Chapter 1: Introduction to POM
-
Upload
cara-thomas -
Category
Documents
-
view
33 -
download
1
description
Transcript of Chapter 1: Introduction to POM
© Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
MGMT 405, POM, 2013/14. Lec Notes
Chapter 1: Introduction to POM
Department of Business Administration
FALL 2013-2014
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
2
Outline: What You Will Learn . . .
Define the term operations management Identify the three major functional areas of organizations and
describe how they interrelate Compare and contrast service and manufacturing operations Describe the operations function and the nature of the
operations manager’s job Differentiate between design and operation of production
systems Describe the key aspects of operations management decision
making Briefly describe the historical evolution of operations
management Identify current trends that impact operations management
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
3
Production/Operations Management is: The management of that part of an organization that is
responsible for producing goods and/or services. The management of systems or processes that create
goods and/or provide services.i.e. Every book you read, every e-mail you send or every medical treatment you
receive involves the operation function of one or more organizations.
The aim of production and operations is to satisfy people’s wants or needs.
Operations Management affects:The collective success or failure of companies’ POMCompanies’ ability to competeNation’s ability to compete internationally
Definition of Operations Management
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
4
BusinessBusiness Organization Organization
The Three Basic Functions
Organization
Finance Operations Marketing
Fig 1.1
All business organizations have these three basic functions so it doesn’t matter the business a hospital, a manifacturing firm, a car wash etc.....
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
5
Finance- is responsible for securing financial resources at favourable prices as well as analysing investment proposal and providing funds for marketing and operations.
Marketing is responsible for assessing consumer needs or wants and selling and promoting the organization’s goods and services.
Operations is responsible for producing the goods or providing the services offered by the organization.
Basic Concepts
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
6
Value-Added ProcessValue-Added Process
Inputs Land Labor Capital
Transformation/Conversion
process
Outputs Goods Services
Control
Feedback
FeedbackFeedback
Value added
The operations function involves the conversion of inputs into outputs
Figure 1.2
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
7
Basic ConceptsInput- Materials, labour, Data or unprocessed
information, technology, equipment, legal constraints, government regulations etc....
What type of skill do the employees need?What type of materials does the firm need?
Value-Added Activities- Performed with tools machines, techniques, human skills etc....i.e. Processing.
How will the firm use its resources to produce its products/ how can the firm improve its operations?
Output- Good and services. what are their needs/what sort of products will be produced?
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
8
Value-added Value-added is the difference between the cost of inputs and
the value or price of outputs. In non-profit organization, value-added of output is their
value to society. The greater the value-added, the greater the effectiveness of
these operations (i.e. High way construction, state school construction etc...).
In profit organization, value-added of output is measured by prices that customers are willing to pay for those goods and services.
Firms use the money generated by value-added for research and development, worker salaries and profit.
The greater the value-added, The greater the amount of funds available for these purposes.
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
9
Is Is Goods-serviceGoods-service combination combination a a ContinuumContinuum??
Automobile assembly, steel making
Home remodeling, retail sales
Automobile Repair, fast food
Figure 1.3
Computer repair, restaurant meal
Song writing, software development
Goods Service
Surgery, teaching
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
10
Why Product Packages?
Because there are relatively few pure goods and pure services and therefore companies sell Product packages for their own benefit or interest.
Product packages are a combination of goods and services.
Product packages can make a company more competitive.
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
11
Example of the transformation for Example of the transformation for Food ProcessorFood Processor
Inputs Processing Outputs
Raw Vegetables Cleaning Canned vegetables Metal Sheets Making cans
Water CuttingEnergy CookingLabor PackingBuilding LabelingEquipment Table 1.2
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
12
Example of the transformation for Example of the transformation for Hospital ProcessHospital Process
Inputs Processing Outputs
Doctors, nurses Examination Healthy patientsHospital Surgery
Medical Supplies MonitoringEquipment MedicationLaboratories Therapy
Table 1.3
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
13
Manufacturing or Service?Manufacturing or Service?
Tangible Act
Manufacturing and Service are often different in terms of what is done but quite similar in terms of how it is done. For example, manufacturers decide what size factory needed and service organizations must decide what size building is needed. Manufacturing and Service differ cause manufacturing is goods-oriented and service is act-oriented.
