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OPERATIONS MANAGEMENT. Adi Djoko Guritno. PROGRAM MAGISTER MANAJEMEN UNIVERSITAS GADJAH MADA. Objectives. Introducing the cross functional decision making within operations management’s strategy context. Discussing some new concepts in operations management.

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OPERATIONS MANAGEMENT

Adi Djoko Guritno

PROGRAM MAGISTER MANAJEMEN

UNIVERSITAS GADJAH MADA


Objectives

  • Introducing the cross functional decision making within operations management’s strategy context

  • Discussing some new concepts in operations management

  • Creating ideas in operation management research

  • Problem-solving in case studies


R e f e r e n c e s

1 - Jacobs, F.B., Chase, R.B., and N.J. Aquilano, 2009,

Operations and Supply Chain Management, McGraw Hill.

2 - Heizer, J. and B. Render, 2008, Operations Management,

Prentice Hall.

3 - Finch, B.J. 2006. Operations Now: Profitability, Processes,

Performance. McGraw Hill.

4 - Beckman, S.L. and D.B. Rosenfield, 2008. Operations Strategy. McGraw Hill.



Big paper
Big Paper *

  • Abstrak

  • I. Pendahuluan: Latar Belakang; Rumusan Masalah;

    Batasan Penelitian; Tujuan Penelitian

  • II. Landasan Teori: Teori; Model Penelitian; Hipotesis

  • III. Metodologi: Objek; Populasi dan Sampel Penelitian;

    Uji Hipotesis (Formula dan Cara Uji Hipotesis); Flow

    Chart Penelitian

  • Referensi

    * Dikerjakan setiap kelompok yg dibentuk (abstrak dibagikan, hard copy dan soft copy paper). Urutan presentasi ditentukan saat pengumpulan paper.


Evaluation *

Case & Quiz : 10%

Group Presentation : 15%

Big paper : 15%

Class Participation + Discussion : 10%

Mid Examination : 25%

Final Examination : 25%

* Negotiable


  • Lecturer in Supply Chain Management and Operations Management (Master of Management), Management Science and Management of Technology (Doctoral Program)

  • Lecturer in Advanced Operations Management - Post Graduate Program FE-UGM

  • Vice Dean of Finance, and Human Resources, Faculty of Agricultural Technology, UGM (2004 to present)

  • Permanent Lecturer at Department of Agro-Industrial Technology, Faculty of Agricultural Technology, UGM (1988 to present)

  • Temporary Lecturer in Supply Chain, Post Graduate Program of Industrial Engineering UII, UPN (private university), Jogjakarta

Adi Djoko Guritno

  • Audit Committee Member of PT Timah Tbk (State Owned Company-Mining), Jakarta (2000 to 2007)

  • Head of Risk Management and Investment Committee of PT Timah (Persero) Tbk (2007-present)

  • Permanent Consultant in Business Development, PT MG Consult (Geological Survey)

  • Certified Professional in Risk Management (CPRM) ; Business Continuity Certified Planner (BCCP)

  • Member of CSCMP, POMS, APICS, EurOMA, IKAI, PATPI, BCMI

  • Journal Reviewer: International Journal of Business (IJB), Industrial Progress, Industrial Research, Agritech, Teknoin

  • Research interest: Industrial Management, Supply Chain Management and Strategic Management

  • Affiliation of research institutions: Green Symbiosis Japan, CIRDAI, PPA-UGM, PPE-UGM, ISTMI

  • Training experiences: PT. Combiphar, PT Pegadaian, PT BNI 1946, PT Geo Dipa Energi, PT Quick Tractors, PT Sari Husada, PT Pfizer-PCH, PT Timah, PT Telkom, PT Sriboga Raturaya, Department of Agriculture, Department of Trade and Industry, PT. Samator Group, PT. Perkebunan Nusantara

  • Chairman of ISTMI ; Chairman of RISPESCIA (Riset dan Pengembangan Supply Chain Indonesia)

