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OMSAN LOJİSTİK. Top Management Program in Logistics & Supply Chain Management (TMPLSM). Production and Operations Management 1: Strategic Role of Operations. OPERATIONS Chain of Activities that Create, Produce, and Deliver Products and Services. Operations Are Made of Processes. 3. FIRM.

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Top Management Program in Logistics

& Supply Chain Management (TMPLSM)

Production and Operations Management

1: Strategic Role of Operations


OPERATIONS

Chain of Activities that Create, Produce, and Deliver Products and Services

Operations Are Made of Processes

3


What is pom

FIRM

  • Inputs:

  • Raw Materials

  • Labor

  • Capital

  • Technology

  • Energy

  • ……

Production

Processes

  • Outputs:

  • Goods

  • Services

What is POM?

POM = design and management of

production processes


There is a “process” behind everything we do

For External Customers

For Internal Customers

Operational

Processes

Administrative

Processes

Often a little attention to these processes produces great benefits


A good starting question:

Is the process aligned for maximizing value for the customer?

?

Value for the customer

Design and management

of the process

The answer, in a surprising number of cases, is

“Not exactly!”

6


More questions

What makes Customers to buy from you instead of the Competition?

Cost

Quality

Service

Flexibility

More Questions? …


Typical Performance Measures

for Operations

  • Cost (Efficiency)

    • Cost per unit, Labor productivity, Capacity utilization, …

  • Quality

    • Conformance to Specs, Rejects, Reworks, …

  • Service (Dependability)

    • Reliability of Delivery, Availability, Predictability, ….

  • Flexibility

    • Speed of delivery, Ability to customize, Min. order quantities, …

  • Of course in addition to Safety, Environmental, and other

  • good housekeeping measures


What does the customer want from the process?

Cost

Service

Flexibility

Quality

Differentiate between

“qualifiers” and “order winners”


Always check, and re-check, the “fit”

Value for customer

Are “order winners” & “qualifiers” specified? (and updated?)

Cost

Quality

Time

Flexibility

Is focus on maximizing the “order winners” and meeting acceptable levels for the qualifiers?

Process Design &

Management

Looks simple—but it is not easy!


Are operational processes aligned for different market segments
Are Operational Processes Aligned for Different Market Segments?

Market Segments Served

by the Business

?

Operational Processes


Managerial Decisions Segments?

behind these processes

Operational Processes

Acquire production capacities

Configure & improve the system

Schedule and deploy resources

12


Acquire Capacities Segments?

  • What?Facilities, equipment, people

  • Ownership?Vertical integration

  • How Much?For peak load? Average load?...

  • When?Lead demand? Lag demand?...

  • Where?Centralized or decentralized?...


Configure & Improve Segments?

  • Orientation?Job shop, batch, flow shop

  • Work Organization?Functional, cellular,…

  • Linkages upstream and downstream?

  • Interface with R&D?

  • Key Performance Indicators?


Schedule & Deploy Segments?

  • Flows, Inventories, and queues?

  • Orders and Capacity Utilization?

  • Continuous Improvement?

    • Of cost efficiency, quality, flexibility, reliability,…


There is always Segments?

variability

in demand and supply

And that’s a big challenge in management of operations


The business as a system

FIN Segments?

MKT

ACT

OPERATIONS

OB

The Business as a System

Operations

& Logistics


Organization’s Segments?

Top Management

Operations

Marketing

Role: Production of

Goods and Services

Role: Investigate Demand

and establish distribution chain

LINKS

Costs

Schedules

Flexibility

High Quality

Price

Delivery Promise

Number of Models

Repeat Sales


Producer s view

TRANSFORMING Segments?PROCESSES

OUTPUTS

Goods

& Svcs

Operations

Producer’s View

INPUTS

Matl

Labor

$$$


Customer s view

Order Segments?

Entry

DEMAND

LINKINGPROCESSES

Logistics

Customer’s View

Del’y &

Service

SUPPLY


Order Segments?

Entry

P

R

O

D

U

C

T

I

V

I

T

Y

Matl

Labor

$$$

Operations

& Logistics

Goods

& Svcs

Del’y &

Service

Cost

Quality

Service

Flexibility

SERVICE LEVEL


Wilson sporting goods
Wilson Sporting Goods Segments?

96 million golf balls a year!!

* Market share from 2% to 18%

* Plantwide productivity up 121%

* Cost: Total inventory reduced by 67% (Inventory turns from 6.5 to 85)

* Flexibility: orders from 1 dozen to 85,000 dozens

* Service: 99.9% on-time delivery, Normal lead time = 10 days

* Quality: scrap reduced 67% ($9.5 million in quality costs)

* Continuous Improvement, Associate Involvement, TQM, JIT,

“Lowest Total Cost” Manufacturing


Business portfolio

Possible Segments?

