Intro to Business

1. Intro to Business Operations Management

2. Operation • the process of making goods and services available • The key difference between goods production and services operations: direct customer involvement

3. Operations Globalization • Global competition has made production faster-paced andmore complex • New technologies make machines that run cleaner, faster and safer and that operate on a global scale. • With the Internet, producers of both services and goods can integrate their production with those of far-off suppliers and customers.

4. Employment in Goods and Service Sectors

5. Shanghai-Employment-Industry Unit: 10,000 Shanghai Statistics Bureau, http://www.stats-sh.gov.cn

6. Employment by Industry -SH Unit: 10,000 Shanghai Statistics Bureau, http://www.stats-sh.gov.cn

7. GDP from Goods and Services

8. The Importance of Operation • Availability of goods and services • Satisfying customer needs by providing goods and services • Economic well-being (living standards) • GDP: market value of goods and services produced • Profitability (efficiency) • Profit = sales revenue – costs • costs: money spent on resources

9. Operations Management Systematic direction and control of the processes that transform resources into finished productsthat create value for and provide benefits to customers

10. Operations Management: • The goal: • Higher productivity (efficiency) • Higher Quality • Faster (On-going) improvement

11. Classic Readings • The Machine That Changed The World –the story of lean production, James P. Womack, Daniel T. Jones, Daniel Roos, HarperPerennial, 1991 How Japan’s secret weapon in the global auto wars will revolutionize western industry,

12. Classic Readings • The Deming Dimension, Henry R. Neave, SPC Press, 1990 • Other readings on Deming Total quality management (TQM / TQC) based on statistics and scientific methods

13. Classic Readings • The Goal: A Process of Ongoing Improvement, Eliyahu M. Goldratt and Jeff Cox, North River Press, Inc, 1984 (1986 revised). creation and acceptance of change for the better – ongoing improvements

14. Productivity • Production: Transforming resources into products (goods and services) • Productivity: the amount of goods and services produced for each unit of input (labor productivity, capital productivity, etc.)

15. International Productivity Comparisons

16. Productivity in Selected U.S. Industries

17. Resource Transformation Process

18. Goods Tangible Can be stored Little customer contact in providing process Longer demand cycle Can serve long distance markets Larger facility scales Easier quality measurement Services Intangible Can not be stored Requires customer contact in providing process Shorter demand cycle Limited service areas Smaller facilities Harder quality measurement Outputs

19. Operations Processes • Goods classifications: based on whether an operations process combines resources or breaks them into component parts • Analytic process breaks down resources into components • Synthetic process combines raw materials to produce a finished product

20. Operations Processes: • Services classification: based on the extent ofcustomer contactrequired • High-contact system: the customer is part of the system during service delivery • Low-contact system: the customer needs not be a part of the system to receive the service

21. High contact Personal services Entertainment centers Hotels Retails Schools Public transportations Recreation centers …… Low contact Headquarters Banks Government agencies Law firms Ad agencies Postal services Research labs …… Examples: Mixed services Branches Moving companies Repair workshops

22. Operations Management

23. Business Strategy (business plan) • Mission, Objectives • Environmental Analysis • Operations Tasks • Special Competence • Policies

24. Operations Planning • Capacity Planning • Location Planning • Layout Planning • Method Planning

25. Capacity Planning • Capacity: Amount of a product that a company can produce under normal working conditions • Producing Goods • ensuring that production capacity slightly exceeds normal demand for its product. • Providing Services • low-contact: maintaining inventory in order to set capacity at the level of average demand. • high-contact: must plan capacity to meet peak demand.

26. Capacity Measuring • By Output: • car, beer, food, electricity, TV sets, … • By Input: • Airlines, hospitals, schools, cinemas, shops, …

27. Affecting Factors: Capacity • Facilities: design, location, layout, environment • Product/Service: design, type • Process: quantity, quality • Human: tasks, design, training, spirit, rewards, attendances, … • Operations: planning, inventory, maintenance, quality assurance • External: standards, safety rules, pollution control

28. Location Planning • Producing Goods • Location decisions are influenced by proximity to raw materials and markets, availability of labor, energy and transportation costs and other factors. • Providing Services • Low-contact: can be located near resource supplies, labor or transportation outlets. • High-contact: must locate near the customers who participate in the system.

