OPM Basics v0.4 Summary

8/2/2019 OPM Basics v0.4 Summary

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BAJJonker Operations Management Basics 1

Bernoud A.J. Jonker MBA

OPERATIONS

MANAGEMENTBASICS


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OPERATIONS MANAGEMENTObjectives

Objectives of this lecture are to introduce OperationsManagement its place and connections withinorganisation and some important concepts:

Efficiency

Batch production Quality

Customer Order Decouple Point

Process layout

Production Planning



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1OPERATIONS

MANAGEMENTBASICS


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OPERATIONS MANAGEMENTIntroduction

What is Operations?

How does the role of Operationsrelate to other functional areas?

What Operations Managementconcepts do you know?



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Operations can be defined as a transformationprocess where e. g. materials, labour is transformedinto e.g. goods, services

OPERATIONS MANAGEMENTWhat is Operations?

I NPUTMaterialMachinesLabourEnergy

ManagementCapital

OUTPUTGoods

Services

Feedback Feedback

Requirements

OPERATIONS

1

2

3

4

5

Source: Russel & Taylor, 2009

Operations Management Basics 5


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OPERATIONS MANAGEMENTTransformation processes

Transformation

can be:

Physical

Locational

Exchange Physiological

Psychological

Informational

Example:

- Manufacturing operations

- Transportation/warehousing

- Retail

- Health care

- Entertainment

- Communication

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OPERATIONS MANAGEMENTStrategic planning hierarchy

Mission andVision

CorporateStrategy

Voice of theBusiness

Operations

Strategy

Marketing

Strategy

Financial

Strategy

Voice of theCustomer

Source: Russell & Taylor, 4th Edition, 2003



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OPERATIONS MANAGEMENTSupply Chain perspective

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Transformationprocess

Supply side Demand side

Tier 3suppliers Tier 2suppliers Tier 1suppliers Warehouses/Wholesale Retail Customers

Supply Chain

Source: David Barnes, 2008



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OPERATIONS MANAGEMENTOperations within organisation

Generalmanagement

Market ing Operat ions FinanceHuman

Resources

Generalmanagement

Market ing Operat ions FinanceHuman

Resources

AvailabilityLead time

Sales forecastCustomer orders

BudgetsCost analysis

Production- andinventory data

Job designEmployee evaluation

Hiring/firingTraining

Source: Own compilation



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OPERATIONS MANAGEMENTProductivity and Competitiveness

Productivity = ratio of output to input

Output Output

Productivity = ------------- = -----------------

input Labour

Competitiveness = degree to which an countriescan produce goods and services that meet the test of

international markets.



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OPERATIONS MANAGEMENTProduction process selection

Projects

High

High

LowLow

Volum

e

Standardisation

Batchproduction

Mass

production

Continuousproduction

Production of oil, electricity,paper, steel, foodstuffs.

Production of automobiles,televisions, personal

computers, fast food.

Machine shops, bakeries,education, furniture making.

Building ship, rock concert,development new product.

Examples

Source: Russel & Taylor, 2009



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THE OPERATING SYSTEMCustomer-order-decoupling-point

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Supplier

C

ustomer

The logistic chainmake-to-stock

assemble-to-order

make-to-order

design-to-order


Operations Management, an international perspective


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OPERATIONS MANAGEMENTCustomer-order-decouple-point

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Ship buildingindustry

Car buildingindustry

Manyindustries

Make-to-order Assemble-to-order Make-to-stock

Examples from manufacturing industry



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OPERATIONS MANAGEMENTDifferent layout types

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Process layout Product layout

Fixed position layout Hybrid layout

Adopted from: Russel & Taylor, 2009



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OPERATIONS MANAGEMENTLine balancing

Flow time = 4 + 4 + 4 = 12

Cycle time = max{ 4, 4, 4} = 4

Idle time = 0

Balance delay = 0

Flow time = 3 + 4 + 3 = 10

Cycle time = max{3, 4, 3} = 4

Idle time = 1

Balance delay = 2

21 34 minutes 4 minutes 4 minutes

21 33 minutes 4 minutes 3 minutes



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OPERATIONS MANAGEMENTThe supply chain

Supplier Manufact urer Wholesale Cust omer

Purchasing

Physical distribution

Production

Retailing

Supply chain

Reverse logistics


Retail



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OPERATIONS MANAGEMENTInformation in the supply chain

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Supplier Manufacturer Ret ail Cust omer

EDI EDI EDI



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OPERATIONS MANAGEMENTPlanning hierarchy

Operations planning hierarchy:

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Forecasting

Planning

Scheduling

Input from sales/marketing incombination with historic data

Input from forecasting in combinationwith rough capacity calculations

Input from planning in combination

with machine capacity calculations

Source: own compilation



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OPERATIONS MANAGEMENTLevels of scheduling

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Make-to-stock Assemble-to-order Make-to-order

Master schedulefinished products

Master schedulemajor subassemblies

or modules

Master schedulecomponents or

materials

Source: Russell & Taylor, 2009, p. 652



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LEAN MANUFACTURINGReduction of lead time

Lead time is typically made up of four components:

Waiting time, reduce or eliminate

Moving time, reduce by shorter distances

Set-up time, reduce by smart set-up

Processing time, reduce by increasing speed

Storage Transportation Set-up machine Production Storage



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OPERATIONS MANAGEMENTInventory management elements

Raw mat erial buf fers: to cover for variations insuppliers deliveries;

buffer inventories: so that production can runsmoothly in case of temporary machine breakdowns,or other work stoppages.

Finished goods invent ories: to cover forfluctuations in demand and work stoppage.

Raw material In-processbuffer

Productionstep 2

Finished productProductionstep 1



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PLANNING AND SCHEDULINGEconomic order quantity models

Reorder point, R

Order quantity, Q

Inventory level

Time

Orderplaced Orderreceived

Leadtime

Orderplaced Orderreceived

Leadtime

Demand rate

The I nvent ory Order Cycle

Source: Russell & Taylor, 2009



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OPERATIONS MANAGEMENTEvolution of quality management

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Quality inspection

Quality Control

Quality Assurance

Total Quality

Management



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OPERATIONS MANAGEMENTIntegrated overview

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General Management

Finance

Marketing

Human Resource Management

Operations

Integrating allfunctional areas

BudgetsCost analysis

Production- and

inventory data

Availability

Lead timeSales forecast

Customer orders

Job designEmployeeevaluation

Hiring/firingTraining



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OPERATIONS MANAGEMENTIssues and trends in Operations

Globalisation of markets, sourcing, operations

Virtual companies

Greater choice more individualism

Emphasis on service

Speed and flexibility Supply chains

C(ollaborative)-commerce

Technological advances

Knowledge Environmental and social responsibilities


OPM Basics v0.4 Summary

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