Chap01 Operation Mgmt & Strategy

BKC3813 - OPERATION and PROJECT MANAGEMENT

(E)

Hj. M Noor Nawi, FKKSA, UMP.

(X 2813)

Chapter 1: OPERATION MANAGEMENT &

STRATEGYThe Outline: Definition Concept Classification of System Manufacturing vs Services System Framework The Objective The Scope The Operation Strategy

WHAT IS OPERATION MANAGEMENT?

• What is Production Management?The management interrelated activities in manufacturing designed product/s

• What is Operation Management?The business function responsible for planning, coordinating, and controlling the resources needed to produce a company’s products and services

OPERATION MANAGEMENT

The Concept INPUT

TRANSFORMATION PROCESS OUTPUT

Input-Transformation-Output Processes

CLASSIFICATION OF PRODUCTION SYSTEM

1) Job-Shop Production2) Batch Production3) Mass Production4) Continuous Production System

CLASSIFICATION OF PRODUCTION SYSTEM

Job-Shop Production1. Characteristics2. Advantages3. Limitations

CLASSIFICATION OF PRODUCTION SYSTEM

Batch Production1. Characteristics2. Advantages3. Limitations

CLASSIFICATION OF PRODUCTION SYSTEM

Mass Production1. Characteristics2. Advantages3. Limitations

CLASSIFICATION OF PRODUCTION SYSTEM

Continuous Production System1. Characteristics2. Advantages3. Limitations

Differences between Manufacturing and Service Operation

MANUFACTURING• Tangible• Output Consumption

over time.• Nature of work – Less

Labour More Equipment• Little Degree of

Customer Contact• No Customer

Participations• Sophisticated

Performance Measurement

SERVICE• Intangible• Immediate

Consumption of Output.• More Labour Less

Equipment Usage• Direct Customer

Contact• Frequent Customer

Participation• Easy method to

Performance Measure.

Quiz 01Q. What are the FOUR objectives of Production

Management?

Operation Management System Framework

• Planning- activities that establishes a course of action & guide future Decision -Making• Organizing

- activities that establishes a structure of tasks and authority• Controlling

- Activities that assure the Actual performance in accordance with planned performance

Operation Management System Framework

• Behaviour- relationship all above parameters with human behaviour• Models

- e.g aggregate planning, break even analysis, linear programming & Simulation, decision tree analysis & simple median models.

Objectives of Operation Management

Customer Service- provide goods and services with Right Specifications, Right Cost & Right Time!!!

Resource Utilization- Man, Materials & Machines

Quiz 02Q.What are the scopes (areas) of Operation/

Production Management?

Scope of Operation Management

• Location of Facilities• Plant Layout and Materials Handling• Product Design• Process Design• Production and Planning Control• Quality Control• Materials Management• Maintenance Management

Scope of Operation Management• Location of Facilities• Plant Layout and Materials Handling• Product Design• Process Design• Production and Planning Control• Quality Control• Materials Management• Maintenance Management

Scope of Operation Management• Location of Facilities• Plant Layout and Materials Handling• Product Design• Process Design• Production and Planning Control• Quality Control• Materials Management• Maintenance Management

Scope of Operation Management• Location of Facilities• Plant Layout and Materials Handling• Product Design• Process Design• Production and Planning Control• Quality Control• Materials Management• Maintenance Management

Scope of Operation Management• Location of Facilities• Plant Layout and Materials Handling• Product Design• Process Design• Production and Planning Control• Quality Control• Materials Management• Maintenance Management

Scope of Operation Management• Location of Facilities• Plant Layout and Materials Handling• Product Design• Process Design• Production and Planning Control• Quality Control• Materials Management• Maintenance Management

Scope of Operation Management• Location of Facilities• Plant Layout and Materials Handling• Product Design• Process Design• Production and Planning Control• Quality Control• Materials Management• Maintenance Management

Scope of Operation Management• Location of Facilities• Plant Layout and Materials Handling• Product Design• Process Design• Production and Planning Control• Quality Control• Materials Management• Maintenance Management

Location of Facilities Long-term Capacity & Commitment Base of Operation Large Investment of Plant & Machineries Expansion Plan & Policy Diversification Plan for Products/ Market Sources of Raw Materials Manpower Supplies (skilled or non-skilled) Optimal Location – greatest advantages to

organizations

Plant Layout and Materials Handling

Plant Layout:1. Physical arrangement of facilities, comprise

of departments, work centres and equipment.2. Meeting most economic output quality and

quantity.

