SEWP ZC 241: PRINCIPLES OF MANAGEMENT Productivity, Operations Management, and Total Quality Management

After studying this chapter, you should understand:

1. The nature of productivity issues and ways to improve effectiveness and efficiency.

2. Production and operations management as an applied case of managerial planning and control.
3. Techniques for improving productivity including JIT and outsourcing. 4. The importance of quality, the nature of a variety of techniques for improving quality, and lean manufacturing.

What is Productivity?
Productivity is the inputoutput ratio within a time period with due consideration for quality

Production and Operations Management: Manufacturing and Service

Production management was the term used to refer to those activities necessary to manufacture products

Production and Operations Management: Manufacturing and Service

Operations management refers to activities necessary to produce and deliver a service as well as a physical product

WHAT IS OPERATIONS MGMT?

Business Function that: PLANS ORGANIZES COORDINATES CONTROLS the RESOURCES needed to provide companys GOODS and SERVICES. OPERATIONS MANAGEMENT is a MANAGEMENT FUNCTION.

WHAT IS OPERATIONS MGMT?

Definitions of tasks:

PLANNING:
Activities that establish a course of action. Guides future decision making.

ORGANIZING:
Activities that establish a structure of tasks and authority.

CONTROLLING:
Activities that ensure that actual performance is in accordance with planned performance.

WHAT IS OPERATIONS MGMT?

Operations management INVOLVES: People Equipment Technology Information

OPERATIONS MANAGEMENT is a CORE FUNCTION of any company.

ROLE OF OPERATIONS MGMT: OPERATIONS SYSTEM

INPUTS
RANDOM FLUCTUATIONS

OUTPUTS

ADJUSTMENT NEEDED

CONVERSION/ TRANSFORMATION PROCESS

MONITOR OUTPUT

COMPARISON: ACTUAL VERSUS DESIRED

To TRANSFORM companys INPUTS into FINISHED GOODS or SERVICES

ROLE OF OPERATIONS MGMT: COMPONENT DEFINITIONS

INPUTS: Human Resource Facilities and processes Materials Technology Information OUTPUTS: Physical Goods Services

ROLE OF OPERATIONS MGMT: COMPONENT DEFINITIONS

OPERATION SYSTEMS:
Part of orgn. That produces organizations physical goods and services.

CONVERSION/ TRANSFORMATION PROCESS:

The process of changing INPUTS to OUTPUTS. TECHNOLOGY: The level of scientific sophistication in plant/ equipement or skills in the CONVERSION

ROLE OF OPERATIONS MGMT: COMPONENT DEFINITIONS

RANDOM FLUCTUATIONS: Unplanned/ Uncontrollable influences that cause differences between ACTUAL and EXPECTED output. Can be EXTERNAL or INTERNAL. VALUE ADDED: Net increase between FINAL VALUE of outputs compared to SUM of VALUE OF INPUTS. Greater the value, more profitable the business.

ROLE OF OPERATIONS MGMT: COMPONENT DEFINITIONS

FEEDBACK: INFORMATION in the control process that allows management to decide whether organizational activities require ADJUSTMENT.

DEFINITION OF OPERATIONS MANAGEMENT:

OPERATIONS MANAGEMENT: THE MANAGEMENT OF THE CONVERSION PROCESS WHICH CONVERTS INPUTS INTO DESIRED OUTPUTS OF GOODS AND SERVICES.

DISTINCTIONS BETWEEN MANUFACTURING & SERVICE OPERATIONS

Primary distinctions
Manufacturing organizations

Organizations divided into 2 broad categories based on their OUTPUTS.

Service organizations

Produces physical tangible Produces intangible goods goods. (Services) Can be stored as INVENTORY before they rae needed. Cannot be produced AHEAD of time.

Customers have no Customers are present DIRECT CONTACT with the during CREATION or conversion process. DELIVERY of SEVICES.

