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Slides for introduction on operation management in different organisation
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Introduction
Prof. Christian Terwiesch
Operations in a Restaurant
Prof. Christian Terwiesch
Operations in an Emergency Room
Prof. Christian Terwiesch
Operations from the Perspective of the Customer
Prof. Christian Terwiesch
Four Dimensions of Performance
Cost▪ Efficiency
Quality▪ Product quality (how good?)
▪ Process quality (as good▪ Process quality (as good as promised?)
Time▪ Responsiveness to
demand
Variety▪ Customer heterogeneity
Important for- Performance measurement- Defining a business strategy
Prof. Christian Terwiesch
Four Dimensions of Performance: Measurements for a Sandwich Store
Cost▪ Efficiency
Quality▪ Product quality (how good?)
▪ Process quality (as good as promised?)
Time▪ Responsiveness to demand
p )
Variety▪ Customer heterogeneity ▪ Responsiveness to demand▪ Customer heterogeneity
Prof. Christian Terwiesch
IntroductionEfficient Frontier
Prof. Christian Terwiesch
Four Dimensions of Performance: Trade-offs
Cost▪ Efficiency▪ Measured by:
Quality▪ Product quality (how good?)
=> Price▪ Process quality (as good- cost per unit
- utilization
▪ Process quality (as good as promised?)=> Defect rate
Time▪ Responsiveness to
Variety▪ Customer heterogeneity p
demand▪ Measured by:
- customer lead time- flow time
Customer heterogeneity▪ Measured by:
- number of options- flexibility / set-ups
make to order
Prof. Christian Terwiesch
- flow time- make-to-order
What Can Ops Management (This Course) Do to Help? Step 1: Help Making Operational Trade-Offs
ResponsivenessHigh
Very short waiting times,Comes at the expense ofFrequent operator idle time
Trade-off Long waiting times,
yet operators are almostfully utilized
Example: Call center of a large retail bank
Labor Productivity(e.g. $/call)
Low
Low laborproductivity
High laborproductivity
y
Example: Call center of a large retail bank- objective: 80% of incoming calls wait less than 20 seconds - starting point: 30% of incoming calls wait less than 20 seconds- Problem: staffing levels of call centers / impact on efficiency
Prof. Christian Terwiesch
OM helps: Provides tools to support strategic trade-offs
What Can Ops Management (This Course) Do to Help?Step 2: Overcome Inefficiencies
Responsiveness
HighCurrent frontier
Eliminate inefficiencies
In the industry
Competitor A
Low
Competitor C
Competitor B
Labor Productivity(e.g. $/call)
Low laborproductivity
High laborproductivity
Competitor B
Example:• Benchmarking shows the pattern above• Don’t just manage the current system… Change it!
Provides tools to identify and eliminate inefficiencies => Define Efficient Frontier
Prof. Christian Terwiesch
Types of inefficiencies:-Poor process design- Inconsistencies in activity network
What Can Ops Management (This Course) Do to Help?Step 3: Evaluate Proposed Redesigns/New Technologies
Responsiveness
HighHigh
Redesignprocess
Current frontierNew frontier
LowIn the industry
Labor Productivity( $/ )
Low labor High labor
Example:• What will happen if we develop / purchase technology X?
Better technologies are al a s (?) nice to ha e b t ill the pa ?
(e.g. $/call)productivity productivity
Prof. Christian Terwiesch
• Better technologies are always (?) nice to have, but will they pay?
OM helps: Evaluates system designs before they occur
Example: The US Airline Industry
Prof. Christian Terwiesch
Example: The US Airline Industry
Prof. Christian Terwiesch
IntroductionFormat of the course
Prof. Christian Terwiesch
Course Outline / Grading / Homework
Objective of the course: Understanding and improving business processes
Performance measuresHow-to
Mix of industries: healthcare restaurants automotive computers call centers banking etcMix of industries: healthcare, restaurants, automotive, computers, call centers, banking, etc
Course OutlineIntroduction (0.5 weeks)1. Process analysis (1.5 weeks)2. Productivity3. Product variety 4. Responsiveness 5. Quality
Requirements / Prerequisites: There are no prerequisites for the course
Some modules require statistical knowledge (standard deviation, normal distribution)
Homework assignmentsOne large assignment after each module (five assignments); 10% each
Final exam with questions from all modules; 50%
Prof. Christian Terwiesch
q ;
Text Book
Course book Cachon, Gerard, Christian Terwiesch, Matching Supply with Demand: An Introduction to Operations Management, 3rd edition, Irwin - McGraw Hill, 2012 (ISBN 978-0073525204, 507 pages)
Prof. Christian Terwiesch
Personal IntroductionMBA core course: Operations Management: Quality and Productivity
Taught ~ 60 times ~ 4000 MBA students
McKinsey Ops Practice ~ 500 new associates
Research: Operations Management, focus on Healthcare Management
Innovation tournaments and contests
Christian Terwiesch [email protected]
Andrew M. Heller Professor at the Wharton SchoolSenior Fellow Leonard Davis Institute for Health Economics
573 Jon M. Huntsman Hall
Prof. Christian Terwiesch
Philadelphia, PA 19104.6366