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
14
Production of Goods vs. Delivery of Services
Production of goods – tangible outputDelivery of services – an actService job categories
Government (state, local, etc..)Wholesale/retail (clothing, food, stationery,etc..)Financial services (banking, insurance, etc..)Healthcare (doctors, dentists, hospitals, etc..)Personal services (laundry, dry cleaning, etc..)Business services ( data processing, e-business, etc..)Education (schools, colleges, etc..)
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
15
Key Differences
1. Customer contact
2. Uniformity of input
3. Labor content of jobs
4. Uniformity of output
5. Measurement of productivity
6. Production and delivery
7. Quality assurance
8. Amount of inventory
9. Evaluation of work
10. Ability to patent design
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
16
Goods vs. Service
Characteristic Goods Service
Customer contact Low High
Uniformity of input High Low
Labor content Low High
Uniformity of output High Low
Output Tangible Intangible
Measurement of productivity Easy Difficult
Opportunity to correct problems High Low
Inventory Much Little
Evaluation Easier Difficult
Patentable Usually Not usual
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
17
Goods vs. Service
Year Mfg. Service45 79 2150 72 2855 72 2860 68 3265 64 3670 64 3675 58 4280 44 4685 43 5790 35 6595 25 7500 30 70
02 25 75
0
10
20
30
40
50
60
70
80
90
45 50 55 60 65 70 75 80 85 90 95 00 02 05
Pe
rce
nt
Year
U.S. Manufacturing vs. Service Employment
Mfg.
Service
Figure 1.4 This slide is excluded from the exam
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
18
Why Manufacturing Matters?
Over 18 million workers in manufacturing jobsAccounts for over 70% of value of U.S. exportsAverage full-time compensation about 20% higher
than average of all workersManufacturing workers more likely to have
benefitsProductivity growth in manufacturing in the last 5
years is more than double U.S. economy
This slide is excluded from the exam
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
19
Why Manufacturing Matters?
More than half of the total R&D performed is in the manufacturing industries
Manufacturing workers in California earn an average of about $25,000 more a year than service workers
When a California manufacturing job is lost, an average of 2.5 service jobs are lost
This slide is excluded from the exam
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
20
Challenges of Managing Services
Service jobs are often less structured than manufacturing jobs
Customer contact is higherWorker skill levels are lowerServices hire many low-skill, entry-level workersEmployee turnover is higher Input variability is higherService performance can be affected by worker’s
personal factors This slide is excluded from the exam
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
21
Key Decisions of Operations Managers
WhatWhat resources/what amounts
WhenNeeded/scheduled/ordered
WhereWork to be done
HowDesigned
WhoTo do the work
This slide is excluded from the exam
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
22
Types of OperationsTypes of Operations
Operations ExamplesGoods Producing Farming, mining, construction,
manufacturing, power generationStorage/Transportation Warehousing, trucking, mail
service, moving, taxis, buses,hotels, airlines
Exchange Retailing, wholesaling, banking,renting, leasing, library, loans
Entertainment Films, radio and television,concerts, recording
Communication Newspapers, radio and televisionnewscasts, telephone, satellites
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
23
Historical Evolution of Operations Management
System for P & O have existed since ancient times. The great wall of China Egyptian pyramids
i.e. More than 100000 workers for 20 years. The ships of Roman empire The roads and aqueducts of the Roman These are all examples of the human ability to
organize for operation and production These also show the roots of the Industrial
Revolution
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
24
Historical Evolution of Operations Management Industrial revolution (1770’s) Scientific management (1911)
Mass production Interchangeable partsDivision of labor
Human relations movement (1920-60) A psychologist focusing on human factor in work-tiredness and motivation.
Decision models (Harris 1915-inventory model, 1960-70’s) The factory movement was accompanied by the development of several
quantitative techniques. After ww II-the importance of military and manifucturing sectors, the models of forecasting, inventory man., project man were developed.
Influence of Japanese manufacturers JIT production, quality revolution, continual improvement etc.
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
25
The evolution of POM Production of goods remained at a handicraft level untill the
Industrial revolution took place. In 1764, the Industrial revolution began and James Watt invented the steam engine and advanced the use of mecanical power to increase productivity.