  • Awards: Freezailah Research Award ITTO (Yokohama) ; Robert S McNamara Research Award (Washington)

  • E-mail : [email protected] ; [email protected] ; [email protected]

  • Blog : http://www.adidjoko.wordpress.com


Operations Management: Management (Master of Management), Management Science and Management of Technology (Doctoral Program)

Content, history, and current issues


Definition of operations management
Definition of Operations Management Management (Master of Management), Management Science and Management of Technology (Doctoral Program)

Operations is responsible for supplying the product or

service of the organization. Operations managers make

decisions regarding the operations function and its

connection with other functions. The operations managers

plan and control the production system and its interfaces

within the organization and with the external environment.


New paradigm
New Paradigm Management (Master of Management), Management Science and Management of Technology (Doctoral Program)

Business

Goal Setting

Business

Goal Getting


• Cost Efficiency Management (Master of Management), Management Science and Management of Technology (Doctoral Program)

• Quality

• Delivery

• Flexibility

Competitive Dimension


Just In Time Management (Master of Management), Management Science and Management of Technology (Doctoral Program)

Eli Whitney

Taichi Ohno

Standardization

Quality Assessment

Gilbreth

Motion Study

Baldrige

Theory of Constraints

Goldratt


The hard rock cafe
The Hard Rock Cafe Management (Master of Management), Management Science and Management of Technology (Doctoral Program)

  • First opened in 1971

    • Now – 110 restaurants in over 40 countries

  • Rock music memorabilia

  • Creates value in the form of good food and entertainment

  • 3,500+ custom meals per day

  • How does an item get on the menu?

  • Role of the Operations Manager


Significant events in operations management
Significant Events in Operations Management Management (Master of Management), Management Science and Management of Technology (Doctoral Program)


Major decisions at pizza usa a framework for om
Major Decisions at Pizza USA Management (Master of Management), Management Science and Management of Technology (Doctoral Program) A Framework for OM

  • Process

  • Quality

  • Capacity

  • Inventory


Cross functional decision making
Cross-Functional Decision Making Management (Master of Management), Management Science and Management of Technology (Doctoral Program)

  • Operations as the primary function

  • Other primary functions:

    • Marketing

    • Finance

  • Supporting functions

  • Major cross-functional decisions


Operations as a system

Energy Management (Master of Management), Management Science and Management of Technology (Doctoral Program)

Materials

Labor

Capital

Information

Transformation

(Conversion)

Process

Operations as a System

Goods or

Services

Feedback information for

control of process inputs

and process technology


Relation of operations to its environment

External Management (Master of Management), Management Science and Management of Technology (Doctoral Program)

Environment

SOCIETY

Human

Resources

Operations transformation system

Accounting

Engineering

Marketing

Finance

MIS

CUSTOMERS

COMPETITORS

GOVERNMENT

Relation of Operations to its Environment

Suppliers


New challenges in om
New Challenges in OM Management (Master of Management), Management Science and Management of Technology (Doctoral Program)

FromTo

  • Local or national focus

  • Batch shipments

  • Low bid purchasing

  • Lengthy product development

  • Standard products

  • Job specialization

  • Global focus

  • Just-in-time

  • Supply chain partnering

  • Rapid product development, alliances

  • Mass customization

  • Empowered employees, teams


The economic system transforms inputs to outputs
The Economic System Transforms Inputs to Outputs Management (Master of Management), Management Science and Management of Technology (Doctoral Program)

Inputs

Process

Outputs

Land, Labor, Capital, Management

The economic system transforms inputs to outputs at about an annual 2.5% increase in productivity (capital 38% of 2.5%), labor (10% of 2.5%), management (52% of 2.5%)

Goods and Services

Feedback loop


Fig. Ownership is family-based in Asia, except in Japan where it is widely held

control over companies is seen today as a domain of professional managers, not owners.



