MODULE 7

• Production system – a manufacturing subsystem that combines resources and utilizes various functions to transform inputs into some desired outputs.
• Components of a production system

  • INPUT - Involves capturing and assembling elements that enter the system to be processed
  • PROCESS - Involves transformation processes that convert input into output
  • OUTPUT – the transformed elements that have been produced by processes to their ultimate form
• Categories of processes used to transform inputs into the desired output

  • Physical
  • Locational
  • Exchange
  • Storage
  • Physiological
  • Informational
• Operations Management (OM)


  The activities that are concerned with the creation of goods and services through the transformation of inputs into outputs. It is further defined as the design, operation, and improvement of systems that create and deliver the firm's primary product in the most efficient (best way of doing things) and effective (achieving goals and objectives) way, while creating value for the product.
• In order to achieve good management in operations, it is necessary to define OM in the organization chart.
• Major activities in any organization

  • Finance (including Accounting)
  • Marketing
  • Operations
• The Management Process


  • Planning
  • Organizing
  • Staffing
  • Leading
  • Controlling
• Areas of Management Decisions

  • Strategic
  • Tactical
  • Planning & Control
• Strategic Decisions


  Long-term business decisions that impact the company's long-range effectiveness in terms of how it can address customer needs – aligned to corporate strategy.
• Tactical Decisions


  Intermediate-term decisions that address how to efficiently utilize resources with constraints to strategic decisions.
• Planning and Control Decisions


  Short-term decisions that help breakdown tactical decisions into immediately realizable goals and objectives.
• Critical Strategy Related Decisions in OM

  • Product Strategy
  • Process Strategy
  • Location Strategy
  • Layout Strategy
  • Human Resource Strategy
  • Maintenance and Reliability
  • Quality Strategy
  • Production Planning and Control
  • Supply Chain Management Strategy
• Product Strategy


  Determines production methods and factors, including transformation processes, production costs, quality, and human resource decisions.
• Process Strategy


  Focuses on how products are made, including continuous improvement of production process, decisions on technology, human resource utilization, and maintenance approaches.
• Location Strategy


  Facility location decisions for both manufacturing and service organizations may determine the ultimate success of the operation.
• Expense and capital commitments


  Determine basic cost structure
• Emphasis on people


  Responsible for product creation and development aligned with company goals
• Sample strategy optionsfor product strategy

  • Customized or Standardized?
  • Process focus vs. Repetitive vs. Mass Production
• Facility location decisions


  • May determine the ultimate success of the operation
  • Errors made at this juncture may overwhelm other aspects of the business
• Three main applications of location strategies

  • Location for a new company
  • Relocation of an existing business
  • Business Expansion
• Facility Layouts


  • Represent the physical arrangement of equipment and different components of a facility
  • Capacity, use of personnel, procurement, and inventory planning will be influenced by layout
  • Processes and material must be sensibly located in relation to each other
• Types of layouts widely used by industries

  • Plant Layout
  • Process Layout
  • Product Layout
  • Group Technology
• Process Layout


  • Similar functional equipment are placed at one location and are grouped in departments
• Product Layout


  • The most efficient arrangement based on a products sequence of production
• Group Technology

  
  

  a philosophy in which similar parts are grouped into families and the processes

  required to make parts are arranged in a specialized work cell.
• Revising a firm's layout by using Group Technology Cells


  Can reduce movement, queue time, inventory, required employee, and improve product flow
• Kanban


  • A scheduling system to improve manufacturing efficiency
  • The system takes its name from the cards that track production within a factory
  • The objective is to determine the fastest way to create a product while maintaining consistent production volumes
• Human Resource Strategy


  • Refers to the decisions related to the human resources of an organization, which are integral and expensive parts of the total systems design
  • These strategies help determine quality of work life provided, the talent and skills required, and their costs
  • Strategy: Specialized or enriched jobs?
• Job enrichment


  • A common motivational technique used by organizations to give an employee greater satisfaction in his work
  • Means giving an employee additional responsibilities previously reserved for his manager or other higher-ranking positions
• Maintenance and Reliability


  • These are the decisions aligned with the design and maintenance of systems to achieve its expected performance and quality standard
  • Good maintenance drives out system variability and helps reduce uncertainty
  • The objective is to maintain the capability of the system while controlling costs
• Preventive Maintenance


  • Reduces the number of breakdowns up until a certain point
  • Beyond this point, it would be less costly to wait for the breakdowns to happen and repair the equipment instead
• Quality Strategy


  • Determines the efforts needed to maintain the level of quality desired for operations
  • Quality, or lack there of, affects the entire organization from supplier to customer and product design to maintenance
• Production Planning and Control


  Dictates the combination of the resources, their proper volumes, and the timing in which they are used within the production process
• Sample Strategy options

  • Push system or Pull system?
  • 2 shift production + overtime or 3 shift production?
• Supply Chain Strategy


  • Integrates procurement, transformation, and delivery activities
  • Emphasis on quality, delivery time, innovation, and price
  • Mutual respect between buyers, suppliers, and distributors
  • Operations managers prioritize dimensions aligned with business goals
• Sample strategy options


  • Low-cost strategy vs. Response strategy vs. Differentiation strategy
• The end-goal of an organization is to create efficient and effective operations that deliver the best product to its customers and the best product in the competition, through effective implementation of all the critical strategy related decisions
• Goods


  • The tangible output of a process, a physical presence, a concrete output of manufacturing
  • Products that can be seen and touched
• Services


  • The intangible output of a process
  • Products that cannot be seen or touched but can be felt and appreciated and are provided to customers according to their expectation and satisfaction
  • Location of the service facility and direct customer involvement in creating the output are often essential factors
• "Services never include goods and goods never include services." -- FALSE