IE 31 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 - Capturing and assembling elements that enter the system to be processed
  • PROCESS - Transformation processes that convert input into output
  • OUTPUT - The transformed elements that have been produced by processes to their ultimate form

  
• Production


  The process of creating goods and services through a production system
• Categories of processes used to transform inputs into desired output

  • Physical - Converts raw materials into a finished good
  • Locational - Transportation of an entity from one place to another
  • Exchange - Involves retailing, the exchange of a good for money
  • Storage - Involves storing of materials prior delivery to consumers or customers
  • Physiological - Concerned with health care and safety of individuals
  • Informational - Involves transfer of data, information, or knowledge
• Operations Management


  The activities that are concerned with the creation of goods and services through the transformation of inputs into outputs
• Operations Management


  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
• Operations Management


  The administration of business practices to create the highest level of efficiency possible within an organization
• Major activities in any organization

  • Finance (including Accounting)
  • Marketing
  • Operations
• Operations Manager


  Responsible for Planning, Organizing, Controlling, and Staffing
• The Management Process

  • Planning
  • Organizing
  • Staffing
  • Leading
  • Controlling
• 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
• 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


  The location of a firm is the geographical positioning of its operations relative to the input resources and other operations or customers with which it interacts
• 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
• 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
• 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
• Total Cost Curve


  • Shows the relationship between the costs associated with Preventive Maintenance and costs related to Breakdown maintenance
  • Operation Managers should always consider a balance between the two
• Quality Strategy


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


  • Decisions about the set of activities that creates value in the form of goods and services by transforming input to output
  • Dictates the combination of the resources, their proper volumes, and the timing in which they are used within the production process
• Sample Strategy options for Production Planning and Control

  • Push system (Make to Stock)
  • Pull system (Make to Order)
  • 2 shift production + overtime
  • 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
• 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
• Core services


  • The basic things that customers want from products they purchase
  • Performance objectives include Quality, Flexibility, Speed, and Price (Cost Reduction)
• Categories of Value-added Services

  • Information
  • Sales support
  • Field support
  • Problem solving
• Service Factory


  • The idea that the factory can be a source of customer service in addition to a place where products are manufactured
  • Factory workers can contribute to sales and marketing efforts, and be a resource for installation, maintenance and troubleshooting
• Tactical Decision


  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
• Plant Layout


  depends on the design of the factory

  building, plant, or facility.
• Process Layout


  similar functional equipment are placed at one location and are grouped in departments