Measurement problems
Measurement Problems where it is widely held

  • Quality may change while the quantity of inputs and outputs remains constant

  • External elements may cause an increase or decrease in productivity

  • Precise units of measure may be lacking


Article: where it is widely held

On theory in operations management


The terminology of the philosophy of science in OM where it is widely held

  • Law of variability

  • Law of bottlenecks

  • Law of science methods

  • Law of quality

  • Law of factory focus


Law of variability where it is widely held

The greater the random variability, either demanded of the process or inherent in the process itself or in the processed, the less productive the process is


Law of bottleneck where it is widely held

An operation’s productivity is improved by eliminating or by better managing its bottlenecks. If a bottleneck cannot be eliminated in some way, say by adding capacity, productivity can be augmented by maintaining consistent production through it.


Law of scientific methods where it is widely held

The productivity of labor can be augmented in most instances by applying methods such as those identified by the scientific management movement


Law of quality where it is widely held

Productivity can frequently be improved as quality is improved and as waste declines, either by changes in product design, or by changes in materials or processing. Various techniques of the quality movement can be responsible for these improvements


Law of factory focus where it is widely held

Factories that focus on a limited set of tasks will be more productive than similar factories with a broader array of tasks.


The theory of swift even flow
The Theory of Swift, Even Flow where it is widely held

Productivity for any process - be it labor productivity, machine productivity, materials productivity, or total factor productivity - rises with the speed by which material flow through the process, and it falls with increases in the variability associated with the demand on the process or with steps in the process itself.


DEMAND VARIABILITY where it is widely held

High demand variability

Low demand variability

Low speed of materials through the process

Job shops

Batch operations

SPEED OF FLOW

Assembly lines

High speed of materials through the process

Highly productive continuous flow process

Fig. A variant on the product-process matrix


Law of Trade-offs where it is widely held

A manufacturing plant cannot simultaneously provide the highest levels among all competitors of product quality, flexibility, and delivery, at the lowest manufactured cost

Law of Cumulative Capabilities

Improvements in certain manufacturing capabilities e.g., quality are basic and enable improvements to be made more easily in other manufacturing capabilities e.g., flexibility.


The theory of performance frontiers
The Theory of Performance Frontiers where it is widely held

A production frontiers is defined as the maximum output that can be produced from any given set of inputs, given technical considerations.


Operating Frontier for B where it is widely held

COST

A

B

Operating Frontier for A

Asset Frontier

PERFORMANCE

Fig. Operating and asset frontiers


Bettered Operating Frontier where it is widely held

COST

A

Operating Frontier

A1

A2

Asset Frontier

PERFORMANCE

Fig. Three operating states for a manufacturing plant


Law of Diminishing Returns where it is widely held

As improvement moves a manufacturing plant nearer and nearer to its operating frontier or its asset frontier, more and more resources must be expended in order to achieve each additional increment of benefit.

Law of Diminishing Synergy

The strength of the synergistic effects predicted by the law of cumulative capabilities diminishes as a manufacturing plant approaches its asset frontier.


Operations strategy and competitiveness
Operations Strategy where it is widely heldand Competitiveness


Boeing suppliers 777

Korean Air where it is widely held

Firm

GEC Avionics

Singapore

Alenia

AeroSpace

Fuji

Short Brothers

CASA

Aerospace

Singapore

Japan

Ireland

Korea

Spain

United Kingdom

Country

Australia

Italy

Wing flaps

Landing gear

Landing gear doors

Landing gear doors

Rudder

Flap supports

Ailerons

Flight computers

Parts

Boeing Suppliers (777)

Menasco

Canada

Landing gears

Technologies

Aerospace

doors, wing section


Brainpower Weighs In where it is widely held


Corporate Strategy where it is widely held

Supply Chain

Strategy

Service

Strategy

Manufacture

Strategy

Distribution

& Retailing

Risk

Management

K P I

Monitoring

Fig. Flow of Supply Chain Strategy


  • A strategy must where it is widely held

  • Fit the existing and potential environment

  • Provide a linkage mechanism

  • Incorporate the activities of all major line functions

  • Extend into staff activities

  • Specify the performance required

  • Promote a culture of continual improvement


Steps in developing a manufacturing strategy
Steps in Developing a Manufacturing Strategy where it is widely held

1. Segment the market according to the product group

2. Identify product requirements, demand patterns, and profit margins of each group

3. Determine order qualifiers and winners for each group

4. Convert order winners into specific performance requirements


A plan for where it is widely held

being competitive

Its not what you say, its what you do…

Successful strategy ???

