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53 Cards in this Set
- Front
- Back
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What Is Operations Management
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….managing the set of business activities that creates goods and services by transforming inputs into outputs
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Objective of OM
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Creating an efficient and effective transformation through managing inputs, outputs, resources, network of activities and information
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OM Involves Managing Transformations
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Turns inputs into outputs using
resources (labor and capital) Network of activities Information |
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Why Study Operations Management? (4)
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Operations management is a major function of an organization, in addition to marketing and finance.
Operations management is a source of competitive advantage by reducing cost and increasing quality Provides value to society by creation of services and products Not just about businesses about your life |
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Productivity
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Productivity = Outputs produced / Inputs used
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Single Factor Productivity
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Single Factor Productivity = Output / Labour hour
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Multifactor Productivity
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Multifactor Productivity = Output / (Labour + Material + Energy + Capital + Miscellaneous)
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Strategy has two components:
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A Goal
A goal to achieve sustainable competitive advantage by producing product and services with different characteristics or better than your competitors. A Plan A plan is the decisions that lead to achieving the goal. |
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Competitive Priorities
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Cost
Quality (Superior Quality, Consistent Quality) Delivery (On time Delivery, Delivery Speed) Flexibility (Variety, Volume) |
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11 Key Operations Management Decisions
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Product/Service design: what is offered to customers and how is it designed (e.g., innovative vs. commodity product) or delivered?
Quality Management: how is quality defined and what practices are implemented to achieve the desired quality level (e.g., performance vs. consistency; and Total Quality Management)? Process Design: what activities are included to produce a product and how are they performed (e.g., assembly line vs. job shop)? Capacity: how many units will be produced? Location Selection: where should the facility be built (domestic vs. foreign country); should we have multiple locations or one site? Layout Design: what is the size of the facility, and where should different processes be located within the facility (e.g., process oriented vs. product oriented)? Human Resources: how many employees are needed and what are their skill levels (e.g., full-time vs. part-time)? Supply Chain Management: who should our suppliers be and what is the supplier relationship (e.g., are we their partners or their customers)? how do we evaluate our suppliers? Inventory: when should inventory be ordered (e.g., after a certain time period or when inventory reaches a particular level)? Scheduling: when do you produce a product (e.g., make to order vs. make-to-stock)? Maintenance and safety: when do you maintain the equipment (e.g., preventative maintenance)? |
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Core competencies
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set of decisions and plans which a company is showing an excellent performance
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Critical success factors:
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Critical success factors: set of decisions and plans which support a company gaining competitive advantage
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decisions
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strategic (LT)
tactical (ST) |
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Cycle Time
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Cycle Time = (Processing Time at Bottleneck)
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Throughput Time
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Throughput Time = Sum of the Processing Times of all Tasks (+ any wait time)
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Process Strategy
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Involves determining how to produce a product or provide a service
Process strategies follow a continuum |
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Projects
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Often one-of-a-kind output for each iteration
Usually the variety is so high that only key resources (e.g. managers, key personnel) maintained over time; other resources are typically rented or shared Reliance on highly skilled workers who may be required to make decisions independently and coordinate work with others |
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Job Shop
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Low volume, High variety products
Highly customized “Jobs”, or produces products or services according to customers’ designs or specifications Typically has non-specialized equipment and staff with broad skills to create custom products / services Tend to produce in a “make-to-order” environment |
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Batch Process
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Generally used when a business has a relatively stable product line, that are produced in periodic batches.
Products or services typically created to the producer’s specifications. Volumes may vary but not high enough to warrant special facilities for each product or service type. Equipment may have only limited specialization, flexible enough to be used with a wide variety of outputs. |
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Line Flow
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High volumes warrant facilities dedicated to narrow range of outputs
Standard, repeat products Facilities often organized by assembly lines Tend to be characterized by modules Product or service production stages laid out in a sequence of process steps Highly specialized equipment and facilities; workers may each have only a narrow range of skills |
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Continuous Flow
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Equipment usually dedicated to a few closely related products; or only a single product
Systems custom-made exclusively for high-volume processes, typically commodity products Long, continuous production runs enable efficient processes Few changeovers required Difficult and expensive to start and stop the process Highly capital-intensive and often automated Workers mostly occupied in keeping the equipment running |
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Facility planning answers questions such as:
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How much long-range capacity is needed?
