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Key Topics

Key Topics. Define Operations Management Give examples (Inputs – Processes – Outputs) Service operations vs. goods production Current Challenges in Operations Management Quality attributes for services and products Total quality management tools What is supply chain management.

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Key Topics

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  1. Key Topics • Define Operations Management • Give examples (Inputs – Processes – Outputs) • Service operations vs. goods production • Current Challenges in Operations Management • Quality attributes for services and products • Total quality management tools • What is supply chain management

  2. The Big Picture! Marketing Sales Management Demand Forecasting Facility Design Advertising Distribution Process Choice Product Management Quality Market Research Operations Management Business Strategy Capacity Customer Satisfaction JIT Finance Planning & Control Leadership Risk Management Inventory Management Motivation Technology Management Investment Analysis Product Design Product Pricing Systems Cash Flow Group Dynamics/Teams Valuation Networking Telecommunications Organizational Effectiveness Product Costing Budgeting Information Systems Accounting Organizational Behavior

  3. Operations Management • Production: creation of goods and services • Operations management (OM)is defined as the design, operation, and improvement of the systemsthat create (transform inputs into outputs) and deliver the firm’s primary products and services • Each part of the organization, not just operations, must design and operate processes and deal with quality, technology and staffing issues

  4. Processes and operations 2 3 1 4 5 Processes and Operations Internal and external customers • Inputs • Workers • Managers • Equipment • Facilities • Materials • Services • Land • Energy • Outputs • Services • Goods Information on performance

  5. Small Group Activity • Identify the inputs, processes, and outputs for: • Saint Michael’s College • Fletcher Allen Hospital • Ben and Jerry’s Ice Cream

  6. 100 80 60 40 20 Services Services $4,000 $3,000 $2,000 $1,000 Millions of Workers (Billions) Goods Production Goods Production 1984 1986 1988 1990 1992 1994 1996 1998 2000 1996 1984 1986 1988 1990 1992 1994 1998 2000 Growth in the Goods and Services Sectors

  7. Options for Increasing Contribution Marketing Finance & OM Option Option Accounting Option Current Sales Finance Production Revenue : Costs: - 50% Costs: - 20% +50% Sales $100,000 $150,000 $100,000 $100,000 Cost of Goods Sold - 80,000 - 120,000 - 80,000 - 64,000 Gross Margin 20,000 3 0,000 20,000 36,000 Finance Costs - 6,000 - 6,000 - 3,000 - 6,000 Net Margin 14,000 24,000 17,000 30,000 Taxes @ 25% - 3,500 - 6,000 - 4,250 - 7,500 Contribution 10,500 18,000 12,750 22,500

  8. Significant Events in Operations Management

  9. Continuum of Characteristics More like a manufacturing organization More like a service organization • Physical, durable product • Output that can be inventoried • Low customer contact • Long response time • Regional, national, or international markets • Large facilities • Capital intensive • Quality easily measured • Intangible, perishable product • Output that cannot be inventoried • High customer contact • Short response time • Local markets • Small facilities • Labor intensive • Quality not easily measured

  10. Global focus Just-in-time Supply chain partnering Rapid product development, alliances Mass customization Empowered employees, teams Local or national focus Batch shipments Low bid purchasing Lengthy product development Standard products Job specialization New Challenges in OM FromTo

  11. CompetitivePriorities Cost 1. Low-cost operations Quality 2. High-performance design 3. Consistent quality Time 4. Fast, Reliable delivery 5. On-time delivery 6. New development speed Flexibility 7. Customization 8. Volume flexibility Operating system capabilities and strengths required to serve customers and outperform competitors

  12. Southwest Airline’s Low Cost Competitive Advantage

  13. Small Group Activity • What makes a quality good? • What makes a quality service?

  14. Dimensions of Quality for Goods • Operation • Reliability & durability • Conformance • Serviceability • Appearance • Perceived quality Quality

  15. Reliability Responsiveness Tangibles Competence Access Security Courtesy © 1995 Corel Corp. Credibility Communication Service Quality Attributes Under-standing

  16. Seven Tools for TQM

  17. Supply-Chain Management Supply Chain Management is primarily concerned with the efficient integration of suppliers, factories, warehouses and stores so that merchandise is produced and distributed in the right quantities, to the right locations and at the right time, and so as to minimize total system cost subject to satisfying service requirements. SCM, is a strategic weapon that seeks to synchronize a firm’s functions and those of its suppliers to match the flow of materials, services, and information with customer demand

  18. Phase 1: Independent supply-chain entities Suppliers Purchasing Customers Production Distribution Phase 2: Internal integration Suppliers Purchasing Production Distribution Customers Internal supply chain Materials management department Phase 3: Supply-chain integration Internal supply chain Suppliers Customers Integrated supply chain Integrated Supply Chain

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