Eli Whitney (1798) found out and introduced the concepts of standardised parts and interchangeable parts. He then developed musket system because the type of muskets were handcrafted-he produced 10000 muskets by using the concept of interchangeable parts.
By using the same concept, he allowed the manifacture of fire-alarms, clocks, watchs, sewing machines etc..
Soon after, by conducting the concept of steam engine, Richard Trevithick (1802) invented the first train and Richard Fulton (1807) invented the first steam boat.
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
26
The evolution of POM The first steam boat and the first train indicate a long stream of
application in which human anad animal powers were replaced by engine power.
The Industrial revolution was the transformation of a society from peasant and local occupation into a society with world wide connections in terms of great use of machinery and large-scale commercial operations. This is the first step of factory system.
This system replaced the traditional production system by the concept of mass-production by bringing together large numbers of semi-skilled workers.
Adam Smith’s ‘The wealth of nations’ (1776) pointed out the importances and advantages of the division of labor where the production process was broken down into series of small tasks and each performed by a different worker.
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
27
The evolution of POM With aid of the concept of the division of labor: Workers who continually perfomed the same task, they would
gain skill and experience. Saving time or avoiding lost time due to changing jobs. Workers’ concentration on the same job increased would lead to
the development of special tools and techniques for faster and easier task.
Specialization jobs and division of labor began to take place. A prominent mathematician and engineer Charles babbage (1832) promoted an economic analysis of work and pay on the basis of skill requirement.
In the earliest days of manufacturing, goods were produced using craft production-highly skilled workers conducting simple, flexible tools to produce small quantities customized goods .
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
28
The evolution of POM Frederick Taylor (1911) published ‘the priciples of scientific
management’. This helped to achieve wide tasks in industry. Frank Gilber (principles of motion economy), Henry Gantt
(schudeling and charts design for system) and Herrington Emerson (organizational efficiency) used Taylor’s ideas to improve the system of operation and production management.
Influence of Japanese manufacturers JIT production, quality revolution, continual improvement etc. Using the concept of JIT production, Japanese manufacturers
changed the rules of production from Mass Production to Lean Production.
Lean production prizes flexibility rather then efficiency, as well as quality rather than quantity. This indicates the first step of ‘Era of Industrial globalization’.
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
29
The evolution of POM
Figure 1.5
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
30
School of Management
The process school of management was developed by Henry Fayol in 1900 management can be viewed as a continuous process the function of planning, organizing and controlling
The behavioural school of management was developed by Elton Mayo in 1920 human relation movement on production output Productivity depends not only on the physical
environment but also on social norms and personal feelings (i.e. Western Electric’s Hawthorne plant)
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
31
School of ManagementThe quantitative school of management
is concerned with decision making, mathematical modeling as well as system theory
represents a productive system In 1915, Harris developed an Economic Order
Quantity model for inventory management In 1931, Shewhart developed a Quantity decision
model for use in Statistical quality control work In 1947, George Dantzing developed PERT/CPM In the late 1950s and early 1960s Edward Bowman,
Robert Fetter and Elwood Buffa developed the concept called Modern poduction Management
As computers became available in the 1950s, the power of opeartions research was multiplied
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
32
School of Management The School of Modern Management
In the late 1960s, MRP and CPR were introduced by Joseph Orlicky and Oliver White
In the late 1970s, MRP II, JIT, TMQ and KANBAN systems were developed
the School of Modern Management includes the system and the contingency approaches.
these are also called new contemporary management approaches
the system approach points out that an organization has interdependent factors as such individuals, status, motives, goals etc and must work together
the contingency approach reveals that organizations are different so different and changing cases need to conduct different approaches and techniques in reaching a solution
This slide is excluded from the exam
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
33
Trends in Industrial globalization
Major trendsThe Internet, e-commerce, e-businessManagement technologyGlobalizationManagement of supply chainsOutsourcingAgilityEthical behavior
This slide is excluded from the exam
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
34
Summary for Historical Evolution of Operations Management
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
35
Some Famous Scientists
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
36
Some Famous Scientists
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
37
Some Famous Scientists
MGMT 405, POM, 2013/14. Lec Notes © Stevenson, McGraw Hill, 2010- Assoc. Prof. Sami Fethi, EMU, All Right Reserved.
Introduction; Chapter1
38
Thanks