Ch. 6 Master Production Scheduling SCM 461 Dr. Ron Tibben-Lembke Pages: 168-181, 183-188.
What is “Operations Management”? (and why should you care?) Dr. Ron Tibben-Lembke, Ph.D....
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Transcript of What is “Operations Management”? (and why should you care?) Dr. Ron Tibben-Lembke, Ph.D....
What is“Operations Management”?(and why should you care?)
Dr. Ron Tibben-Lembke, Ph.D.
University of Nevada, Reno
Reaching me Email: [email protected] Phone: (775) 682-9164 WWW: http://coba.unr.edu/faculty/rtl FAX: (775) 784-1796 eFax:(509) 562-2179
Don’t call my house, and I won’t call yours.
When emailing, please include “701” in the subject line.
Who Are You? (This is Homework)
In an email, please tell me the following: Your name Where From Major Interests /
Hobbies phone #’s to reach you at Musical
interests email address when you anticipate graduating any experience you have had that might be relevant to
this course
The Goal What is the goal of a company?
Efficent & Effective
Efficiency: Doing things with the least use of resources
Effectiveness: Doing the right thing at the right time.
Value = Quality / $
What is Operations Management?
“The design, operation, and improvement of the systems that create and deliver the firm’s primary products and services.” p. 6. Operations research / management science
Applying quantitative methods to decision making Industrial Engineering
Engineering discipline OM is a field of management that may use
some tools from OR/MS and IE.
What is OM?
Manage entire system for delivering service or product for OEM Original Equipment Manufacturer Brand name on the product. Probably doesn’t
produce
Suppliers, vendors, Third party logistics providers (3PLs)
Contract manufacturers – Solectron, Flextronics
Why OM is the most important area
Marketing gets people to buy our product Finance makes sure we have the money to operate Accounting keeps track of what we spend Management keeps people on task I/S makes sure systems work to support everyone
else Operations actually makes the thing we sell. Without
operations, you can’t have a company.
Why Do You Care?
Satisfying Customers depends on Operations You must understand and work in or with
Operations: Finance: Depr, Cash Flow, Make vs. Buy Acctg: Cost estimates, Overhead, Inv valuation Mktg: What can be done? HR: job descr, standards, incentives MIS: production, shipping, billing, receiving
Operations as Service
Everybody’s in serviceCore services: done correctly, customized to
their needs, delivered on time, priced competitively
Value-added services: make life easier, help do jobs easier:
Information on product – data, specs
Problem solving – help internal, external customer
Sales support – demo product trying to sell
Field support – replace parts quickly
Decisions of OM
1. Quality: what do customers want?
2. Goods & Service Design: what to sell?
3. Process & Capacity Design: how to make it and how much capacity to have? When add more? Where? How?
4. Location Selection: where to build?
5. Layout Design: how to design facilities?
Decisions of OM6. Human Resource & Job Design: what skills
and how many people needed?
7. Supply chain management: vendor management, who use as suppliers?
8. Inventory: how much and where?
9. Scheduling: HR, facility needs, when?
10. Maintenance: how much, when?
Current OM Issues
Flexible supply chains for mass customization of products and services
Global supplier, production, and distribution networks
Commoditization of suppliers – “plug compatibility”
Enhancing value-added services
Maximizing use of internet to share information, coordinate production
Continuous Process Improvement
It used to be you had to be “good enough” Now, you must be looking for ways to make
your customer happy, and meet their future needs
If you aren’t someone else is, and is going to take your business
What is strategy?
How a firm intends to create and sustain value for its shareholders (p. 24)
Major components: Operations effectiveness Customer management Product innovation
Competitiveness: A firm’s relative position in comparison to
other firms in the marketplace
Satisfying the Customer Mission: the organization’s purpose,
what it hopes to achieve; rationale for its existence.To provide society with superior products and services--innovations and solutions that improve the quality of life and satisfy customer needs--to provide employees with meaningful work and advancement opportunities and investors with a superior rate of return.
(Merck mission statement)
Mission Statement
“Without a clear mission, an organization is unlikely to achieve its true potential, because there is little direction for formulating strategies.”
Wouldn’t the same be true about people?
My Favorite Guru
When you think of something, put it on a list.
Check your lists regularly.
Don’t get sucked into email distractions.
Get rid of the clutter you don’t need.
Strategy Strategy: a plan for achieving the mission
Each functional area (accounting, finance, marketing) determines its “supporting mission”
Tactics: the methods to be used to achieve the strategic goals. Must support mission, corporate values
Michael PorterThree ways to achieve corporate mission:
1. Differentiation: Make your product different and / or better
2. Cost Leadership (lower prices): Wal- Mart, Southwest Airlines
3. Quick Response: Pizza Hut, FedEx
Purchasing Triangle
Price
Quality
Speed
“Don’t be sad; two out of three ain’t bad” -- Meatloaf
Competitive Dimensions
Cost -- make it cheap Quality and Reliability -- make it good Speed -- make it fast Reliability -- deliver when promised Cope with Change -- change volume New product speed Customer support
Focus What is Merck’s strategy?
To provide society with superior products and services--innovations and solutions that improve the quality of life and satisfy customer needs--to provide employees with meaningful work and advancement opportunities and investors with a superior rate of return.
Impact of Life Cycle
Cassettes
Records
iTunes
8-Tracks
CDs
DATMiniDisc
Introduction Growth Maturity Decline
DVDAudio
Impact of Life Cycle
Records
DAT
Introduction Growth Maturity Decline
Impact of Life Cycle Introduction: develop product, small-scale
production Growth: ramp up production, marketing Maturity: standardized, volume production,
optimization Decline: cost minimization, eliminate
unprofitable products
Competitiveness
Order qualifiers: screening criterion that allows your products to be considered deliver on-time, reliability, general quality
Order Winners: criterion that differentiates your service/product above the competition price, quality, reliability
Balanced Scorecard – track performance from following perspectives:
Financial: revenue or productivity growth Customer: Product leadership, customer intimacy,
operational excellence Internal: innovation, customer management,
operational excellence, corporate citizenship Learning and Growth: strategic competencies and
technologies, climate for action Kaplan and Martin, 1992, “The Balanced Scorecard:
Measures that Drive Performance” Harvard Business Review
Operations Strategy
Core capabilities: the skills that differentiate the firm from its competitors.
What is the thing you do better than everyone else, that you could never dare trust to anyone else? Soft drinks: the secret sauce Automobiles: designing engines
Productivity
Productivity = Outputs / Inputs Partial: Output/Labor or Output/Capital Multifactor:
Output / (Labor + Capital + Energy ) Total Measure:
Output / Inputs
Productivity
Services have always been a large portion of U.S. economy
Services’ share continues to grow U.S. has higher service % than others U.S. productivity growth has lagged other
countries in past. What explains this phenomena?
Improving Productivity
Develop productivity measurements– you can’t improve what you can’t measure
Identify and Improve bottleneck operations first
Establish goals, document and publicize improvements