigma: Operations Management
Each Six Sigma project in an organization follows a defined sequence of steps and has quantified financial targets such as reducing costs or increasing profits. Tools used in Six Sigma are: Process mapping, Trending charts, Calculations of potential defects, Ratios, and statistics. Best practices for work within a team are also used.

47 Examples of Six Sigma and Lean Manufacturing
Similar to Henry Ford and systematic process improvements. Goal is to reduce staff costs and increase output with same amount or less resources. Toyota (and the concept of kaizen) is a fantastic example of Lean manufacturing and what is called just-in-time (JIT) inventory management. Toyota became famous in manufacturing for timing every specific element of the manufacturing process to ensure that minimal warehousing was required, delivering each new add-on component at precisely the time it would be needed and in exactly the location it would be installed. This created a process flow that minimized space usage (lowering costs), optimized timing, and created widespread consistency of operational flow.


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