Operations Management Professor Dilip Chhajed

1. Operations Management Professor Dilip Chhajed

2. Course Materials • Ritzm and and Krajewski (2003) Foundations of Operations Management • Goldratt, E.M. (1992), The Goal: A Process of Ongoing Improvement, Second Edition, North River Press.

3. Cases/Reports- First Half • Michigan Manufacturing • Dore Dore (Report) • Manzana Insurance (Report) • Toyota Motor Manufacturing

4. Grading • HW 1: Case Report (Dore-Dore) Sessions 6 (Jun 24) • HW 2: Case Report (Manzana) Sessions 9 (Jun 30) • HW 3: Problem Set Session 10 (Jul 1) • HW 4: Problem Set Session 18 (Jul 15) • HW 5: Problem Set Session 25 (Jul 28)

5. Introduction • What is a Business Process? • Products and Services • Can I Design and Manage a Process? • Processes Management and • Marketing • Strategy

6. External environment Customer or client participation Inputs • Workers • Managers • Equipment • Facilities • Materials • Services • Land • Energy Outputs • Goods • Services Operations and processes 2 3 1 4 5 Information on performance The Operations Management System Figure 1.1

7. Business Process • a collection of activities that takes one or more kinds of inputs and creates an output that is of value to the customer. (Hammer&Champy, 1993) • Examples • procurement to shipment • concept to prototype • order to payment-

8. Sales Shipping Finance Production Warehouse Order Received Order Integration and Packing Credit Check Scheduling Assembly Order Delivery Order Fulfillment Process

9. Importance of Processes • Focus of reengineering is Processes • “It is not products but the processes that create products that brings companies long-term success. Good products don’t make winners; winners make good products(Hammer and Champy, “Reengineering the Corporation, HarperBusiness, 1993)

10. “E-Commerce has made process management obsolete.”

11. 5. Human Resource Development and Management 2. Strategic Planning 1. Leadership 7. Business Results 3.Customer and Market Focus 6. Process Management BALDRIGE AWARD CRITERIA FRAMEWORK Customer and Market Focused Strategy and Action Plans 4. Information and Analysis

12. Rules • Keep working- you need to maximize your productivity • Move material in batches • Do not change the process • Measures • Work-in-Process – anything not on the pad and not in a stack of four • Finished units • Start and Finish Times

13. Rules • Keep working- you need to maximize your productivity • Move material in batches • Do not change the process • Measures • Work-in-Process – anything not on the pad and not in a stack of four • Finished units

14. Process 1 • Batch size: 5 boats Step 1 Steps 5 & 6 Steps 3 & 4 Step 2

15. Process 2 • Batch size: 4 boats Step 1 Steps 5 & 6 Step 2 Steps 3 & 4

16. Team Activity • Summarize three changes you made and what they accomplished? • How does the design of the process affects customer’s purchase decision?

17. Competitive Priorities Cost Quality Time Flexibility

18. More Questions • How long was the average flow time (time from start to finish in the process)? • How does it compare with the time it would take to make one boat in an empty shop? • What is the importance of flow time? • How will you reduce the average flow time?

19. Flow Strategies • Flexible Flow- low volume, high variety • Line Flow- high volume, low variety

20. Physical exam Flu Physical exam Broken arm Broken arm D T R B P Flu Flow Strategies Flexible flows at a Health Clinic D: Doctor (examination rooms) R: Radiology (X-ray) T: Triage (assess severity of illness) B: Blood (lab test) P: Pharmacy (fill prescriptions) Figure 2.3 (a)

21. Mid-sized 6 cylinder Mid-sized 6 cylinder A S H F Compact 4 cylinder Compact 4 cylinder Flow Strategies Line flows at an Automobile Assembly Plant A: Front-end body-to-chassis assembly H: Hood attachment F: Fluid filling S: Start-up testing Figure 2.3 (b)

22. Corporate strategy Future directions Competitive priorities Capabilities Operations strategy Flow strategy • Flexible flows • Intermediate flows • Line flows • Process decisions • Quality decisions • Capacity, location, and layout decisions • Operating decisions Flow Strategy

23. Opportunity Costs Out-of-pocket Costs Product-Process Matrix Product Low volume Low Standardization One of a kind Low volume Many Products Higher volume Few Major Products High volume High Standardization Commodity Products Process Flexible Flow. Process segments loosely linked. Scheduling, Materials Handling, Shifting Bottlenecks JOB SHOP (Commercial Printer) Disconnected Line Flow/Jumbled Flow but a dominant flow exists. BATCH Worker Motivation, Balance, Maintaining Flexibility (Heavy Equipment) LINE FLOWS Connected Line Flow (assembly line) (Auto Assembly) CONTINUOUS FLOW Continuous, automated, rigid line flow. Process segments tightly linked. Capital Investment for big chunk capacity, Technological Change, Vertical Integration (Oil Refinery) Managerial Challenges Bidding, delivery, product design flexibility Quality & Product Differentiation, output volume flexibility Price

24. Road Map • Process Design and Analysis • Types • Capacity; Flow Time • Process Improvement • Process Management • Inventory • Lean Process • Capacity • Supply Chain Management

25. Selected Flow Diagram Symbols • Operation/activity • DecisionStorageInformation flowFlow

26. The way I see it process is the issue. But then the way I see it process is always the issue.