Professional Documents
Culture Documents
Operations Management:
MGT329
Office: BA 434
Phone: X4184
Cell: (770) 654-2056
e-mail: strejeff@isu.edu
Course Books
Operations Management For
Competitive Advantage, 11th Edition,
by Richard B. Chase, F. Robert Jacobs
and Nicholas J. Aquilano.
Participation/Homework (25%)
Exam I (25%)
Exam II (25%)
Final Exam (25%)
Some questions to be addressed
in this course include:
How does the customer fit into
operations strategy?
How is globalization affecting
business and operations strategies?
What effect are new technologies
having on the utilization of an
organization’s resources?
Some questions to be addressed
in this course include:
How has the concept of quality
management changed, and how does
it affect operations?
Why is continuous improvement in
the operations management function
necessary for an organization to
remain competitive?
Why Study Operations
Management?
Systematic Approach
to Organizational
Processes
Operations
Business Education Career Opportunities
Management
Cross-Functional
Applications
Development of OM as a Field
2
What is Operations Management?
Operations Management is a functional area
of business devoted to the management of
an organization's resources to create
products or services.
Corporate Strategy
Operations Management
Input Output
Production System
Managing Transformations
“The Production System”
Micro View
Input Transformation Output
Process
(Value Adding)
People
Transformation is Plants
enabled by The 5 Ps of OM: Parts
Processes
[A.K.A. The 5 Ms…Man,
Planning and
Machines, Materials, Methods,
And Management] Control
Transformations
Physical--manufacturing
Locational--transportation
Exchange--retailing
Storage--warehousing
Physiological--health care
Informational--telecommunications
Competitive Priorities
Quality (including Service)
Field Support
“grow utility”
Value-Added Factory Services
Information - provide critical data to market
Why
then would we consider
McDonald’s a service business?
Front and Back Office
Back Office
Service Provider
Front Office
Customer
How would an Operations
Management focus apply
here?
Standard Verbalize Prepare
Enter Order Collect
execution time 2 Order Food payment
minutes
Back Office
Operations Strategy and
Competitiveness
Chapter 2
Operations Strategy and
Competitiveness - Overview
Operations Strategy
Productivity Measurement
Operations Strategy
Alignment
Decisions
Strategic options
Requirements for implementing options
Contingency plans
Strategy Process Example
Customer Needs More Product
Decisions on Processes
and Infrastructure Build New Factory
Hierarchy of Strategy Process
Customers
Environment
Corporate Strategic
Planning
Vision
Type of Value delivered
Specific Market Capabilities
Corporate Values Progress
Core competencies
Performance metrics Potential Problems/Changes
Strategic
Business SBU #1 SBU #2 SBU #3
Units
Marketing Engineering
Functional
Areas
Finance Operations
Mgt
Operations Strategy --
Formulation
Customers
Get to know; team up with next and
final customer.
Continual, rapid improvement in
lead time, quality, cost, flexibility
and variability.
Operations Strategy --
Formulation
Company
Achieve unified purpose via
information;
team involvement in planning and
implementing change.
Operations Strategy --
Formulation
Competitors
Getto know the competition and
world-class leaders.
Operations Priorities
Cost
Quality Traditional
Delivery Speed Competitive Priorities
Flexibility
Service
Delivery Reliability
Coping with Changes in Demand
Flexibility and New Product Introduction Speed
A Framework for Manufacturing Strategy
Customer Needs
Competitive
dimensions & requirements
Enterprise capabilities
Operations
Operationsand Suppliercapabilities
& Supplier Capabilities
R&DR&D Technology SystemsSystems
Technology People
People Distribution
Distribution
Support Platforms
Financial management Human resource management Information management
Operations Strategy
Alignment
Decisions
Quality
Flexibility
Service
Cost
Lead Times
Variability
Dealing with Trade-offs
For example, if we reduce costs by reducing product
quality inspections, we might reduce product quality.
Distinctive Competency
Distinctive competency
“A strength that sets a business
apart from its competition”
McDonald’s
Disney World or Disney Land
Delta Airlines
Intel Corporation
UPS
Strategy Begins with Priorities
Consider the case of a personal computer
manufacturer.
1. How would we segment the market according
to product group?
Personal use
Small business
Large Corporations
2. How would we identify product requirements,
demand patterns, and profit margins for each
group?
How do we identify order winner and
order qualifiers for each group?
quality
cost
delivery
flexibility
service
Competition Us
(Them) Differentiation (Distinctive
Competencies)
Servicecan be
an “order
winner” Travel
Warranty Planning
Leases
Roadside Loaner
Car Dealership Assistance Vehicles
7
Again, What is Operations
Management?
quality
training
technology
management
What methods can be used to
improve productivity?
develop productivity measures
measurement is necessary to control the operation
look at overall productivity
develop methods for achieving productivity
improvements
establish reasonable goals for improvement
measure and communicate improvements to
both customers and employees
Total Measure Productivity
Total measure Productivity = Outputs
Inputs
or
Output .
Labor + Capital + Energy
or
Output .
Labor + Capital + Materials
Example of Productivity Measurement
You have just determined that your service
employees have used a total of 2400 hours of labor
this week to process 560 insurance forms. Last
week the same crew used only 2000 hours of labor to
process 480 forms.
(10,000 unit*$10/unit)
= $22.22
(500hrs*$9/hr)
What do these calculations tell us?
More importantly -- What don’t they tell us?
Applying Productivity Figures
You’ve just told your boss that the
plant labor productivity is better than
that of a plant in a related business.
Other priorities?
Flexibility?
Delivery?
Quality?
Lasik Vision
Is
this the appropriate approach in this
industry?
Is standardization more difficult in health
care?