Krajewski Om9 Ppt 01
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Transcript of Krajewski Om9 Ppt 01
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CCOMPETINGOMPETING WITHWITH OOPERATIONSPERATIONS1
For For Operations Management, 9eOperations Management, 9e by by Krajewski/Ritzman/Malhotra Krajewski/Ritzman/Malhotra © 2010 Pearson Education© 2010 Pearson Education
PowerPoint Slides PowerPoint Slides by Jeff Heylby Jeff Heyl
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Operations ManagementOperations Management
The systematic design, direction, and control of processes that transform inputs into services and products for internals, as well as external, customers
Processes can be linked together to form a supply chain – interrelated processes within a firms and across different firms that produce a service or product to the satisfaction of the customers
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Across the OrganizationAcross the Organization
Material & Service Inputs
Sales Revenue
Product & Service Outputs
FinanceAcquires financial
resources and capital for inputs
MarketingGenerates sales
of outputs
OperationsTranslates
materials and service into
outputs
Support Functions• Accounting• Information Systems• Human Resources• Engineering
Figure 1.1
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A Process ViewA Process View
External environment
Information on performance
Internal and external customers
Processes and operations
1
2
3
45
Inputs• Workers• Managers• Equipment• Facilities• Materials• Land• Energy
Outputs• Goods• Services
Figure 1.2
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A Process ViewA Process View
• Physical, durable output• Output can be inventoried• Low customer contact• Long response time• Capital intensive• Quality easily measured
• Intangible, perishable output• Output cannot be inventoried• High customer contact• Short response time• Labor intensive• Quality not easily measured
More like a manufacturing
process
More like a service process
Figure 1.3
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The Supply Chain ViewThe Supply Chain View
Support Processes
Exte
rnal
sup
plie
rs
External customers
Supplier relationship process
New service/ product development
Order fulfillment process
Customer relationship management
Figure 1.4
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The Supply Chain ViewThe Supply Chain View
Core processes are sets of activities that deliver value to external customers
1. Supplier relationship process2. New service/product development process3. Order fulfillment process4. Customer relationship process
Support processes provide vital resources and inputs to the core processes
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Support ProcessesSupport Processes
TABLE 1.1 | EXAMPLES OF SUPPORT PROCESSESCapital acquisition The provision of financial resources for the
organization to do its work and to execute its strategy
Budgeting The process of deciding how funds will be allocated over a period of time
Recruitment and hiring The acquisition of people to do the work of the organization
Evaluation and compensation The assessment and payment of people for the work and value they provide to the company
Human resource support and development The preparation of people for their current jobs and future skills and knowledge needs
Regulatory compliance The processes that ensure that the company is meeting all laws and legal obligations
Information systems The movement and processing of data and information to expedite business operations and decisions
Enterprise and functional management The systems and activities that provide strategic direction and ensure effective execution of the work of the business
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Operations StrategyOperations Strategy
Specifies the means by which operations implements corporate strategy and helps build a customer-driven firm
Corporate strategy provides an overall direction that serves as the framework for carrying out all the organization's functions
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Operations StrategyOperations Strategy
Figure 1.5
Corporate Strategy• Environmental scanning• Core competencies• Core processes• Global strategies
Market Analysis• Market segmentation• Needs assessment
Competitive Priorities• Cost• Quality• Time• Flexibility
New Service/Product Development• Design• Analysis• Development• Full launch
Operations Strategy
Decisions• Managing processes• Managing supply chains
Competitive Capabilities• Current• Needed• Planned
Performance Gap?
No
Yes
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Corporate StrategyCorporate Strategy
Environmental scanning Developing core competencies
1. Workforce2. Facilities3. Market and financial know-how4. Systems and technologies
Developing core processes Global strategies
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Market AnalysisMarket Analysis
Market segmentationNeeds assessment
Service or product needs Delivery system needs Volume needs Other needs
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Competitive PrioritiesCompetitive Priorities
TABLE 1.2 | DEFINITIONS, PROCESS CONSIDERATIONS, AND EXAMPLES OF COMPETITIVE PRIORITIES
COST Definition Process Considerations Example1. Low-cost
operationsDelivering a service or a product at the lowest possible cost
Processes must be designed and operated to make them efficient
Costco
QUALITY
2. Top quality Delivering an outstanding service or product
May require a high level of customer contact and may require superior product features
Ferrari
3. Consistent quality
Producing services or products that meet design specifications on a consistent basis
Processes designed and monitored to reduce errors and prevent defects
McDonald’s
TIME
4. Delivery speed Quickly filling a customer’s order
Design processes to reduce lead time
Dell
5. On-time delivery
Meeting delivery-time promises
Planning processes to increase percent of customer orders shipped when promised
United Parcel Service (UPS)
6. Development speed
Quickly introducing a new science or a product
Cross-functional integration and involvement of critical external suppliers
Li & Fung
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Competitive PrioritiesCompetitive Priorities
TABLE 1.2 | DEFINITIONS, PROCESS CONSIDERATIONS, AND EXAMPLES OF COMPETITIVE PRIORITIES
FLEXIBILITY Definition Process Considerations Example7. Customization Satisfying the unique
needs of each customer by changing service or products designs
Low volume, close customer contact, and easily reconfigured
Ritz Carlton
8. Variety Handling a wide assortment of services or products efficiently
Capable of larger volumes than processes supporting customization
Amazon.com
9. Volume flexibility
Accelerating or decelerating the rate of production of service or products quickly to handle large fluctuations in demand
Processes must be designed for excess capacity
The United States Postal Service (USPS)
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Order Winners and QualifiersOrder Winners and QualifiersSa
les
($)
Achievement of competitive priority
Low High
Order Winner
Figure 1.6
Sale
s ($
)
Achievement of competitive priority
Low High
Order Qualifier
Threshold
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Using Competitive PrioritiesUsing Competitive Priorities
Customer relationship Top quality Consistent quality Delivery speed Variety
New service development Development speed Customization Top quality
At an airline
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Using Competitive PrioritiesUsing Competitive Priorities
Order fulfillment Low-cost operations Top quality Consistent quality On-time delivery Variety
At an airline
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Using Competitive PrioritiesUsing Competitive Priorities
Supplier relationship Low-cost operations Consistent quality On-time delivery Variety Volume flexibility
At an airline
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Operations StrategyOperations Strategy
TABLE 1.3 | OPERATIONS STRATEGY ASSESSMENT OF THE BILLING AND PAYMENT PROCESS
Competitive Priority Measure Capability Gap Action
Low-cost operations Cost per billing statement
$0.0813 Target is $0.06
Eliminate microfilming and storage of billing statements
Weekly postage
$17,000 Target is $14,000
Develop Web-base process for posting bills
Consistent quality Percent errors in bill information
0.90% Acceptable No action
Percent errors in posting payments
0.74% Acceptable No action
Delivery speed Lead time to process merchant payments
48 hours Acceptable No action
Volume flexibility Utilization 98% Too high to support rapid increase in volumes
Acquire temporary employees Improve work methods
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Trends in Operations ManagementTrends in Operations Management
Productivity improvementGlobal competitionEthical, workforce, and environmental
issues
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Productivity ImprovementProductivity Improvement
EXAMPLE 1.1Calculate the productivity for the following operations:
a. Three employees process 600 insurance policies in a week. They work 8 hours per day, 5 days per week.
