Managing Operations

Managing the Process of Production and Provision of Services for Greater Productivity

Managing Operations

The Production Process

Baking

Bread

Raw materials flour, oil, salt, yeast Equipment bread pans, oven Timing time in oven, cooling Packaging getting the bread ready to ship Shipping sending the bread to the customer

Managing Operations

Operations Management
Systematic

direction and control That transform resources Into finished goods and services

Managing Operations

Operations Management
Key

processes

Planning production by mobilizing materials, equipment, labour and information Scheduling operations to make efficient use of resources Controlling the work, costs, quantity and quality of production

Managing Operations

Operations Management
The

difference between producing goods and producing services

Services are more customized to the client Services are much harder to store and thus keep in inventory Providing services means engaging people skills Service quality is not the same as the quality of the work provided

Managing Operations

Operations Planning
Capacity

planning

What will you need to produce How will you allocate resources Will you allocate for average production or maximum production If you allocate for average production, how will you handle periods of maximum production

Managing Operations

Operations Planning
Location

Planning

Where will you locate the plant, or the service office How will you balance the costs of transportation of resources and the costs of moving finished goods

Managing Operations

Operations Planning
Planning

layout for efficiency Quality planning ensuring quality standards are met Methods planning eliminating waste

Managing Operations

Operations Scheduling
Planning

how to use time Flows of products and information over time Priorities Getting processes in the right order Lead times and lag times

Managing Operations

Operations Control
Materials

management

Planning and controlling the flow of materials from purchase through production and distribution of finished goods Standardization of components, including information components of service provisions

Managing Operations

Operations Control
Areas

of Materials Management

Transportation of resources, finished products Warehousing Inventory control Purchasing of raw materials

Managing Operations

Operations Control
Materials

Management Purchasing

Holding costs of goods Lead times for acquiring goods Supplier selection Cost control

Managing Operations

Operations Control
Just-in-Time

Production Systems

Instead of ordering an inventory of raw materials, you order only what you need when you need it Lead times must be carefully calculated Any JIT system is very delicately balanced, and needs a contingency plan

Managing Operations

Operations Control
Quality

Control

Testing of finished goods to ascertain quality Ensuring goods and services meet quality standards

Managing Operations for Efficiency Increasing Productivity

How do you manage production to be more efficient and more productive?

How

do you get a larger output for the same inputs How do you match your output better to the environment

Increasing Productivity

Productivity
A

measure of efficiency How much is produced relative to the resources used to produce it Productivity goes up when more is produced for the same inputs

Increasing Productivity

Productivity
Often

basis

measured on a country-wide

Labour productivity = of a country workers

GDP total

It is measured this way because statistics on labour are easiest to

Increasing Productivity

Productivity in Canada
Productivity

has been falling in Canada Canada now ranks 17th in productivity worldwide, with productivity about 75% of the U.S. value Canada relies on exports of natural resources, rather than on enhanced finished goods

Increasing Productivity

Effect of Reduced Productivity

Higher

productivity means additional wealth that can be shared between workers, investors and customers Lower productivity means wages rise only if investors or customers pay more

Increasing Productivity

Higher productivity allows

Greater

profit for the same price, or Lower prices for customers

Productivity varies as well by industry

In

general service industries are less productive than industries producing goods

Increasing Productivity

How do you manage to increase productivity

Invest

in growing, productive industries Remove waste within production processes Add labour value through education Remove government waste, regulatory barriers

Increasing Productivity

Managing to Increase Productivity

Increase

quality in the product Total Quality Management

Focus on customer value Increase performance quality of products Increase reliability of products Have workers take ownership for quality Monitor quality and feed back results

Increasing Productivity

Managing to Increase Productivity

Process

Re-engineering

Rethink each step in the production process Improve efficiency, cost, quality by changing all that needs to be changed Requires delicate balance in moving to a new process design

Increasing Productivity

Managing to Increase Productivity

The

Supply Chain

Traditionally, each business is managed as a separate unit But businesses are actually linked in a larger system The larger system is called a supply chain

Increasing Productivity

Managing to Increase Productivity

The

supply chain

Farmer grows grain Miller mills the grain into flour The bakery makes the flour into bread The distributor moves the bread to stores The grocery store sells the flour to the consumer

Increasing Productivity

Managing to Increase Productivity

The

supply chain

Bakery can simply consider itself, or it can work with other members of the chain to increase efficiency Coordination of effort between members of the chain often depends on information sharing to coordinate activities

Increasing Productivity

Managing to Increase Productivity

The

supply chain

To manage the chain, you need to think of the whole chain as part of a larger system While you look out for your own interests, you coordinate those interests with those of the other participants Similar to the approach in just-in-time inventory

Increasing Productivity

Managing to Increase Productivity

The

supply chain

Re-engineering approach applies to the supply chain as well You consider each step in the chain, and consider how to increase efficiencies The collaborative effort in itself often improves the supply chain

Increasing Productivity

Productivity and Quality as Competitive Tools

Invest

in innovation and technology This makes the human inputs more productive, as you automate the routine jobs

Increasing Productivity

Productivity and Quality as Competitive Tools

Adopt

a long-run perspective Many larger companies have pressures from investors to turn a profit NOW But businesses need to consider improving processes and quality in the longer term

Increasing Productivity

Productivity and Quality as Competitive Tools

Invest

in employees as a crucial resource Empower the employees to make as full a contribution as possible Train employees and expect them to advance in the business

Increasing Productivity

Productivity and Quality as Competitive Tools

Improve

the service sector Service must be reliable Service must be responsive to the customers needs, not just high quality Service must engender confidence and trust in the client