MSc. Management: Operations Management. Lecture 4: Managing People and Facilities.

Managing Resources in the Internal Supply Chain

MSc. Management: Operations Management. Lecture 4: Managing People and Facilities.

Factors relating customers to supply chain design COST QUALITY LEVELS 1. Low Price 2. High Performance Design. 3. Fast Delivery Times.

QUALITY RELIABILITY
FLEXIBILITY

4. Consistent Quality. 5. On-time Delivery.

6. Product Flexibility. 7. Volume Flexibility.

We need to improve on all of these, and we need concepts and techniques to help us

MSc. Management: Operations Management. Lecture 4: Managing People and Facilities.

But to achieve:

Low Cost Good Quality Timeliness Choice

Good resource management is paramount.

MSc. Management: Operations Management. Lecture 4: Managing People and Facilities.

Planning Capacity.

Making sure we have the right type of resources, at the right time.

MSc. Management: Operations Management. Lecture 4: Managing People and Facilities.

Planning Capacity. General procedure:

Break down time into appropriate planning periods, Consider all resources (skills or equipment), then for each one, for each time period, determine How much time do we need? How much time do we need? Is there a difference?

What can/shall we do about it?

MSc. Management: Operations Management. Lecture 4: Managing People and Facilities.

Information for Planning Capacity. So, in order to plan operations we need to know

how things are done (preferably in the best way), i.e. tasks concerned. how long each task takes. how many times each task has to be done.

MSc. Management: Operations Management. Lecture 4: Managing People and Facilities.

Information for Planning Capacity. Work performance standards derived from Work Study can tell how things are done (Method Study), and how long it takes (Work Measurement). Forecasting can tell us how many times it has to be done, i.e. estimating demand.

MSc. Management: Operations Management. Lecture 4: Managing People and Facilities.

WORK STUDY Consists of :
Method Study ....systematic recording and critical examination of existing and proposed ways of doing work. and Work Measurement ..... application of techniques designed to establish the time for a qualified worker to carry out a specified job at a defined level of performance.

MSc. Management: Operations Management. Lecture 4: Managing People and Facilities. WORK STUDY

Early Film Footage. (Frederick Winslow Taylor)

(See also simple room decoration example on Moodle).

MSc. Management: Operations Management. Lecture 4: Managing People and Facilities.

Uses of work time estimates and standards
Use

Evaluation of present or past performance

Prediction of future performance

Equipment and facility evaluation

Evaluation of alternative methods and procedures

Cost Estimating

Operation and activity schedulingcapacity planning

Product/service design specification

Make or buy decisions

Job work estimating

Facilities selection.

Facilities layout

MSc. Management: Operations Management. Lecture 4: Managing People and Facilities.

Work Measurement Techniques.

Further Comments.
With concept of empowerment (e.g. TQM) it may be considered repressive. For non repetitive tasks the analytical estimate of a skilled tradesman may be more useful, but not if used for motivation. Remember there is a learning curve.

MSc. Management: Operations Management. Lecture 4: Managing People and Facilities.

Forecasting
FUNCTION
Marketing

Factor to be Forecast
Future Sales : Price and volume.Competitor Actions/reactions : product improvements, price changes New Processes : output, efficiency, labour requirements. Existing Processes : process efficiency, labour efficiency, material utilisation. Labour Requirements : quality, characteristics (managerial, supervisory, operator), quality. Wage rates. Interest rates, Turnover, Profits, Cash Flow

Operations

Personnel (HRM) Finance

MSc. Management: Operations Management. Lecture 4: Managing People and Facilities.

Forecast Type Long Term (strategic) Forecast Subject Product Portfolio, Operating system design : facility locations, process design, capacity requirements. Product volumes : Operating mix, volumes created / purchased. Scheduling : inventory requirements, final assembly (manufactured), workforce (tasks allocated)

Medium Term

Short Term (Operational)

MSc. Management: Operations Management. Lecture 4: Managing People and Facilities. Forecasting Methods Typology
Forecasting Methuds

Consultation

Statistical Extrapolation

Market Place (Market Research)

Experts (Delphi)

Indirect (Regression)

Direct (Time series analysis).

MSc. Management: Operations Management. Lecture 4: Managing People and Facilities.

