20150316090356_l80_week 1-ch1 operation strategy-end
TRANSCRIPT
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Chapter 1
Introduction to Operations and
Supply Chain Management
Russell and Taylor
Operations Management, 8th Edition
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Key points chapter 1
Productivity. What is it? How to calculate it?
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Lecture Outline
The Operations Function Slide 8
The Evolution of Operations and Supply Chain Management Slide 13
Productivity and Competitiveness Slide 25
Strategy and Operations Slide 30
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Operations Management
What is Operations?
a function or system that transforms inputs into outputs of greater value
What is Operations Management?
design, operation, and improvement of productive systems
What is a Value Chain?
a series of activities from supplier to customer that add value to a product or service
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Operations as a
Transformation Process
1-5
INPUT MaterialMachinesLaborManagementCapital
TRANSFORMATION
PROCESS
OUTPUT GoodsServices
Feedback & Requirements
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Transformation Process
A series of activities along a value chain extending from supplier to customer
Activities that do not add value are superfluous and should be eliminated
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Physical: as in manufacturing operations
Locational: as in transportation or warehouse operations
Exchange: as in retail operations
Physiological: as in health care
Psychological: as in entertainment
Informational: as in communication
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Operations Function
Operations
Marketing
Finance and Accounting
Human
Resources
Suppliers
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Sample Organizational Structure
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CEOChief Executive Officer
CIOChief Information Officer
CFOChief Financial Officer
COOChief Operating Officer
VP Human Resources
VP Operations
VP Supply Chain Management
VP Marketing
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How is Operations Relevant
to my Major?
Accounting
Information Technology
Management
As an auditor you must understand the
fundamentals of operations
management.
IT is a tool, and theres no better place to apply it than in operations.
We use so many things you learn in an operations classscheduling, lean production, theory of constraints, and
tons of quality tools.
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The Operations Function
Organizing work Selecting processes
Arranging layouts Locating facilities Designing jobs Measuring performance
Controlling quality Scheduling work
Managing inventory Planning production
2014 John Wiley & Sons, Inc. - Russell and Taylor 8e
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How is Operations Relevant
to my Major?
Economics
Marketing
Finance
Its all about processes. I live by flowcharts and Pareto analysis.
How can you do a good job marketing a product if youre unsure of its quality or delivery status?
Most of our capital budgeting requests are from operations, and most of our
cost savings, too.
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CraftIndividual customer
Division of LaborIndividual worker
Interchangeable part
Standardized parts
Evolution of Operations and Supply Chain
Management
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Scientific Mgt
Method analyzed
Mass production
Standardized product
Lean Production
Quality & flexibility
Evolution of Operations and Supply Chain
Management (continued)
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Evolution of Operations and Supply
Chain Management
Craft production process of handcrafting products or services for
individual customers
Division of labor dividing a job into a series of small tasks each
performed by a different worker
Interchangeable parts standardization of parts that enabled mass production
Scientific management
systematic analysis of work methods
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Evolution of Operations and
Supply Chain Management
Mass production high-volume production of a standardized product for
a mass market
Quality revolution an emphasis on quality and the strategic role of
operations
Lean production adaptation of mass production that prizes quality and
flexibility
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Historical Events in
Operations Management
Era Events/Concepts Dates Originator
Industrial
Revolution
Steam engine 1769 James Watt
Division of labor 1776 Adam Smith
Interchangeable parts 1790 Eli Whitney
Scientific
Management
Principles of scientific
management1911 Frederick W. Taylor
Time and motion studies 1911Frank and Lillian
Gilbreth
Activity scheduling chart 1912 Henry Gantt
Moving assembly line 1913 Henry Ford
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Historical Events in
Operations Management
Era Events/Concepts Dates Originator
Human
Relations
Hawthorne studies 1930 Elton Mayo
Motivation theories
1940s Abraham Maslow
1950s Frederick Herzberg
1960s Douglas McGregor
Operations
Research
Linear programming 1947 George Dantzig
Digital computer 1951 Remington Rand
Simulation, waiting
line theory, decision
theory, PERT/CPM
1950sOperations research
groups
MRP, EDI, EFT, CIM1960s,
1970s
Joseph Orlicky, IBM
and others
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Historical Events in
Operations Management
Era Events/Concepts Dates Originator
Quality
Revolution
JIT (just-in-time) 1970s Taiichi Ohno (Toyota)
TQM (total quality
management)1980s
W. Edwards Deming,
Joseph Juran
Strategy and
operations1980s
Wickham Skinner,
Robert Hayes
Reengineering 1990sMichael Hammer,
James Champy
Six Sigma 1990s GE, Motorola
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Historical Events in
Operations Management
Era Events/Concepts Dates OriginatorInternet
Revolution
Internet, WWW, ERP,
supply chain management
1990s ARPANET, Tim
Berners-Lee SAP,