29. Affecting Factors: Location • Geographic factor: • Location of suppliers: necessary inputs, perishability, costs • Location of markets: customer needs, perishability, costs • Community: • Living facilities: education, shopping, public transportation, … • Service facilities: banks, hospitals, utilities, security, … • Community attitudes and policies: • Location factor: soil, sewer system, …

30. Location Planning Customers Distributor Suppliers retailer plant

31. Location Decision P5 (x5 , y5) P4 (x4 , y4) y w5 W4 P(x,y) P1 (x1 , y1) w1 w3 w2 P3 (x3 , y3) P2 (x2 , y2) x • Quantity • Distance • Cost

32. Layout Planning: Goods • Productive facilities • Nonproductive facilities • Support facilities

33. Layout Planning: Goods • Process layout: groups equipment and people according to function • Cellular layout: works well when a family of products follows a fixed flow path • Product layout: set up to make one type of product in a fixed sequence and arranged according to its production requirements (Assembly line)

34. Process Layout • Material flow chart • Decide material flow path • Calculate transportation / moving load • Layout: heavy moving load together • Activity correlations: • Correlations between activities and reasons • Layout based on correlations and activities

35. Process Layout

36. Cellular Layout • Equipment stations: minimize transportation route and moving loads (from-to)

38. Cellular Layout

39. Product Layout checking Raw materials warehouse Finished goods Out Part B Part C Part D Incoming PartA Assembly line packaging

40. Layouts for Producing Goods

41. Layout Flexibility • U-shaped product line: a product layout in which machines and workers are placed in a narrow U shape rather than a straight line • Flexible manufacturing system (FMS): a production system in which a single factory uses automation to produce a wide variety of products

42. Layout Planning for Producing Services • low-contact: the facility should be arranged to enhance the performing of the service. • high-contact: the facility should be arranged to meet customer needs.

43. Layout of a Typical Piccadilly Cafeteria

44. Methods Planning • Methods Improvement in Goods • Process flowchart is a diagram included in a detailed description of methods • Methods Improvement in Services • Service flow analysis shows the flow of processes that make up a given service • Designing to Control Employee Discretion in Services • Design for Customer Contact in Services

45. Service Flow Analysis

46. Operations Scheduling • Scheduling Goods Operations • Master production scheduleshows which products will be produced, when production will take place and what resources will be used • Scheduling Service Operations • low-contact: work scheduling may be based either on desired completion dates or on the time of order arrivals. • high-contact: the customer must be accommodated as part of the system and its processes.

47. Master Production Schedule

48. MRP X MPS BOM MRP 加 工 计 划 采 购 计 划 1 2 3 4 5 6 7 8 9 10 11 时 段 12 计划接收量 计划产出量 计划投入量 提前期=1 批量=1 现有量=0 1 2 3 4 5 6 7 8 9 10 11 时 段 12 10 10 10 10 10 计划产出量 10 10 10 10 10 5 计划投入量 A 物料需求计算 提前期=1 批量=1 现有量=0 1 2 3 4 5 6 7 8 9 10 11 时 段 12 (逐级展开) 10 10 10 10 10 5 计划产出量 10 10 10 10 10 5 计划投入量 X C 提前期=1 批量=1 现有量=0 20 A (1) 20 20 20 20 10 20 20 20 20 10 10 C (2) O 提前期=2 批量=40 现有量=10 1 2 3 4 5 6 7 8 9 10 11 时 段 12 O (2) 20 20 20 20 10 10 毛 需 求 40 40 计划接收量 50 30 30 10 10 30 30 10 10 0 0 30 预计库存量 10 10 净 需 求 40 40 计划产出量 40 40 计划投入量

49. Bill Of Materials 23 累计 提前期 物料 名称 计量 单位 ABC 码 数量 成品率 层次 物料号 类型 生效日期 失效日期 1 . 2 . . 3 . 2 . . 3 1 . 2 1 . 11000 11100 11110 11200 11210 12000 12100 13000 A C O D P B R E 件 件 m2 件 m3 件 m3 套 1.0 1.0 1.0 4.0 0.2 4.0 0.2 1.0 M M B M B M B B 19990101 19990101 19990101 19990101 19990101 19990101 19990101 19990101 99999999 99999999 99999999 99999999 19991231 99999999 99999999 99999999 1.00 1.00 0.90 1.00 0.90 1.00 1.00 1.00 26.0 15.0 12.0 22.0 20.0 17.0 10.0 5.0 A A B C C B C C . . 3 11210/1 P1 m3 0.2B 20000101 99999999 1.00 15.0 C 物 料 号：10000 计量单位： 件 批量： 10 现 有 量： 8 物料名称： X 分 类 码： 08 提前期： 2 累计提前期：28

50. Scheduling Service Operations • Gantt chart: diagrams steps to be performed and specifies time required to complete each step