1. OMSAN LOJİSTİK

2. Top Management Program in Logistics
& Supply Chain Management (TMPLSM)
Production and Operations Management
1: Strategic Role of Operations

3. OPERATIONS
Chain of Activities that Create, Produce, and Deliver Products and Services
Operations Are Made of Processes 3

4. What is POM? FIRM Inputs: Raw Materials Labor Production Capital
Processes
FIRM
Inputs:
Raw Materials
Labor
Capital
Technology
Energy ……
Outputs:
Goods
Services
POM = design and management of
production processes

5. There is a “process” behind everything we do
For External Customers
For Internal Customers
Operational
Processes
Administrative
Processes
Often a little attention to these processes produces great benefits

6. ? A good starting question:
Is the process aligned for maximizing value for the customer?
Value for the customer ?
Design and management
of the process
The answer, in a surprising number of cases, is
“Not exactly!” 6

7. More Questions? … Cost Quality Service Flexibility
What makes Customers to buy from you instead of the Competition?
Cost
Quality
Service
Flexibility

8. Typical Performance Measures for Operations
Cost (Efficiency)
Cost per unit, Labor productivity, Capacity utilization, …
Quality
Conformance to Specs, Rejects, Reworks, …
Service (Dependability)
Reliability of Delivery, Availability, Predictability, ….
Flexibility
Speed of delivery, Ability to customize, Min. order quantities, …
Of course in addition to Safety, Environmental, and other
good housekeeping measures

9. What does the customer want from the process?
Cost
Quality
Service
Flexibility
Differentiate between
“qualifiers” and “order winners”

10. Looks simple—but it is not easy!
Always check, and re-check, the “fit”
Value for customer
Are “order winners” & “qualifiers” specified? (and updated?)
Cost
Quality
Time
Flexibility
Is focus on maximizing the “order winners” and meeting acceptable levels for the qualifiers?
Process Design &
Management
Looks simple—but it is not easy!

11. Are Operational Processes Aligned for Different Market Segments?
Market Segments Served
by the Business ?
Operational Processes

12. Managerial Decisions behind these processes 12 Operational Processes
Acquire production capacities
Configure & improve the system
Schedule and deploy resources 12

13. Acquire Capacities What? Facilities, equipment, people
Ownership? Vertical integration
How Much? For peak load? Average load?...
When? Lead demand? Lag demand?...
Where? Centralized or decentralized?...

14. Configure & Improve Orientation? Job shop, batch, flow shop
Work Organization? Functional, cellular,…
Linkages upstream and downstream?
Interface with R&D?
Key Performance Indicators?

15. Schedule & Deploy Flows, Inventories, and queues?
Orders and Capacity Utilization?
Continuous Improvement?
Of cost efficiency, quality, flexibility, reliability,…

16. variability There is always in demand and supply
And that’s a big challenge in management of operations

17. The Business as a System
OPERATIONS
ACT
FIN
MKT OB
Operations
& Logistics

18. Costs Schedules Flexibility High Quality Price Delivery Promise
Role: Production of
Goods and Services
Role: Investigate Demand
and establish distribution chain
Organization’s
Top Management
Operations
Marketing
LINKS
Costs
Schedules
Flexibility
High Quality
Price
Delivery Promise
Number of Models
Repeat Sales

19. Producer’s View Matl Labor Goods Operations $$$ & Svcs
TRANSFORMING PROCESSES
INPUTS
Goods
& Svcs
OUTPUTS
Matl
Labor
$$$

20. Customer’s View Order Entry Logistics Del’y & Service DEMAND
LINKING PROCESSES
Del’y &
Service
SUPPLY

21. Cost Service Quality Flexibility Order Entry Matl Labor $$$ Operations
& Logistics
Goods
& Svcs
Del’y &
Service
Cost
Quality
Service
Flexibility
SERVICE LEVEL

23. Wilson Sporting Goods * Market share from 2% to 18%
96 million golf balls a year!!
* Market share from 2% to 18%
* Plantwide productivity up 121%
* Cost: Total inventory reduced by 67% (Inventory turns from 6.5 to 85)
* Flexibility: orders from 1 dozen to 85,000 dozens
* Service: 99.9% on-time delivery, Normal lead time = 10 days
* Quality: scrap reduced 67% ($9.5 million in quality costs)
* Continuous Improvement, Associate Involvement, TQM, JIT,
“Lowest Total Cost” Manufacturing

24. Business Portfolio MARKET ATTRACTIVENESS LOW HIGH MAINTAIN / PROTECT
INVEST /
GROW S T R O N G W E A K
Profit Pool ?
Possible
Win ?
C O M P E T I T I V E
P O S I T I O N
HARVEST/
DIVEST
DEVELOP OR
WITHDRAW

