IE 31: Module 7

• Production - The process of creating goods and services through a production system.
• Production system – a manufacturing subsystem that

  combines resources and utilizes various functions to

  transform inputs into some desired outputs. Its functions

  include design, production, distribution, & servicing.
• INPUT - Involves capturing and assembling elements

  that enter the system to be processed (e.g., raw

  materials, energy, data, human effort)

  PROCESS - Involves transformation processes that

  convert input into output (e.g., manufacturing

  process, service processes, sophisticated

  calculations)

  OUTPUT – the transformed elements that have been

  produced by processes to their ultimate form (e.g.,

  finished products, rendered service)
• Physical


  • Converts raw materials into a finished good (manufacturing industries)
• Locational


  • Transportation of an entity from one place to another (transportation services, distribution services)
• Exchange


  • Involves retailing, the exchange of a good for money (supermarkets, department stores)
• Storage


  • Involves storing of materials prior delivery to consumers or customers (Warehousing services)
• Physiological


  • Concerned with health care and safety of individuals (health care, grooming, hospitals)
• Informational


  • Involves transfer of data, information, or knowledge (Telecommunications, information systems, schools)
• The major activities in any organization is divided

  into 3 main categories: Finance (including

  Accounting, the systematic recording, reporting,

  and analysis of financial transactions of a

  business), Marketing, and Operations.
• The Management Process

  PLANNING

  • Managers determine objectives and goals for organizations and develop programs,

  policies, and procedures that will help organizations attain them

  • Managers determine subordinate plans for every department, group, and individual.

  ORGANIZING

  • Managers develop a structure of individuals, groups, departments, and divisions to

  achieve objectives.

  STAFFING

  • Managers determine personnel requirements, including the

  best way to recruit, train, retain, and terminate employees for

  achieving objectives.
• The Management Process

  LEADING

  • Managers lead, supervise, and

  motivate personnel to achieve

  objectives.

  CONTROLLING

  • Managers develop the standards and

  communication networks necessary to ensure

  that the enterprise is pursuing appropriate plans

  and achieving objectives.

  • Measures results, evaluates their acceptability,

  and instituting corrective action if necessary
• Areas of Management Decisions

  STRATEGIC DECISIONS

  These are 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. Making these

  decisions are critical because they greatly affect

  the entire operations

  • What products/service will we offer?

  • How will we make the product?

  • Where do we locate the facilities?

  • How much capacity do we need?

  • When should we add capacity?
• Areas of Management Decisions

  TACTICAL DECISIONS

  Also known as an intermediate-term decision, this

  addresses how to efficiently utilize resource (i.e.,

  schedule material and labor) with constraints to strategic

  decisions. These are important because they help

  • How many workers do we need?

  • When do we need them?

  • Should we work overtime or on shifting?

  • When to order/deliver material?

  • Do we store finished goods inventory to cushion

  possible demand increase?
• Areas of Management Decisions

  PLANNING AND CONTROL DECISIONS

  These are the short-term decisions that help breakdown

  tactical decisions into immediately realizable goals and

  objectives. The tactical decisions serve as the operating

  constraint to operational planning and control decisions,

  which means that these decisions are restricted to the

  tactical decisions want to achieve.

  • Schedule – who will do what today/this week?

  • How to deal with equipment breakdown?

  • How to deal with shortages (of material)?

  • How to adjust with quality problem?
• Critical Strategy Related Decisions in OM

  LOCATION STRATEGY

  Facility location decisions for both manufacturing and

  service organizations may determine the ultimate success

  of the operation. Errors made at this juncture may

  overwhelm other aspects of the business.

  Sample strategy options: Near supplier or Near

  customers?
• LAYOUT STRATEGY

  Facility Layouts refers to 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.

  Sample strategy options: Work cells or Assembly line?

  Process layout or Product layout?
• Critical Strategy Related Decisions in OM

  PRODUCT STRATEGY - determines production

  methods and factors

  ● Includes transformation processes,

  production costs, quality, and human resource

  decisions

  ● Product decisions set cost and quality limits

  ● Product-focused organizations seek

  competitive advantage; they strive to improve

  products faster than competition

  Sample strategy options:

  Customized or

  Standardized?
• PROCESS STRATEGY

  ● Process options focus on how products are

  made

  ● Continuous improvement of production

  process

  ● Decisions commit management to

  technology, human resource utilization, and

  maintenance approaches

  ● Expense and capital commitments

  determine basic cost structure

  ● Emphasis on people responsible for product

  creation and development aligned with

  company goals

  Sample strategy options: Process focus vs. Repetitive vs. Mass Production
• Examples of Layout strategies:

  PROCESS LAYOUT

  
• Examples of Layout strategies:

  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.

  
• Examples of Layout strategies:

  Kanban is a scheduling system to improve

  manufacturing efficiency. The system

  takes its name from the cards that track

  production within a factory.
• Critical Strategy Related Decisions in OM

  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.

  ●

  Sample strategy options: Specialized or Enriched jobs?
• 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 of maintenance and reliability is to

  maintain the capability of the system while controlling

  costs.

  Sample strategy options: Improving individual

  components or Provide redundancy (having back-up or

  spare parts) ? Preventive maintenance or Breakdown

  maintenance?
• QUALITY STRATEGY

  -These decisions determine the efforts needed to maintain

  the level of quality desired for operations. These are

  critical decisions since quality, or lack there of, affects the

  entire organization from supplier to customer and product

  design to maintenance.

  Building an organization that can achieve quality also

  affects the entire organization and is a demanding task.

  Sample Strategy options: Source inspection or Sampling

  inspection?
• PRODUCTION PLANNING AND CONTROL

  A critical part of operations wherein decisions about the set

  of activities that creates value in the form of goods and

  services by transforming input to output take place. This

  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?
• "Push type" means “Make

  to Stock” in which the

  production is not based on

  capacity utilization.

  "Pull type" means “Make

  To Order” in which the

  production is based on

  actual demand.
• SUPPLY CHAIN STRATEGY

  ● Supply chain setup decisions integrate 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: Low-cost strategy vs. Response

  strategy vs. Differentiation strategy
• A good is the tangible output of a process, a physical

  presence, a concrete output of manufacturing. Goods are

  products that can be seen and touched.

  A service is an intangible output of a process. These are

  products that cannot be seen or touched but can be felt

  and appreciated and are provided to customers according to

  their expectation and satisfaction.