When is more capacity needed? How should facilities be arranged? (layout) Where should facilities be located? (location) |
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What is capacity?
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Capacity is usually the output rate of the operation
Where products / services are highly varied, capacity may be expressed in terms of the volume of a limiting process or facility (e.g., hospital beds, hotel rooms) Capacity utilization rate = Actual Output [rate] / Design Capacity |
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How much capacity should be developed? 4 considerations
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Demand seasonality
Cost of idle capacity vs. cost of developing additional capacity Impact of making customers wait Effective service area |
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Demand Management (5 points)
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Offering Price Incentives
Promoting Off-Peak Demand Developing Complementary Services Reservation Systems and Overbooking Waiting Lines |
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Capacity Management (4 points)
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Change facilities, equipment, methods & processes
Redesign the product for faster processing Vary staffing levels Facility usage changes |
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Facility Layout Strategy Objectives …
Facility Layout |
Facility Layout: the location or arrangement of everything within the facility
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Facility Layout Strategy Objectives …
Objectives are to maximize (5) |
Objectives are to maximize
Customer appeal/satisfaction Utilization of space, equipment, & people Efficient flow of information, material, & people Employee morale & safety Flexibility |
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Facility Layout Strategy Objectives …
Develop an economical layout which will meet the requirements of (4) |
Product design and volume
Process equipment and capacity Quality of work life Building and site constraints |
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7 Layout Strategies
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1. Office Layout
2. Retail/Service layout 3. Warehouse layout 4. Fixed-position layout 5. Process-oriented layout 6. Cellular layout 7. Product-oriented layout |
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Office layout
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positions workers, their equipment, and spaces/offices to provide for movement of information
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Retail/Service layout
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allocates shelf space and responds to customer & employee behaviour
Servicescape Ambient conditions: background characteristics such as noise level, music, lighting, temperature, and scent. Spatial Layout & Functionality: design and layout of the facility as well as furnishings, equipment, machinery, walkways (etc.); ability of layout to facilitate performance. Signs, Symbols, and Artifacts: style of décor, signage, personal objects on display; provides explicit and implicit signals. |
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Warehouse layout
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addresses trade-offs between space and material handling
Design balances space utilization & handling cost Optimum layout depends on: Variety of items stored Number of items picked |
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Fixed-position layout
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for stationary projects
Workers and equipment come to the site |
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Process-oriented layout
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grouping similar resources in different areas to facilitate common workflow patterns
Design places/ departments with large flows of material or people together Used in situations where there is no dominant workflow Department areas having similar processes located in close proximity e.g., All X-ray machines in same area Basic considerations: Group together departments that share common supervisory or equipment requirements Fix position of facilities that have specific utilities or transportation needs Separate departments that are incompatible Otherwise, relative position of departments usually picked to minimize the total amount of travel per time period required by people or WIP moving through the process: Minimize Σ (volume x distance x cost) for all items over a representative period of time, summing volume of traffic between each pair of departments X inter-departmental distance X cost factor |
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Steps in Developing a Process-Oriented Layout…
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Objective: Typically it is to …
Min Σ (volume x distance x cost) for all pairs of departments 1) Determine historical volume of movements between each pair of departments. 2) Determine space requirements for each department. 3) Make initial layout plan; estimate expected total travel distance or cost with that configuration. 4) Alter the plan by trial and error to see if total distance or cost can be reduced. |
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Cellular layout
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grouping clusters of resources in work centres, with the cluster (cell) designed to provide a specific narrow range of services or products
Special case of product-oriented layout - in what is ordinarily a process-oriented facility Consists of different process functions brought together to make a range of similar outputs May be a temporary arrangement only (e.g., production line set up in a job shop to fulfill a large order) or may form a permanent part of the work arrangement |
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Product-oriented layout
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positioning departments linearly to facilitate workflow for the dominant flow pattern
Typically used for line flow processes where most products or services require highly similar series of process steps Layout is straightforward: linear, with work centres in the order of the process steps Objective: Divide up work tasks such that each work centre needs about the same amount of time to perform its tasks; work can pass down the line synchronously (line balancing |
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5 Unique Characteristics of Services
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Intangibility
Perishability Simultaneity Heterogeneity Customer Participation in the Service Process |
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Service Design
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Services typically involve direct interaction with the customer, while customer interaction may be inefficient
Techniques to reduce cost and enhance quality: Reduce customer interaction when appropriate, often through automation Manage customer behaviour |
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Improving Service Productivity…
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Self-service
Automation postponement focus modules training |
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Service Encounter
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“… period of time during which a consumer directly interacts with a service.”
