CHAPTER 18

OPERATIONS MANAGEMENTOPERATIONS MANAGEMENT

OPERATIONS MANAGEMENT (OM) The Nature of Operations ManagementThe Nature of Operations Management

Innovative managers do not just manage Innovative managers do not just manage people--they must also manage technical people--they must also manage technical resources and processes associated with the resources and processes associated with the production of goods and services.production of goods and services.

OM STRATEGY AND MANAGEMENT DEFINED

operations strategyoperations strategy is part of the strategic plan is part of the strategic plan which defines the role, capabilities, and which defines the role, capabilities, and expectations for operations management.expectations for operations management.

operations managementoperations management involves the involves the managerial activities and techniques used to managerial activities and techniques used to convert resources into products and servicesconvert resources into products and services

Refer to Exhibit 18.1 and 18.2 in the textbookRefer to Exhibit 18.1 and 18.2 in the textbook

ELEMENTS OF OPERATIONS PLANNING MODEL Product and Service DesignProduct and Service Design

design for manufacturability and assemble design for manufacturability and assemble (DMFA)(DMFA)

Facilities LayoutFacilities Layout process layoutprocess layout production layoutproduction layout cellular layoutcellular layout fixed position layoutfixed position layout

ELEMENTS OF OPERATIONS PLANNING MODEL Production Processes and TechnologyProduction Processes and Technology

roboticsrobotics CAD/CAMCAD/CAM Flexible Manufacturing SystemsFlexible Manufacturing Systems Computer-Integrated ManufacturingComputer-Integrated Manufacturing Computers and the Delivery of ServiceComputers and the Delivery of Service

Facilities LocationFacilities Location Capacity PlanningCapacity Planning

THE MANAGEMENT OF OPERATIONS Once strategic planning decisions about Once strategic planning decisions about

design, layout, process and technology, design, layout, process and technology, location, and capacity have been made, location, and capacity have been made, specific plans need to be developed for the specific plans need to be developed for the overall production operations. This involves overall production operations. This involves Aggregate PlanningAggregate Planning Master SchedulingMaster Scheduling Structuring for OperationsStructuring for Operations

THE AGGREGATE PLAN

Involves planning production activities and Involves planning production activities and the resources need to achieve them. Flow the resources need to achieve them. Flow charts and road maps the production charts and road maps the production process based on demand forecasts and process based on demand forecasts and capacity of the operations.capacity of the operations.

Serves as the basis for the Master PlanServes as the basis for the Master Plan

THE MASTER SCHEDULE

Specifies the quantity and type of each item Specifies the quantity and type of each item to be produced and how, when, where it to be produced and how, when, where it should be produced.should be produced.

Materials requirements are derived from the Materials requirements are derived from the master schedule, and the schedule affects master schedule, and the schedule affects inventory levelsinventory levels

STRUCTURE FOR PRODUCTION Decisions on how to organize by Decisions on how to organize by

department, whether to incorporate teams, department, whether to incorporate teams, nature of authority relationships, and extent nature of authority relationships, and extent of decentralizationof decentralization

The desired result is an integrated, flexible The desired result is an integrated, flexible organizational structure which can respond organizational structure which can respond to changes in the aggregate planto changes in the aggregate plan

QUALITY AND PRODUCTIVITY CONTROLS Productivity traditionally viewed in terms of Productivity traditionally viewed in terms of

output. Managers today realize productivity is output. Managers today realize productivity is high-quality units of output whether goods or high-quality units of output whether goods or services.services.

Quality measures related to after-the-fact Quality measures related to after-the-fact determination of scraps, re-work, repair, and determination of scraps, re-work, repair, and downtime. Now quality involves proactive downtime. Now quality involves proactive design decisions which minimize these design decisions which minimize these measures of quality.measures of quality.

QUALITY AND PRODUCTIVITY CONTROLS Design ControlDesign Control--focus on creating new products --focus on creating new products

engineered for reliability, functionality, and engineered for reliability, functionality, and serviceability.serviceability.

Materials ControlMaterials Control--achieved through effective --achieved through effective purchasing and Just-In-Time manufacturing purchasing and Just-In-Time manufacturing practices.practices.

Inventory ControlInventory Control--critical aspect of operations --critical aspect of operations management due to costs associated with management due to costs associated with inventory.inventory.

QUALITY AND PRODUCTIVITY CONTROLS Schedule ControlSchedule Control--scheduling operations --scheduling operations

and tracking production.and tracking production. Product ControlProduct Control--at one time focused on --at one time focused on

inspection of finished goods. TQM inspection of finished goods. TQM involves reducing probability and cost of involves reducing probability and cost of poor quality with inspection and testing poor quality with inspection and testing techniques prior to production.techniques prior to production.