Win ?

Profit Pool ?

Business Portfolio

MARKET ATTRACTIVENESS

LOW

HIGH

MAINTAIN /

PROTECT

INVEST /

GROW

S

T

R

O

N

G

W

E

A

K

C O M P E T I T I V E

P O S I T I O N

HARVEST/

DIVEST

DEVELOP OR

WITHDRAW


Marketing financial framework
Marketing / Financial Framework Segments?

INVESTMENT

CAPACITY

MARKET

POTENTIAL

MARKET

SIZE

R.O.I.

SALES

MARKET

PENETRATION

MARKET

SHARE

PROFITS

BUSINESS / PROD.

PORTFOLIO

PRICE

PROFIT

M/P

I/G

MARGIN

H/D

D/W

COST


Growth opportunity matrix

MARKETS Segments?

OLD

NEW

N

E

W

P

R

O

D

U

C

T

S

Product

Development

Diversification

O

L

D

Performance

Improvement

Market

Development

Growth Opportunity Matrix


Elements of operations strategy
Elements of Operations Strategy Segments?

1. Workforce

2. Process Technology

3. Capacity

4. Production Planning and Control

5. Supply Chain

6. New Product & Process Development

7. Facilities

8. Organization

9. Performance Measures


Product / Process Segments?

Spectrum


Job Shop to Flow Shop Segments?

Objective:

  • Understand the differences between:

    • Job shop

    • Batch flow

    • Line flow

    • Flow shop


Example car wash
Example: Segments?Car Wash

IN

OUT

Automatic

Wash

2.5 min / car

Interior

Cleaning

3 min / car

Queue 1

Queue 2


Process spectrum
Process Spectrum Segments?

Job

Shop

Groups similar equipment together.

Jobs follow diverse paths

Jumbled

flow

Batch

Flow

Disconnected

line flow

Groups similar equipment together.

Batches provide some standardization.

Line

Flow

Assembly

line flow

Equipment placed in assembly sequence.

Worker or machine paced flow.

Flow

Shop

Continuous

flow

Equipment in process sequence.

Expensive equipment but

high utilization rates.


Types of processes
Types of Processes Segments?

Job

Shop

High

Batch

Flow

Variety, # of products

Line

Flow

Flow

Shop

Low

Low

High

Volume


Job shop vs flow shop

Job Shop Segments?:Production system designed for low volume manufacturing of highly customized products and services.

Flow Shop: Production systems that is designed for high-volume production of a standardized products.

Job Shop vs Flow Shop


Job Shops Segments?

Flow Shops

Products

Varied

Standard

Equipment

General purpose

Specialized

Material Flows

Jumbled

Linear

Scheduling & Planning

Complex

Simple

Capacity Utilization

Fluctuating

High

Inventories

WIP

Negligent

Accounting

Job costing

Process costing

Information Flow

Structured

Simple

Direct Labor

Skilled

Less-skilled

Managerial Focus

Supervision

Planning

Competitive Challenges

Flexibility, response

Price, supply


Types of production processes

Flow shop Segments?

Job shop

Increasing volume

Increasing variety

Types of Production Processes

Assembly Line

Batch Process

Continuous Flow

Project


Product spectrum
Product Spectrum Segments?

High

One-of-a kind product

Satellites

Batches of distinctly

different product

Apparel

Variety, # of products

Variations

on a theme

Auto

Light

bulbs

Standard

product

Low

Low

High

Volume


Product life cycle

Introduction Segments?

Growth

Maturity

Product Life Cycle

Decline

Demand

time


Product Segments?

High Customization

Low Volume

High Standardization

High Volume

Job

Shop

X

Process

X

Flow

Shop

X

Product Life Cycle

Entry

Growth

Mature


Product process matrix
Product Process Matrix Segments?

Competitive Modes

Vertical int.,

Economies of

Scale, cost

Custom

Designs

hi margin

Quality,

Service

margin

Std,

Designs

availability

Quoting and

tracking jobs,

shop floor control

Satellites

Develop stds,

Process dev.

Inventory mgt.

Apparel

Management Tasks

Line balancing,

Process dev.

Personnel mgt.

Auto

Light

bulbs

Raise capital

Run efficiently

Material mgt.


Tension within the matrix
Tension within the matrix Segments?

High

Job

Shop

Flexibility

Variety, # of products

Cost efficiency

Flow

Shop

Low

Low

High

Volume


Take aways

Each firm is a sequence of processes. Segments?

Operational Performance measures:

Cost, flexibility, quality and service

While designing the process, you face a trade-off between efficiency and flexibility.

Need to match processes to competitive priorities

Take-aways


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