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Production & Operations ManagementChapters The Role of Operations Management
Business Process Reengineering
Inventory Management
Operations Strategy
Total Quality Management
Supply Chain Management
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Planning & Control
Analyzing Operations
New Product/process development
Project Management
Issues For International Operations
Time Based Competition
Cost Elements
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Understand the basics & the role of operations in today business & learn manufacturing theories
Being able to design process/procedures & analyze Data
Data warehousing & the role of IT in a successful Production & Operations Management
Lean how to manage an ERP-Enterprise Resource Planning & Point of Sale: from order to Delivery
Cost effectiveness & Cost oriented process in Operations Management
Security in Operations Management
Understand Inventory theories & Models: JIT (Just in time), Lean Manufacturing …………..
Start to understand quality management as a general concept & how to set quality Metrics
Having access to Effective & efficient Management best practices
How to transform Global strategy into daily operations
Make difference between & when to use Operations, Production & Project Management
Manager toolkit for a successful daily operations Management
Learning Objectives of this course
Production & Operations ManagementChapter : The Role of Operations Management
Business Process Reengineering
Inventory Management
Operations Strategy
Total Quality Management
Supply Chain Management
✓
7
1
2
3
4
5
6
Planning & Control
Analyzing Operations
New Product/process development
Project Management
Issues For International Operations
Time Based Competition
Cost Elements
8
9
10
11
12
13
Factors Affecting Today’s Global Business
Reality of Global Competition
Production Sharing
Pros & Cons of Globalization
Quality, Service & Cost challenges
The Growth of service Sector
Social Responsibility Issues
Developing Operations Strategy
Elements of Operations Strategy
Positioning the Production System
Product life cycle
Outsourcing
Process & Technology Plan
Strategic Allocation of Resources
Facility Plans
Linking Operations & Marketing Strategies
Lecture Outlines
Introduction
Operational effectiveness is the ability to perform similar operations activities better than competitors.
It is very difficult for a company to compete successfully in the long run based just on operational effectiveness.
A firm must also determine how operational effectiveness can be used to achieve a sustainable competitive advantage.
An effective competitive strategy is critical.
Factors Affecting Today’s Global Business Conditions
Reality of global competition
Quality, customer service, and cost challenges
Rapid expansion of advanced technologies
Continued growth of the service sector
Scarcity of operations resources
Social responsibility issues
Reality of Global Competition
Changing nature of world business
International companies
Strategic alliances and production sharing
Fluctuation of international financial conditions
International Companies
International companies are those whose scope of operations spans the globe as they buy, produce, and sell.
International firms search out opportunities for profits relatively unencumbered by national boundaries.
Operations managers must coordinate geopraphically dispersed operations.
Production Sharing
Production sharing means that a product might be designed and financed in one country, its materials produced in other countries, assembled in another country, and sold in yet other countries.
The country that is the highest-quality, lowest-cost producer for a particular activity would perform that portion of the production of the product.
Pros and Cons of Globalization
Pros (Pluses)
Productivity grows more quickly (living standards can go up faster)
Global competition and cheap imports keep a lid on prices (inflation less likely to derail economic growth)
Open economy spurs innovation (with fresh ideas from abroad)
Export jobs often pay more than other jobsUS has more access to foreign investment (keeps
interest rates low)
Quality, Service and Cost Challenges
Quality
The goal of adequate quality must be replaced with the objective of perfect product and service quality.
The entire corporate culture must be redirected and committed to the ideal of perfect quality.
All employees must be empowered to act.
A commitment to continuous improvement has to be organization-wide.
Quality, Service and Cost Challenges
Customer Service
Companies must quickly develop innovative products and respond quickly to customers’ needs.
Organizational structures must be made more horizontal to quickly accommodate change.
Multidisciplined teams must have decision-making authority, responding better to the marketplace.
Large, unwieldy companies are spinning off whole business units making them autonomous businesses that can compete with small, aggressive competitors.
Quality, Service and Cost Challenges
Cost
There is continuing pressure to reduce direct costs (of producing and selling) and overhead costs.
It cost the US automakers $1,500 more per auto for labor in 1980 than it cost the Japanese auto-makers. By the 1990s the difference was almost zero.
Giant retailers (like Wal-Mart) squeezed weaker competitors out of the market, giving the retailers the leverage to force their suppliers to streamline operations and reduce costs/prices.
Quality, Service and Cost Challenges Contd
Cost
Cost-cutting measures being used include:
Moving production to low-labor-cost countries
Negotiating lower labor rates with unions and workers
Automating processes to reduce the amount of labor needed, particularly processes that are labor intensive.
Growth of Service Sector
A robust service sector helps support the manufac-turing sector.
There is much opportunity for quality improvement in US service firms.
Many operations managers are being employed in services.
Planning, analyzing, and controlling approaches from manufacturing are being adapted to service systems.
The US service sector, like the manufacturing sector, must streamline and improve operations if it is to survive.
