Introduction to Operations Operations -- Prof. Juran.

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Introduction to Operations Operations -- Prof. Juran

Transcript of Introduction to Operations Operations -- Prof. Juran.

Introduction to Operations

Operations -- Prof. Juran

Operations -- Prof. Juran

• Intro to Operations Management• Administrative Issues• Basic Definitions• Operations Strategy• Historical Development of OM• Scientific Management• Current Issues in OM• Measures of Productivity

Outline

Operations -- Prof. Juran

• Web site– Mission– Description– Syllabus (note special dates)– Downloads

• Textbook• TAs

About the Class

Operations -- Prof. Juran

What is Operations Management?

The design, control, and improvement of the systems that create and deliver the firm’s primary products and services

Operations -- Prof. Juran

What is a Production System?

A user of resources to transform inputs into some desired outputs

Operations -- Prof. Juran

Important Measures of Performance

Efficiency: Using a minimum of resources

Effectiveness: Creating value for some customer

Operations -- Prof. Juran

Transformations

Physical (Manufacturing) Locational (Transportation) Exchange (Retailing) Storage (Warehousing) Physiological (Health Care) Informational (Telecommunications)

Operations -- Prof. Juran

Manufacturing vs. Services

What differentiates manufacturing operations from service operations?

J&C proposition: All businesses are services

Operations -- Prof. Juran

Operations Strategy

J&C: Setting broad policies and plans for using the resources of the firm to best support its long-term competitive strategy

Juran: Deciding how the firm’s competitive strategy will actually happen, in terms of processes that are more efficient and/or more effective than the competition’s processes.

Operations -- Prof. Juran

Operations Strategy

Key questions:• What business are we in?• Who are the customers?• What do the customers need?• How can we meet those needs more

efficiently/effectively than the competition?

• How is all of this going to change over time?

Operations -- Prof. Juran

Competitive Dimensions

• Cost• Product Quality and Reliability• Delivery Speed• Delivery Reliability• Coping with Changes in Demand• Flexibility and New Product

Introduction Speed• Other Product-Specific Criteria

Operations -- Prof. Juran

Dealing with Trade-offs

• Cost vs. Quality• Flexibility vs. Speed• Etc.

Operations -- Prof. Juran

Strategic Frameworks

Kaplan and Norton:• Financial• Customer• Internal• Learning and Growth

Operations -- Prof. Juran

Strategic Frameworks

Michael Porter:• Rivalry• Threat of Substitutes• Buyer Power• Supplier Power• Barriers to Entry / Threat of Entry

Operations -- Prof. Juran

Historical Development of OM

• Craft System• Industrial Revolution• Scientific Management• Organizational Science• Operations Research• JIT and TQM• Supply Chain Management• Internet Commerce

Operations -- Prof. Juran

Scientific Management• Frederick Winslow Taylor,

(1856-1915), American industrial engineer.

• In 1878, he began working at the Midvale Steel Company.

• Developed measures of productivity based on time & motion studies.

• Became rich from 100+ patents including tempered steel.

Operations -- Prof. Juran

Taylor’s Industrial Environment

• Large numbers of unskilled workers

• Many immigrants who often didn’t speak English

• Homogeneous markets meant great returns to scale (e.g, Model T dropped in price from $1000 to $360)

• Management not viewed as a general or learnable skill

Operations -- Prof. Juran

Scientific ManagementScientific Management

• Defined by Frederick Taylor, late 1800s.• The systematic study of the

relationships between people and tasks to redesign the work for higher efficiency.– Taylor sought to reduce the time a

worker spent on each task by optimizing the way the task was done.

• Significant improvements in productivity

Operations -- Prof. Juran

Taylor’s 4 Principles• Develop a science for each element

of work• Select, train, and develop workers• Cooperate with workers (share the

savings – more $$$ for better performance)

• Divide work and responsibility equally

Operations -- Prof. Juran

Resistance to Taylor• Separation of work from planning

destroyed the traditional craft system – ‘money substituted for pride’

• Unions mistrusted – Taylor reduced work force from 450 to 150 on first job

• Some firms cut rates after changes• Legislation to prevent time studies in

government jobs.

Operations -- Prof. Juran

Frank & Lillian GilbrethTime and Motion Studies

Film

Therbligs

Cheaper by the Dozen

Henry L. GanttEngineer; worked with Taylor

Gantt Chart

Operations -- Prof. Juran

The GilbrethsThe Gilbreths• Frank and Lillian Gilbreth refined Taylor’s

methods.– Made many improvements to time and motion

studies.• Time and motion studies:

– 1. Break down each action into components.– 2. Find better ways to perform it.– 3. Reorganize each action to be more efficient.

• Gilbreths also studied fatigue problems, lighting, heating and other worker issues.

Operations -- Prof. Juran

JIT and TQM

Taiichi Ohno1912 - 1990

Kaoru Ishikawa1915 - 1989

Genichi Taguchi1924 - 2012

Operations -- Prof. Juran

Current Issues in OM• Coordinating relationships between mutually

supportive but separate organizations• Optimizing global supplier, production, and

distribution networks• Managing customer touch points• Raising awareness of competitive advantage

– Amazon, Apple, Taco Bell, Southwest Airlines• Operational risk• Sustainability and “triple bottom line”

– Economics, employees, environment

Operations -- Prof. Juran

What is Productivity?

Productivity is a common measure on how well resources are being used. In the broadest sense, it can be defined as the following ratio:

Outputs Inputs

Operations -- Prof. Juran

Total Measure Productivity

Total Measure Productivity = Outputs

Inputs

or

= Goods and services produced

All resources used

Operations -- Prof. Juran

Partial Measure Productivity

Output or Output or Output or Output Labor Capital Materials

Energy

Operations -- Prof. Juran

Multifactor Measure Productivity

Output . Labor + Capital +

Energy

or

Output . Labor + Capital +

Materials

Operations -- Prof. Juran

Summary

• Intro to Operations Management• Administrative Issues• Basic Definitions• Operations Strategy• Historical Development of OM• Scientific Management• Current Issues in OM• Measures of Productivity