1. Operations Management

2. 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

3. Importance of Operations
Productivity
Quality
Inventory management
Cost control
Lead to profitability

4. 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

5. 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

6. Manufacturing Technology
Automation
Often specialized machines
“Feedback loop”
CAD, computer aided manufacture
CAM, computer aided design
3D printing
Robotics
Assembly
Material handling
Medical

7. Service Technology Computers in Banking Insurance Education
Restaurants

8. 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

9. Managing Quality What is quality? ISO 9000 Malcolm Baldridge Award
Importance
Competition
Meet
Differentiate
Productivity
Costs

10. 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

11. 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

12. 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

13. Managing Productivity
Aggregate productivity
Productivity of a country
Industry productivity
Company productivity
Individual productivity
Productivity = outputs / inputs or
Productivity = outputs / direct labor

14. Improving Productivity
R&D
New products
Automate/revamp production
Increase employee involvement
E.g. the ‘red button’
Training
Rewards