Materials Handling:1. About moving materials from store to

machine and so on…..in manufacturing process.

2. Cost reduction by proper section, operation and maintenance of MH devices and help to increase output, improve quality & speed up deliveries.

Product Design Conversion of Ideas into Reality Product Development translates customers needs

via marketing into technical specs and design various features into the product specifications.

P.D. and Development provide link bet marketing, customer needs & expectations and activities required to manufacture the product.

Process Design• Decision Making in Overall Process Route for

Converting Raw Mat into Finished Goods.• Selection of a process• Choice of Technology• Process Flow Analysis• Layout of the facilities• Analyse workflow• Select workstation in the workflow

Production and Planning Control

• Advance process• Setting, fixing, orders and follow up progress.• Planning – what, how, when & who?• Routing – selection of route to be follow• Scheduling• Dispatching• Follow-up

Quality Control• Improve Income • Reduce cost• Achieve Interchangeability• Produce optimal quality• Prompt inspection• Variation check• Customers satisfaction, goodwill, confidence and

reputation.

Materials Management• Minimise material cost• Efficient in purchasing, receiving, transporting

and warehousing.• Cut cost via simplification, standardisation, value

analysis and import subtitution.• New source of supply?• Reduce investment tie in inventory & develop

high inventory turnover ratios.

Maintenance Management • Minimum breakdown – low cost• No interruption, optimal capacity• Availability of machines, buildings and services

functional at optimal return on investment.

Historical Development of Operation Management

• Industrial revolution Late 1700s• Scientific management Early 1900s• Human relations movement 1930s to

1960s• Management science Mid-1900s• Computer age 1970s• Environmental Issues 1970s

Historical Development of Operation Management

• Time-Based Competition 1990s

• Supply chain Management 1990s

• Electronic Commerce2000s

• Outsourcing and flattening of the world 2000s

• Just-in-Time Systems (JIT) 1980s

• Total quality management (TQM)1980s

• Reengineering 1990s• Global competition

1980s• Flexibility 1990s

Operation Management Strategy• Operations Management Strategy is

concerning the planning to achieve vision and mission of organisation via total patterns of decisions and actions which set the role, objectives and activities of the operation so that they contribute to, and support, the organisation’s business strategy!!!

Operation Strategy• Operational decisions occur on a daily/

weekly/ monthly/ yearly basis and are made considering the risk to the business.

• These decisions are administrative in nature and can be implemented quickly and tend to carry minor risk.

Tactical Strategy• Tactical Strategic decisions are medium

term decisions. • Misguided strategy could take a

business in entirely the wrong direction and lead to failure, a misguided tactic would have a more limited impact.

• Tactical strategy tend to be more changeable.

(2 – 5years)

Strategic Planning• Long-term Strategy ( > 5 years )• Strategic decisions are those which

affect the long term performance of the business and which relate directly to its aims and objectives.

• They are usually taken at the highest levels of management and carry higher levels of risk.

• Effective strategic decisions bring high levels of reward.

Productivity Measurement Productivity is a measure of how efficiently inputs

are converted to outputs Productivity = output/input

Total Productivity Measure Total Productivity = $sales/inputs $

Partial Productivity Measure Partial Productivity = cars/employee

Multifactor Productivity Measure Multi-factor Productivity = sales/total

$costs

Quiz 031) What are the elements/ factors that contribute

to the success of O.M.? and 2) How and Why these factors can affect the

success of O.M.?

Cont.ANS: Right Quality Right Quantity Right Time Right Manufacturing Cost