Social-Responsibility Issues
Environmental Impact
Product-Safety Impact
Employee Impact
Social-Responsibility Issues
Environmental Impact
•Concerns about the global environment include:
Landfill waste reductionRecyclingEnergy conservationChemical spillsAcid rainRadioactive waste disposal… and more
Social-Responsibility Issues
Product-Safety Impact
•Harm to people or animals that results from poor product design can:
Damage a company’s reputation
Require a large expense to remedy
Cause governments to impose more regulations
Social-Responsibility Issues
Employee Impact
•Employee benefits and policies include:
Safety and health programsFair hiring and promotion practicesDay-careFamily leaveHealth careRetirement benefitsEducational assistance… and more
Developing Operations Strategy
Corporate MissionCorporate Mission
Business StrategyBusiness Strategy
Product/Service PlansProduct/Service Plans
Competitive PrioritiesCompetitive Priorities
Operations StrategyOperations Strategy
Assessmentof GlobalBusiness
Conditions
Assessmentof GlobalBusiness
Conditions
DistinctiveCompetencies
orWeaknesses
DistinctiveCompetencies
orWeaknesses
Competitive Priorities
Low Production CostsDefinition• Unit cost (labor, material, and overhead) of each
product/service
• Some Ways of CreatingRedesign of product/serviceNew technologyIncrease in production ratesReduction of scrap/wasteReduction of inventory
Competitive Priorities
Delivery Performance• Definition
• a) Fast delivery • b) On-time delivery
• Some Ways of Creating• a) larger finished-goods inventory• a) faster production rates• a) quicker shipping methods• b) more-realistic promises• b) better control of production of orders• b) better information systems
Competitive Priorities
High-Quality Products/Services• Definition
• Customers’ perception of degree of excellence exhibited by products/services
• Some Ways of Creating
• Improve product/service’sAppearancePerformance and functionWear, endurance ability
After-sales service
Competitive Priorities
Customer Service and Flexibility Definition• Ability to quickly change production to other
products/services. Customer responsiveness.
• Some Ways of CreatingChange in type of processes usedUse of advanced technologiesReduction in WIP (work in process) through lean
manufacturingIncrease in capacity
Operations Strategy
Operations strategy is a long-range game plan for the production of a company’s products/services, and provides a road map for the production function in helping to achieve the business strategy.
Elements of Operations Strategy
Positioning the production system
Product/service plans
Outsourcing plans
Process and technology plans
Strategic allocation of resources
Facility plans: capacity, location, and layout
Positioning the Production System
Select the type of product designStandardCustom
Select the type of production processing systemProduct focusedProcess focused
Select the type of finished-goods inventory policyProduce-to-stockProduce-to-order
Product/Service Plans
As a product is designed, all the detailedcharacteristics of the product are established.
Each product characteristic directly affects how the product can be made.
How the product is made determines
the design of the production system.
Stages of a Product’s Life Cycle
Introduction Growth Maturity Decline
Internet TV
B777
I phone 4S
T. Corolla
Outsourcing Plans
Outsourcing refers to hiring out or subcontracting some of the work that a company needs to do.This strategy is being used more and more as companies strive to operate more efficiently.Outsourcing has many advantages and disadvantages. Companies try to determine the best level of out-sourcing to achieve their operations & business goals.More outsourcing requires a company to have less equipment, fewer employees, and a smaller facility.
Outsourcing Plans
A company might outsource any of the following manufacturing related functions:
Designing the product
Purchasing the basic raw materials
Processing the subcomponents, subassemblies, major assemblies, and finished product
Distributing the product
Outsourcing Plans
Many companies even outsource some service functions such as:
PayrollBillingOrder processingDeveloping/maintaining a websiteEmployee recruitmentFacility maintenance
Process and Technology Plans
An essential part of operations strategy is the determination of how products/services will be produced.
The range of technologies available to produce products/services is great and is continually changing.
Strategic Allocation of Resources
For most companies, the vast majority of the firm’s resources are used in production/operations.
Some or all of these resources are limited.
The resources must be allocated to products, services, projects, or profit opportunities in ways that maximize the achievement of the operations objectives.
Facility Plans
How to provide the long-range capacity to produce the firm’s products/services is a critical strategic decision.
The location of a new facility may need to be decided.
The internal arrangement (layout) of workers, equipment, and functional areas within a facility affects the ability to provide the desired volume, quality, and cost of products/services.
Competitive Priorities for Services
The competitive priorities listed earlier for manufacturers apply to service firms as well
Low production costs
Fast and on-time delivery
High-quality products/services
Customer service and flexibility
Providing all the priorities simultaneously to customers is seldom possible.
Positioning Strategies for Services
Type of Service DesignStandard or custom products Amount of customer contactMix of physical goods and intangible services
Type of Production ProcessQuasi manufacturingCustomer-as-participant
Positioning Strategies for Services
Example: McDonald’s
Highly standardized service design
Low amount of customer contact
Physical goods dominating intangible services
Quasi-manufacturing approach to back-room production process
THANK YOU!
Ahmed BELAFQUIH