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Lecture outline
What do operations managers do? Operations function Evolution of operations management Operations management and ebusiness Globalization and competitiveness Primary topics in operations management Learning objectives for this course
a function or system that transforms inputs into outputs of greater value 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 design, operation, and improvement of productive systems
Transformation Process
Physical: as in manufacturing operations Locational: as in transportation operations Exchange: as in retail operations Physiological: as in health care Psychological: as in entertainment Informational: as in communication
TRANSFORMATION PROCESS
Feedback
Operations Function
Operations Marketing Finance and accounting Human resources Outside suppliers
Marketing
Finance
Its all about processes. I live by flowcharts and Pareto analysis. How can you do a good job marketing a product if youre unsure of its quality or delivery status? Most of our capital budgeting requests are from operations, and most of our cost savings, too.
process of handcrafting products or services for individual customers dividing a job into a series of small tasks each performed by a different worker standardization of parts initially as replacement parts; enabled mass production
Division of labor
Interchangeable parts
systematic analysis of work methods high-volume production of a standardized product for a mass market adaptation of mass production that prizes quality and flexibility
Mass production
Lean production
Events/Concepts
Dates
1769 1776 1790 1911 1911 1912 1913
Originator
James Watt Adam Smith Eli Whitney Frederick W. Taylor Frank and Lillian Gilbreth Henry Gantt Henry Ford
Steam engine Division of labor Revolution Interchangeable parts Principles of scientific Scientific Management management Time and motion studies Activity scheduling chart Moving assembly line
Events/Concepts
Hawthorne studies Motivation theories
Dates
1930 1940s 1950s 1960s 1947 1951 1950s
Originator
Elton Mayo Abraham Maslow Frederick Herzberg Douglas McGregor George Dantzig Remington Rand Operations research groups Joseph Orlicky, IBM and others
Operations Research
Linear programming Digital computer Simulation, waiting line theory, decision theory, PERT/CPM MRP, EDI, EFT, CIM
1960s, 1970s
JIT (just-in-time) Revolution TQM (total quality management) Strategy and operations Business process reengineering
Events/Concepts
Dates Originator
Numerous countries and companies ARPANET, Tim Berners-Lee SAP, i2 Technologies, ORACLE, PeopleSoft Amazon, Yahoo, eBay, and others
Internet Revolution
WTO, European Union, 1990s and other trade 2000s agreements Internet, WWW, ERP, 1990s supply chain management
E-commerce
2000s
Source: Adapted from Earl W. Sasser, R. P. Olsen, and D. Daryl Wyckoff, Management of Service Operations (Boston: Allyn Bacon, 1978), p.11.
Business
B2B Commerceone.com
B2C Amazon.com
Consumer
C2B Priceline.com
C2C eBay.com
Categories of E-Commerce
Customer
Manufacturer
Supplier
Flow of information (customer order) Flow of information (customer order) Flow of product (order fulfillment)
Impact on Operations
Customer expectations escalate; quality must be maintained and costs lowered No more guessing about demand is necessary; inventory costs go down; product and service design improves; build to-order products and services is made possible Transaction costs are lower; customer support costs decrease; eprocurement saves big bucks
Trade with China: Percent of each countrys trade Source: Share of China in Exports and Imports of Major Traders, 2000 and 2002, International Trade Statistics 2003, World Trade Organization, www.wto.org
Risks of Globalization
Cultural differences Supply chain logistics Safety, security, and stability Quality problems Corporate image Loss of capabilities
degree to which a nation can produce goods and services that meet the test of international markets ratio of output to input sales made, products produced, customers served, meals delivered, or calls answered labor hours, investment in equipment, material usage, or square footage
Productivity
Output
Input
Measures of Productivity
-- Dot com bust Dot com bust -- 9/11 terrorist attacks 9/11 terrorist attacks
Source: International Comparisons of Manufacturing Productivity and Unit Labor Cost Trends, 2002, Bureau of Labor Statistics, U.S. Department of Labor, September 2003. U.S. figures for 20022003 from Major Sector Productivity and Costs Index, Bureau of Labor Statistics, U.S. Department of Labor, March 2004
Productivity Increase
Become efficient
output increases with little or no increase in input both output and input grow with output growing more rapidly output increases while input decreases output remains the same and input is reduced both output and input decrease, with input decreasing at a faster rate
Expand
Achieve breakthroughs
Downsize
Retrench
Retrench Retrench
Productivity as a Function of Inputs and Outputs, 20012002 Source: International Comparisons of Manufacturing Productivity and Unit Labor Cost Trends, 2002, Bureau of Labor Statistics, U.S. Department of Labor, September 2003
Source: Global Competitiveness Report 20032004, World Economic Forum, January 2004, www.weforum.org
Operations Strategy
Strategy: Chapter 2
Maintaining an operations strategy to support firms competitive advantage Focusing on quality in operational decision making Designing quality products and services Setting up process so that it works smoothly and efficiently
Setting up facility so that it works smoothly and efficiently Designing jobs and work to produce quality products Managing complex projects
Managing supply chain Predicting customer demand How much to produce and when to produce it How much to order and when to order
Forecasting: Chapter 11
Planning capacity and other resources Designing efficient production lines Job and task assignments Minimizing waiting time of customers and products
Scheduling: Chapter 16