SOLUTION
a. Labor productivity = Policies processed
Employee hours
= = 5 policies/hour600 policies
(3 employees)(40 hours/employee)
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Productivity ImprovementProductivity Improvement
EXAMPLE 1.1Calculate the productivity for the following operations:
b. A team of workers makes 400 units of a product, which is sold in the market for $10 each. The accounting department reports that for this job the actual costs are $400 for labor, $1,000 for materials, and $300 for overhead.
SOLUTION
a. Multifactor productivity = Value of output
Labor cost + Materials cost + Overhead cost
= = = 2.35(400 units)($10/unit)$400 + $1,000 + $300
$4,000$1,700
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ApplicationApplication
Calculate the year-to-date labor productivity:
Calculate the multifactor productivity:
This Year Last Year Year Before LastFactory unit sales ($) 2,762,103 2,475,738 2,175,447Employment (hrs) 112,000 113,000 115,00Sales of manufactured products ($)
$49,363 $40,831 —
Total manufacturing cost of sales ($)
$39,000 $33,000 —
factory unit sales
employment
This Year2,762,103
= 24.66/hr112,000
Last Year2,475,73
8 = 21.91/hr113,000
Year Before Last2,175,447
= $18.91/hr115,000
sales of mfg products
total mfg cost
This Year$49,363
= 1.27$39,000
Last Year$40,831
= 1.24$33,000
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OM as a Set of DecisionsOM as a Set of Decisions
In practice, managers make strategic and tactical decisions
1. Each part of the organization designs and operates processes
2. Each function is connected through shared resources
Competing with OperationsProject Management
USING OPERATIONS TO COMPETE
Process StrategyProcess Analysis
Quality and PerformanceCapacity Planning
Lean Systems
MANAGING PROCESSES
Supply Chain DesignSupply Chain Integration
LocationInventory Management
ForecastingOperations Planning and Scheduling
Resource Planning
MANAGING SUPLY CHAINS
Figure 1.7
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Challenges in OMChallenges in OM
Part 1: Using operations to competePart 2: Managing processesPart 3: Managing supply chains
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Solved Problem 1Solved Problem 1
Student tuition at Boehring University is $150 per semester credit hour. The state supplements school revenue by $100 per semester credit hour. Average class size for a typical 3-credit course is 50 students. Labor costs are $4,000 per class, material costs are $20 per student per class, and overhead costs are $25,000 per class.
a. What is the multifactor productivity ratio for this course process?
b. If instructors work an average of 14 hours per week for 16 weeks for each 3-credit class of 50 students, what is the labor productivity ratio?
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Solved Problem 1Solved Problem 1
SOLUTION
a. Multifactor productivity is the ratio of the value of output to the value of input resources.
Value of output = 50 studentclass
$150 tuition +$100 state support
credit hour3 credit hours
student
Value of inputs = Labor + Materials + Overhead
Multifactor productivity = = = 1.25$37,500/class$30,000/class
OutputInput
= $37,500/class
= $4,000 + ($20/student 50 students/class) + $25,000
= $30,000/class
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Solved Problem 1Solved Problem 1
SOLUTION
b. Labor productivity is the ratio of the value of output to labor hours. The value of output is the same as in part (a), or $45,000, so
Labor hours of input = 14 hoursweek
16 weeksclass
Labor productivity = = $45,000/class224 hours/class
OutputInput
= 224 hours/class
= $200.89/hour
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Solved Problem 2Solved Problem 2
Natalie Attire makes fashionable garments. During a particular week employees worked 360 hours to produce a batch of 132 garments, of which 52 were “seconds” (meaning that they were flawed). Seconds are sold for $90 each at Attire’s Factory Outlet Store. The remaining 80 garments are sold to retail distribution at $200 each. What is the labor productivity ratio of this manufacturing process?
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Solved Problem 2Solved Problem 2
SOLUTION
Labor productivity = = $20,680360 hours
OutputInput
Labor hours of input = 360 hours
Value of output = (52 defective 90/defective) + (80 garments 200/garment)
= $20,680
= $57.44 in sales per hour
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