eman 003 managing operations

8/7/2019 EMAN 003 MANAGING OPERATIONS

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MANAGING

OPERATIONS



Introduction

The typical responsibilities of operations

managers include the management of

production systems, product quality,inventory systems, supply chains, and

product and process development.



By managing operations efficiently and

effectively, managers can lower costs

of organization and increase thedifferentiation of its product, thereby

reaching the efficiency frontier of the

industry.



Definitions

Operations ± the different activities

involved in creating an organization's

products and service Operations manager ± people who

manage operations



The quality of production process and of

the end product is an issue of great

importance for both manufacturingand service enterprise .

Improving productivity is a key concern

in both manufacturing and serviceorganizations.



Productivity and Efficiency

Productivity ± is the output produced by

a given input.

productivity = output/input

Productivity of labor ± is defined as the

unit output divided by some measure

of labor inputs..



In 2004, it took Toyota 20.6 employee

hours to build a car, comparing to

23.6 hours at General Motors and25.4 hours at Ford and 26 hours at

Chrysler. Thus we can conclude that

Toyota had higher labor productivity

that it/s three rivals, and should have

lower costs and high profitability.



Productivity of capital

Productivity of capital is the sales

divided by the total capital or money

invested in a business. This is often referred to as capital

turnover, and this measure tells

managers how many dollars of sales

are produced for every dollar of

capital invested.



The major point to consider is theproductivity rates of labor and capital

are major determinants of efficiencyand thus the cost structure of anenterprise.

The task facing managers to improve

labor and capital productivity over time; thereby lowering costs andboosting performance enterprise.



Production System

Production system refers to how the

flow of work is configured.

Production can be configured in anumber of different ways, depending

on the nature of product, consumer

requirements and available production

technologies.



Production systems have been

categorized into four main categories:

job shop, batch production, assemblyline or continuous flow.



Job shop ± production systems used whenitems are ordered individually.

This system is used when items are orderedindividually and tend to be unique to therequirements of a particular customer.

Many small manufacturing operations areorganized on a job shop basis ± high end

cabinetmaker, for example, may producedspecialized cabinets designed for individualhomes.



Small batch system are used when

customers order in small batches, but

when each batch is different.



Assembly line production systems areused to mass-produce large volumes

of a standardized product. Assembly lines involved breaking

down a production process intodiscrete steps and assigning

employees to different work stationson a continually moving line wherethey perform specialized tasks.



Automobile manufactures use

assembly line systems to mass

produce specific ca models.



Continuous flow production ± systemscontinuously produce a standardized

output that flows out of the system.Oil refineries are good example. manycontinuous flow systems cannot beeasily shut down; they tend to operate

round the clock, continuouslyproducing a highly standardizedoutput.



Production Systems,

Flexibility, and CostsProduction systems differ in the degree

to which their output is standardized,

their flexibility and their costs.Job shops and small batch system are

more flexible than assembly line and

continuous flow system because their

outputs are less standardized.



Assembly-line and continuous flowsystems mass-produce or

continuously produce a standardizedoutput, and by doing so, they canreduce cost in two ways: economiesof scale and learning effects.

Economies of scale are the costadvantages derived from large-volume production.



Another source of economies of scale is the

ability of the companies producing in large

volumes to achieve a greater division of labor and specialization.

Specialization is said to have a favorable

impact on productivity, mainly because it

enables employees to become skilled in

performing particular task.



Learning Effects ± are cost savings

that come from learning by doing. For

example, workers learn by repetitionhow best to carry out a task.

In general, labor productivity

increases overtime and unit cost fall

as individuals learn the most efficient

way to perform a particular task.



Quality Management

An important aspect of product quality

is product reliability.

A product is said to be reliable when itconsistently does the job it was

designed for, does it well and rarely

breaks down.



Quality management methodologies

try to eliminate defects in the process

of producing a good service, therebyproducing a more reliable end

product.



Product reliability can be a huge

source of cost savings for several

reasons. First, if defects are reduced, time and

materials are not wasted building

products that later have to be

scrapped or reworked.



Second, if products performed asadvertised, the company will save onwarranty costs.

Furthermore, if a company¶s products areviewed by customers as more reliable, thanthose of the competitors, this can lead tosuperior pricing, greater demand.

Thus superior product quality, measured byreliability can be a source of competitiveadvantage.



Quality Improvement

Program The principal tool that many managers

now use to increase the reliability is

the six sigma quality improvementmethodology

eman 003 managing operations

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