  • The firm

  • Customers

Operations

Strategy


• Cost Efficiency where it is widely held

• Quality

• Delivery

• Flexibility

Competitive Dimension


Market where it is widely held

Leadership

Product Leadership

Competitors Focus

Customer Intimacy

Customer Focus

Operational excellence

Company Focus

Fig. Strategic Triangle


Cross where it is widely held

Functional

Corporate

Strategy

  • Objectives

  • Cost

  • Quality

  • Delivery

  • Flexibility

  • Policies

  • Process

  • Quality

  • Capacity

  • Inventory

Mission

Distinctive

Competence

Int. & Ext. Analysis

Consistent

Pattern of

Decision


Mission of fedex
Mission of FedEx where it is widely held

FedEx is committed to our People-Service-Profit philosophy. We will produce outstanding financial returns by providing total reliable, competitively superior, global air-ground transportation of high priority goods and documents that require rapid, time-certain delivery. Equally important, positive control of each package will be maintained using real time electronic tracking and tracing systems. A complete record of each shipment and delivery will be presented with our request for payment. We will be helpful, courteous, and professional to each other and the public. We will strive to have a completely satisfied customer at the end of each transaction.


Mission of the hard rock caf
Mission of the Hard Rock Café where it is widely held

To spread the spirit of Rock ‘n’ Roll by delivering an exceptional entertainment and dining experience. We are committed to being an important, contributing member of our community and offering the Hard Rock family a fun, healthy, and nurturing work environment while ensuring our long-term success.


  • Example: where it is widely held

  • Distinctive competencies of Japanese manufacturing

  • Low labour cost strategy – shortly after the war;

  • Scale-based strategy– high productivity and low unit cost;

  • Focused factory strategy– specialization for higher quality;

  • Flexible factory strategy – high quality with increased variety;

  • Lean production– reducing all waste



Examples of important policies in operations
Examples of Important Policies in Operations where it is widely held

Policy Type

Policy Area

Strategic Choices

Process

Span of process

Make or buy

Automation

Handmade or machine –made

Process flow

Flexible or hard automation

Job specialization

Project, batch, line, or continuous

Supervision

Highly decentralized or centralized

Quality Systems

Approach

Prevention or inspection

Training

Technical or managerial training

Suppliers

Selected on quality or cost

Capacity

Facility size

One large or several small facilities

Location

Near markets, low cost, or foreign

Investment

Permanent or temporary

Inventory

Amount Distr.

High levels or low levels of inventory

Control Systems

Centralized or decentralized warehouses

Control in great detail or less detail


Order qualifiers and winners defined
Order Qualifiers and Winners where it is widely heldDefined

  • Order qualifiersare the basic criteria that permit the firms products to be considered as candidates for purchase by customers

  • Order winnersare the criteria that differentiates the products and services of one firm from another


Table strategic alternatives
Table Strategic Alternatives where it is widely held