TYPE OF GOODS
MANUFACTURING - TANGIBLE

SERVICESINTANGIBLE

DEGREE OF CUSTOMER CONTACT

MANUFACTURING - LOW SERVICES- HIGH

INVENTORY
MANUFACTURING - STORED AHEAD OF USAGE SERVICES- REAL TIME

CHARACTERISTICS: MFG & SERVICES ORGANIZATIONS

OVERLAPS
In many organizations, there is an overlap of manufacturing and services: Computer + Service Car+ Service There are certain organizations, which have: Low Customer Contact. Highly Capital Intensive. Yet, they provide a SERVICE. These are called QUASI MANUFACTURING ORGANIZATIONS

QUASI MANUFACTURING ORGANIZATION: EXAMPLE

INDIA POSTS
Provides SERVICE- sppedy, reliable delivery of letters, documents & packages.
Output is intangible and cant be stored in inventory. Customer not present during creation of service. Highly capital intensive- 1,20,000+ Post Offices, telecom equipment, delivery trucks.

MANY ORGANIZATIONS FALL IN BETWEEN MANUFACTURING & SERVICES

Operations Management Systems

Steps in Product and Production Design

1. Create product ideas by searching for consumer needs and screening the various alternatives 2. Select the product on the basis of various considerations, including data from market and economic analyses, and make a general feasibility study 3. Prepare a preliminary design by evaluating various alternatives, taking into consideration reliability, quality, and maintenance requirements

Steps in Product and Production Design

Reach a final decision by developing, testing, and simulating the processes to see if they work
4.

5. Decide whether the enterprise's current facilities are adequate or if new or modified facilities are required
6. Select the process for producing the product; consider the technology and the methods available 7. After the product is designed, prepare the layout of the facilities to be used, plan the system of production, and schedule the various things that must be done

PROCESS OF CONVERTING AN IDEA INTO A PRODUCT OR A SERVICE

INNOVATION: DEFINITION
Innovation means a new way of doing something. Something new must be substantially different to be innovative, NOT an insignificant change. Linked to performance and growth through improvements in efficiency, productivity, quality, competitive positioning, market share.

COMPONENTS OF INNOVATION
BASIC RESEARCH APPLIED RESEARCH DEVELOPMENT IMPLEMENTATION

COMPONENTS OF INNOVATION
BASIC RESEARCH
Research for advancement of scientific knowledge that has no specific commercial use. Maybe, of present or potential interest

APPLIED RESEARCH
Research for advancement of scientific knowledge that has specific commercial uses.

COMPONENTS OF INNOVATION
DEVELOPMENT
Technical activity concerned with translating basic and applied research results into products or processes.

IMPLEMENTATION
Activities involved with designing and building pilot models, equipment and facilities, and initiating marketing channels for products or services emerging from R & D

DECAY CURVE FOR NEW PRODUCT IDEAS

Screening
Economic Analysis

Development

Testing

Commercial Use

TYPES OF PROCESS TECHNOLOGIES

PROJECTS JOB SHOP BATCH ASSEMBLY LINE CONTINOUS PLANTS

CHARACTERISTICS: PROJECT TECHNOLOGY

Unique Product

Requirement of customer tailor made Products not standardized.

Flexible conversion process.

High degree of problem solving required.

Teamwork and coordination essential.

EXAMPLES: PROJECT TECHNOLOGY

CHARACTERISTICS: JOB SHOP TECHNOLOGY

Small batches of different products.

High degree of customization.

Unique process steps or Routing Each product uses small portion of resources. Elaborate job tracking and control systems required.

High lead time for access to machines.

Equipment overloaded or under loaded.

EXAMPLES: JOB SHOP TECHNOLOGY

CHARACTERISTICS: BATCH TECHNOLOGY

Higher standardization than job shop.

Several products produced repeatedly and in large volumes.

Certain parts/ components/ items produced and stocked without customers orders. System flexibility for small volume/ high variety products. No product sufficiently dominant to warrant dedicated equipment

EXAMPLES: BATCH TECHNOLOGY

CHARACTERISTICS: ASSEMBLY LINE TECHNOLOGY

Narrow range of specialized products.

Relatively stable product designs.

Specialized equipment, human skills and management systems. Beyond a range, manufacturing system is inflexible.