Forecasting Methods
Market Research - good for identifying attractive product or service features, not total activity rate,i.e.sales. (Covered in Marketing). Delphi - asking the experts. Good to predict technological or economic changes, but expensive and susceptible to groupthink unless experts are kept separate. Leads to consensus (hopefully). Good for predicting environmental changes. Regression - finding relationship with a causal variable, the demand for which is known (or accurately predicted by someone else). (Time is not a causal variable, this is time series forecasting - see below). Time series forecasting - extrapolation of past activity rates (sales, performance) into the future. Good for short term forecasts, but beware of environmental changes..
USE MORE THAN ONE METHOD.

MSc. Management: Operations Management. Lecture 4: Managing People and Facilities. Capacity Management.

Strategies : ADJUST CAPACITY ELIMINATE THE NEED TO ADJUST CAPACITY. These are extremes, most organizations use a combination of the two.

MSc. Management: Operations Management. Lecture 4: Managing People and Facilities.

Capacity Management Adjustment. Means of adjustment Subcontracting Resources which can changed Materials, labour, and equipment. Can be applied to .. Manufacture and Service sectors. Mainly Manufacture

Material substitution Materials only Supply schedule change. Reduction of material content. Transfer of material use Re-schedule activities Labour and equipment Re-schedule maintenance Change hours worked Change workforce size People and equipment

Manufacture and Service sectors Manufacture and Service sectors.

MSc. Management: Operations Management. Lecture 4: Managing People and Facilities.

Capacity Management:ELIMINATION Eliminating the need to adjust.
Maintain excess capacity .....at additional expense Accept loss of customers ... and loss of potential profit (in short term ?). Require customers to queue or wait .... they may go away. Provide output stocks (manufacture only ?) ...at additional expense. Alter demand pattern (by differential pricing).

MSc. Management: Operations Management. Lecture 4: Managing People and Facilities.

Capacity Management: People? People, how many ? the generic approaches to capacity management apply. work study standards will give performance standards. workforce scheduling may be necessary for fluctuating demand.

MSc. Management: Operations Management. Lecture 4: Managing People and Facilities.

Capacity Management:

Supporting Quantifying Techniques

Forecasting. Capacity Smoothing. Optimization techniques. Queuing theory. Simulation.

MSc. Management: Operations Management. Lecture 4: Managing People and Facilities.

(Capacity Management): Useful graphs Product Life Cycle
18 16 14 12 10 8 6 4 2 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Demand

Time (years ?)

steady infant growth

stability

decline

MSc. Management: Operations Management. Lecture 4: Managing People and Facilities.

(Capacity Management): Useful graphs Learning Curves
120 100 80 60 40 20 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Efficiency

Time or number of operations

MSc. Management: Operations Management. Lecture 4: Managing People and Facilities.

(Capacity Management): Useful graphs Process Life Cycle
45 40 35 30 25 20 15 10 5 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Failure rate

process life
infant failure steady state wear out

MSc. Management: Operations Management. Lecture 4: Managing People and Facilities.

Capacity Management: Useful Technique Capacity Smoothing
40 35 30 25 20 15 10 5 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 demand product'n

MSc. Management: Operations Management. Lecture 4: Managing People and Facilities.

Capacity Management: Useful Technique

Optimization Techniques
(Linear Programming).

Methods of meeting some desired objective (e.g. minimizing cost, maximizing profit) subject to constraints on commodities required or resources available. General Procedure
Build model. Derive any feasible solution. Iteratively improve it until no further improvement.

MSc. Management: Operations Management. Lecture 4: Managing People and Facilities.

Capacity Management: Useful Technique

QUEUING THEORY Considerations (input variables) : Nature of arrivals. Queue discipline. Service time distribution. Need to know (outputs) : Server efficiency. Service level (probability of finding queue, longest queue formed, average time spent queuing, longest time in queue).

MSc. Management: Operations Management. Lecture 4: Managing People and Facilities.

Capacity Management: Useful Technique

SIMULATION simulating a set of interlinking queues to represent a completed system.

Input is usually simulated as a set of time phased discrete events. Output is in terms of items coming from the system. Useful for getting efficiency of total system, and for spotting bottlenecks in the system.