Strategy A

Strategy B

Business Strategy

Product Imitator

Product Innovator

Market

Price sensitive

Product

features

-

sensitive

conditions

Mature market

Emerging market

High volume

Low volume

Standardization

Customized products

Operation

Emphasiz

e low cost for

Emphasize flexibility to introduce

mission

mature products

new products

Distinctive

Low cost through superior

Fast and reliable new product

competence

process technology and

introduction through product

operations

vertical integration

teams and fle

xible automation

Superior processes

Superior products

Operations

Dedicated automation

Flexible automation

Slow reaction to change

Fast reaction to changes

policies

Economy of scale

Economies of scope

Workforce involvement

Use product development teams

Mass distribution

Selective distribution

Ma

rketing

Repeat sales

New

-

market development

Maximizing of sales

Product design

strategies

opportunities

Sales made through agents

National salesforce

Low risk

Higher risk

Finance

Low profit margin

Higher

profit margins

strategies


Why some organizations fail
Why Some Organizations Fail where it is widely held

  • Too much emphasis on short-term financial performance

  • Failing to take advantage of strengths and opportunities

  • Failing to recognize competitive threats

  • Neglecting operations strategy

  • Too much emphasis in product and service design and not enough on improvement

  • Neglecting investments in capital and human resources

  • Failing to establish good internal communications

  • Failing to consider customer wants and needs


Operation decisions
Operation Decisions where it is widely held

OM’s Contribution to Strategy

Specific

Strategy Used

Examples

Sony - constant innovation ……..……. FLEXIBILITY

Compact - PC market ……...……....… FLEXIBILITY

Southwest Airlines - no frills service.... LOW PRICE

Pizza Hut - five minutes guarantee … DELIVERY

FedEx - on time ………………….……… DELIVERY

Motorola pagers - performance ……. QUALITY

IBM - after sales ………………………… AFTER SALES

  • Quality

  • Product

  • Process

  • Location

  • Layout

  • Human Resources

  • Supply Chain

  • Inventory

  • Scheduling

  • Maintenance


Brand name drugs vs generic drugs
Brand Name Drugs vs Generic Drugs where it is widely held




Types of focus
Types of Focus where it is widely held

  • Product focus

  • Process type

  • Technology

  • Volume of sales

  • Make-to-stock and make-to-order

  • New products and mature products


Some multinational corporations
Some Multinational Corporations where it is widely held

Company

Home

% Sales

% Assets

% Foreign

Country

Outside

Outside

Workforce

Home

Home

Country

Country

ICI

Britain

78

50

NA

Nestlé

Switzerland

98

95

97

Philips

Netherlands

94

85

82

Electronics

Siemens

Germany

51

NA

38

Unilever

Britain & Netherlands

95

70

64



Mass customization and strategic process choices
Mass Customization where it is widely heldand Strategic Process Choices


Case: where it is widely held

Retaining A Consistent Position


CS: Retaining A Consistent Position where it is widely held

A local chain of fast food restaurants wants to extend its performance in the flexibility characteristic and is considering broadening its menu to offer chicken, fish, or veal platters in addition to its normal, limited-menu sandwich items. The new platters will not be ordered in large volume as are its standard items, and the company is therefore evaluating alternative decisions regarding whether or not the platters will be prepared ahead of time. If the company chooses not to prepare platters ahead of demand, it will move away from the delivery-service characteristic for these items. If these items are prepared ahead and held, the platters might not appear so fresh and be so tasty. This option would cause the company to move away from a high-quality emphasis. If the items are prepared at some rate of reasonable expected demand and thrown away if not demanded, the company's cost performance will suffer. (Adapted from: James B. Dilworth, Production and Operations Management: Manufacturing and Non-manufacturing, 3rd ed, p.60, 1986, Random House-NY)


If the company chooses not to prepare platters ahead of demand

delivery-service

high-quality problems

If these items are prepared ahead and held

If the items are prepared at some rate of reasonable expected demand

Cost performance problems


Differences in manufacturing strategy decision between Japanese and Western manufacturing plants: the role of strategic time orientation

Chris Voss, Kate Blackmon


Next : Japanese and Western manufacturing plants: the role of strategic time orientation

Innovation and Managing the renewal of the business


Pun, Kit Fai, 2004. Japanese and Western manufacturing plants: the role of strategic time orientation“A conceptual synergy model of strategy formulation for manufacturing “. International Journal of Operation and Production Management Vol. 24 No. 9: 903-928


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