EXAMPLES: ASSEMBLY LINE TECHNOLOGY

CHARACTERISTICS: CONTINOUS FLOW TECHNOLOGY

Products manufactured in continuous, endless flows. Highly standardized products. Normally highly capital intensive. High degree of automation and process controls required. High start up costs.

EXAMPLES: CONTINOUS FLOW TECHNOLOGY

SERVICE PROCESS TECHNOLOGIES

As diverse as product process technologies.

Services vary:
In amount of customer contact. In intensiveness of labour versus capital.

CUSTOMER CONTACT
Occurs in TWO ways: Involvement during designing or customizing service During creation of service.

CUSTOMER CONTACT
Basis for categorizing services (high to low)

Trade off between flexibility and operational effectiveness.

High contact process technology: More flexible, efficiency low since conversion process cant be standardized. Low contact process technology: Less flexible, but operations more
standardized and efficient..

TYPES OF SERVICE PROCESS TECHNOLOGIES

LOW CUSTOMER CONTACT HIGH CUSTOMER CONTACT

CAPITAL INTENSIVE

QUASI MANUFACTURING

CUSTOM SHOP SERVICES

LABOUR INTENSIVE

MASS SERVICES

PROFESSIONAL SERVICES

CHARACTERISTICS: SERVICE PROCESS TECHNOLOGIES

QUASI MANUFACTURING:
Rigidly standardized service. Concerned with reliable delivery schedule. Major capital intensive decisions.

MASS SERVICES:
Scheduling of human resource critical. Standardized services. Emphasis on training & development..

CHARACTERISTICS: SERVICE PROCESS TECHNOLOGIES

CUSTOM SHOP SERVICE:
Professional staff, customized service. Relatively capital intensive conversion technology.. Emphasis on cost containment and capital investment decisions.

MASS SERVICES:
Customized service. Intensive interaction between customer and professional personnel. Professional skills critical.

LABOUR VERSUS CAPITAL INTENSIVENESS

CAPITAL INTENSIVE LABOUR INTENSIVE

Dominant concerns: Employee scheduling & training

Dominant concerns: Technological advancements & capital investments

Tools and Techniques for Improving Productivity

Inventory Planning and Control
Just-in-Time Inventory System
In the just-in-time (JIT) inventory method, the supplier delivers the components and parts to the production line "just in time" to be assembled

Outsourcing
Outsourcing means that production and operations are contracted to outside vendors that have expertise in specific areas

What is Operations Research?

Operations research is the application of scientific methods to the study of alternatives in a problem situation, with a view to obtaining a quantitative basis for arriving at a best solution

What is Operations Research?

An interdisciplinary branch of applied mathematics and formal science that uses methods such as mathematical modeling, statistics, and algorithms to arrive at optimal or near optimal solutions to complex problems.

What is Operations Research?

OR APPLICATIONS
statistics,

optimization,
probability theory,

queuing theory,
game theory,

graph theory,
decision analysis, and simulation

What is Value Engineering?

Value engineering, is the process of analyzing the operations of the product or service, estimating the value of each operation, and attempting to improve that operation by trying to keep costs low at each step or part

What is Work Simplification? Work simplification is the process of obtaining the participation of workers in simplifying their work

What is a Quality Circle?

A quality circle (QC) is a group of people from the same organizational area who meet regularly to solve problems they experience at work

Total Quality Management (TQM)

Total quality management (TQM) is the organization's long-term commitment to the continuous improvement of quality, throughout the organization and with the active participation of all members at all levels, to meet and exceed customer expectations

Mass Production vs Lean Production

MASS PRODUCTION LEAN PRODUCTION

Sporadic and inconsistent improvements

Satisfied with good enough High inventory acceptable

Continuous improvements (kaizen) with strategic breakthroughs

Aim at zero defects Just-in-time inventory system

Mass Production vs Lean Production

MASS PRODUCTION LEAN PRODUCTION

Me management with emphasis on individual performance

Workers considered the cause of poor quality

We or team management

Everyone is the problem; especially management

CAD/CAM
CAD/CAMs help engineers design products much more quickly than they could with the traditional paper-and-pencil approach

THANK YOU!!!

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