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Service Blueprint
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A map or flow chart of all the transactions constituting the service delivery process
Provides a way to break a service down into its logical components, depict the steps or tasks in the process, the means by which the tasks are executed, and the evidence of service as the customer experiences it Customer-focused visualization of the service process Focuses on the customer and provider interaction; moments of truth are illustrated Defines levels of interaction & visibility; connects processes throughout the organization to support customer-focused service delivery |
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The Value of Service Blueprinting …
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Documents and describes the service process (Visual communication tool)
Tool to support process improvement (Customer-focused: What is the customer experience?Where are there fail points, bottlenecks, etc.) Determine areas for innovation Helps to see the service process as an integrated whole … To aid service design, improvement, and innovation |
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Poka-yokes
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“Avoiding mistakes,” “Fool-Proofing,” “Fail-Safing”
Procedures that block the inevitable mistake from becoming a defect Warning method, physical or visual contact methods Involves “fool-proofing” the actions of workers as well as customers in a service setting |
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6 steps to buliding a service blueprint..
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step 1: Identify the process to be blueprinted
step 2: Identify the customer or segement who experiences the service step 3: map the process from the customers POV step 4: map employees actions and/or technology actions step 5: link activities to support functions step 6: add physical evidence at each customer action |
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Quality Function Deployment
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Process of determining customer requirements and translating them into the attributes that each functional area can understand and act on.
Typically used early on in the design process to help determine what will satisfy customers and where to deploy quality efforts. |
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House of Quality Basic Steps…
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1.Identify customer wants
2.Identify how the good/service will satisfy customer wants 3. Relate customer wants to product hows 4. Identify relationships between the firm’s hows 5. Develop importance ratings 6. Evaluate competing products |
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What is a Project?
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Project: a series of activities required to complete a significant output, usually unique
Typically has a stated scope of work, resources and time constraints Project-base work has been growing in significance: Rapid development of new products and services Team-based, cross-functional management structures, temporary assignments Projects encompass goal-oriented work assignments that require unique organizational structures and processes |
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Work Breakdown Structure
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WBS: Divides a project into more and more detailed components.
Work breakdown structure typically decreases in size from top to bottom: WBS: Divides a project into more and more detailed components. Level Project Major Tasks in the Project Subtasks in major tasks Activities (or “work packages”) to be completed |
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Gantt Chart
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Planning charts used to schedule resources and allocate time.
Helps managers make sure that… All activities are planned for Their order of performance is accounted for The activity time estimates are recorded Overall project time is developed |
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Precedence Network
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Represents precedence relationships among tasks.
Usually assumes that a task cannot start until all preceding tasks are finished. Use Activity-on-Node (AoN) network where a node in the network represents a task. The longest path through the network defines the “Critical Path.” |
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The Critical Path Method (CPM)
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A computing procedure to find critical paths and critical activities:
Determine the sequence of activities. Construct the network or precedence diagram. Start at the START node (with 0) and proceed forward through the network, compute the Earliest Start time (ES) and Earliest Finish time (EF) for each activity. Start at the END node (with project duration) and move backward through the network, compute the Latest Finish time (LF) and Latest Start time (LS) for each activity. Find the total slack (= LS - ES = LF - EF) for each activity. Identify the critical path(s). |