25. Marketing / Financial Framework
CAPACITY
INVESTMENT
MARKET
POTENTIAL
MARKET
SIZE
MARKET
SALES
R.O.I.
PENETRATION
MARKET
SHARE
PROFITS
BUSINESS / PROD.
PORTFOLIO
PRICE
PROFIT
M/P
I/G
MARGIN
H/D
D/W
COST

26. Growth Opportunity Matrix
OLD
NEW
MARKETS P R O D U C T S N E W L
Diversification
Market
Development
Product
Performance
Improvement

27. Elements of Operations Strategy
1. Workforce
2. Process Technology
3. Capacity
4. Production Planning and Control
5. Supply Chain
6. New Product & Process Development
7. Facilities
8. Organization
9. Performance Measures

28. Product / Process
Spectrum

29. Objective: Job Shop to Flow Shop Job shop Batch flow Line flow
Understand the differences between:
Job shop
Batch flow
Line flow
Flow shop

30. Example: Car Wash IN OUT Automatic Wash 2.5 min / car Interior
Cleaning
3 min / car
Queue 1
Queue 2
Let us look at an example. You go to the car wash, what does the process look like?
There are two stages in the process: automatic wash and interior cleaning. The first stage is capital intensive: it is performed by a relatively expensive machine. The second stage is labor intensive as it is performed by an employee.
The cycle time for the automatic wash is the time spent to wash each car. It is 2.5 min for each car. Therefore it can wash 1 divided by 2.5 cars per minute, that is 0.4 cars per minute or 24 cars per hour. This is the capacity of this machine. Capacity provides a measure of the potential rate of production.
The cycle time for the interior cleaning is 3 minutes, therefore the interior cleaning capacity is 20 cars per hour. Even though the automatic wash can clean 24 cars per hour, the capacity of the total process is 20 cars, due to the capacity at the interior cleaning section. In this process, interior cleaning is the limiting resource, or the bottleneck resource.
WE have mentioned about variability in the last session. First of all the customers arrival time are random, that is, there is demand variability. Second, the processing times are variable, especially at the interior cleaning section. As a result, from time to time, we see a queue build –up in front of the processes. At other times, the washer and the cleaner may stay idle.

31. Process Spectrum Job Jumbled Groups similar equipment together. Shop
flow
Groups similar equipment together.
Jobs follow diverse paths
Batch
Flow
Disconnected
line flow
Groups similar equipment together.
Batches provide some standardization.
Line
Flow
Assembly
line flow
Equipment placed in assembly sequence.
Worker or machine paced flow.
Flow
Shop
Continuous
flow
Equipment in process sequence.
Expensive equipment but
high utilization rates.

32. Types of Processes High Low Low High Volume Job Shop Batch Flow Line
Variety, # of products
Line
Flow
Flow
Shop
Low
Low
Volume
High

33. Job Shop vs Flow Shop
Job Shop: Production system designed for low volume manufacturing of highly customized products and services.
Flow Shop: Production systems that is designed for high-volume production of a standardized products.

34. Job Shops Flow Shops Products Varied Standard Equipment
General purpose
Specialized
Material Flows
Jumbled
Linear
Scheduling & Planning
Complex
Simple
Capacity Utilization
Fluctuating
High
Inventories
WIP
Negligent
Accounting
Job costing
Process costing
Information Flow
Structured
Simple
Direct Labor
Skilled
Less-skilled
Managerial Focus
Supervision
Planning
Competitive Challenges
Flexibility, response
Price, supply

35. Types of Production Processes
Project
Batch Process
Assembly Line
Continuous Flow
Job shop
Flow shop
Increasing volume
Increasing variety

36. Product Spectrum High Low Low High One-of-a kind product Satellites
Batches of distinctly
different product
Apparel
Variety, # of products
Variations
on a theme
Auto
Light
bulbs
Standard
product
Low
Low
High
Volume

37. Product Life Cycle
Introduction
Growth
Maturity
Decline
Demand
time

38. Product X Process X X Product Life Cycle High Customization Low Volume
High Standardization
High Volume
Job
Shop X
Process X
Flow
Shop X
Product Life Cycle
Entry
Growth
Mature

39. Product Process Matrix
Competitive Modes
Custom
Designs
hi margin
Quality,
Service
margin
Std,
Designs
availability
Vertical int.,
Economies of
Scale, cost
Quoting and
tracking jobs,
shop floor control
Satellites
Develop stds,
Process dev.
Inventory mgt.
Apparel
Management Tasks
Line balancing,
Process dev.
Personnel mgt.
Auto
Light
bulbs
Raise capital
Run efficiently
Material mgt.

40. Tension within the matrix
High
Job
Shop
Flexibility
Variety, # of products
Cost efficiency
Flow
Shop
Low
Low
High
Volume

41. Take-aways Each firm is a sequence of processes.
Operational Performance measures:
Cost, flexibility, quality and service
While designing the process, you face a trade-off between efficiency and flexibility.
Need to match processes to competitive priorities