i2 Technologies,
ORACLE, Dell
E-commerce 2000s Amazon, Yahoo,
eBay, Google, and
others
Globalization WTO, European Union,
Global supply chains,
Outsourcing, Service
Science
1990s
2000s
China, India,
Emerging
economies
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Historical Events in
Operations Management
Era Events/Concepts Dates OriginatorSustainability Global warming
Carbon footprint
Green products
Corporate social
responsibility (CSR)
UN Global Compact
Today Numerous
companies,
statesmen,
governments,
United Nations,
World Economic
Forum
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Evolution of Operations and Supply
Chain Management
Supply chain management
management of the flow of information, products, and services across a network of customers, enterprises, and supply chain
partners
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Productivity and Competitiveness
Competitiveness degree to which a nation can produce goods and
services that meet the test of international markets
Productivity ratio of output to input
Output sales made, products produced, customers served,
meals delivered, or calls answered
Input labor hours, investment in equipment, material usage,
or square footage
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Measures of Productivity
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Osborne Industries
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B5*B7
B6*B8
B4/B5
B4/B6
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Percent Change in Input and Output and
Productivity
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1.1. tried and True Clothing has opened 4 new stores in
town. Monthly sales volume and labor hours data are
given below. Which store location has highest labor
productivity?
1.8. Carpet City recorded this data below. Use it to
calculate average rate (in yards/hour) at which carpet
can be installed. What is your opinion about installation?
Store Annandale Blacksburg Charlots Danvile
Sales volume ($) 40.000 12.000 60.000 25.000
Labor hour 250 60 500 200
Installation 1 2 3
Square yards 1225 1435 2500
No.of worker 4 3 5
No. of hours/worker 3 5 6
Productivity 160 200 120 125
Productivity/hour 102.08 95.67 83.33
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Strategy and Operations
How the mission of a company is accomplished Provides direction for achieving a mission Unites the organization Provides consistency in decisions Keeps organization moving in the right direction
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Strategic Planning
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Mission
and Vision
Corporate
Strategy
Operations
Strategy
Marketing
Strategy
Financial
Strategy
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Positioning the Firm
Cost Speed Quality Flexibility Innovation
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1. Risk taking, failure as part of learning process
2. Uniform and well defined process to exceed customer expectation
3. Mass customization
4. High volume production, automation
5. Immediate response, rapid shipment
KEYWORDS:
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Positioning the Firm: Cost
Waste elimination relentlessly pursuing the removal of all waste
Examination of cost structure looking at the entire cost structure for reduction potential
Lean production providing low costs through disciplined operations
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Positioning the Firm: Speed
Fast moves, Fast adaptations, Tight linkages
Internet
Customers expect immediate responses
Service organizations
always competed on speed (McDonalds, LensCrafters, and Federal Express)
Manufacturers
time-based competition: build-to-order production and efficient supply chains
Fashion industry
two-week design-to-rack lead time of Spanish retailer, Zara
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Positioning the Firm: Quality
Minimizing defect rates or conforming to design
specifications
Ritz-Carlton - one customer at a time
Service system designed to move heaven and earth
to satisfy customer
Employees empowered to satisfy a guests wish
Teams set objectives and devise quality action plans
Each hotel has a quality leader
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Positioning the Firm: Flexibility
Ability to adjust to changes in product mix, production volume, or design
Mass customization mass production of customized parts
National Bicycle Industrial Company
offers 11,231,862 variations
delivers within two weeks at costs only 10% above standard models
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Balanced Scorecard
Balanced scorecard
measuring more than financial performance
finances
customers
processes
learning and growing
Key performance indicators
set of measures to help managers evaluate performance in critical areas
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Balanced Scorecard
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Radar Chart Dashboard
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Operations Strategy
Products
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Services Process
and
Technology
Capacity
Human
Resources Quality
Facilities Sourcing Operating
Systems
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Emirates Airline Catering
Transformation process?
Operation functions mostly important?
Strategic positioning?
Productivity measurement
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Next week
Weekly group project: 2 groups will choose a company together for chp. Ensuring Quality
1 group as presenter, 1 group as debater Others will be given Q&A.
Individual task: Describe Historical events in Operations To show how Operations evolve. Take information outside from textbook state your
reference
Describe important people and event of Operation evolution
Maximum 2 pages of A4 paper size. EMAIL to [email protected] latest nextweek Format email in subject: Name, Class
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Excercises Problem 1.2
Problem1.5
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