Operations Management Basics

• Operations management involves designing, executing, and controlling processes to transform inputs into outputs, delivering value to customers
• Includes planning, organizing, and overseeing production, manufacturing, or service delivery, ensuring efficiency, quality, and customer satisfaction

Operation Examples

• Good producing (farming, mining, construction)
• Exchange (trade, retail, loans)

Importance of Operations Management

• It is central to all business organizations
• Critical for creating and maintaining competitive advantages
• Interrelated with marketing functions

Three Basic Functions

• Operation/production (goods or service oriented)
• Finance (budgets, investments, funding)
• Marketing (selling, promoting, assessing needs)

Responsibilities

• Capacity, utilization, location, product selection, make or buy decisions
• Layout planning, project management, scheduling, market analysis
• Risk management, forecasting, and job assignments

Role of Operations Manager

• Controlling inventory, quality, and costs
• Organizing standardization and process selection
• Staffing through hiring, layoffs, and incentive plans

Scope

• Forecasting, capacity planning, scheduling, inventory management, quality assurance, employee motivation, and facility location

Key Issues

• Maintaining quality control to meet standards
• Managing costs while preserving quality
• Handling supply chain disruptions
• Ensuring sustainability

Value Added/Profit

• Value added is the difference between the cost of inputs and the fair value of outputs

Degree of Standardization

• Standardized output uses standardized methods for mass production, reducing the need for skilled workers but limiting material choices

Manufacturing Goods vs Service Operations

• Manufacturing involves tangible outputs, separate prodution and consumption, can be inventoried, easier to standardize and automate, and quality is objectively meausred
• Service operations involve experiences, simultaneous production and consumption, cannot be inventoried, high variability, and quality is subjective
• Examples of services are government, education, and financial services

Differences in Goods and Services

• Goods are tangible with low customer interaction while services are intangible with high customer interaction
• Measuring quality and uniformity is easier for goods than services

Goods-Service Continuum

• Pure goods are raw materials like steel
• Mostly Goods with Some Services are cars with warranties or smartphones with tech support
• Hybrid (Balanced Goods & Services) are restaurants
• Mostly Services with Some Goods are airlines
• Pure Services include consulting, education, and healthcare

Models:

• Models represent key features and characteristics of real-world objects or processes
• They simplify complexity for easier analysis and communication

Types of Modeling

• Physical models (prototypes)
• Schematic models (graphs, charts, pictures)
• Mathematical models (statistical models)

Benefits of Models

• Easy to use and inexpensive
• Increase problem understanding and provide consistent tools
• Offer a systematic approach to problem-solving

Types of Models

• Simulation for testing ideas
• Optimization for creating optimal solutions
• Pattern recognition for identifying trends

Purpose of Models

• Improve understanding and communication
• Facilitate experimentation and standardization
• Enable informed decisions and optimized operations

Abstraction vs Computability

• Abstraction focuses on key aspects, ignoring less relevant details
• Computability ensures the model is practical for making calculations and predictions

Throughput

• Throughput is the rate at which a system produces goods or services
• Defects reduce throughput, leading to bottlenecks

Decision Making Elements

• Models simplify complex systems
• Quantitative approach uses data and statistical techniques
• Analyzing trade-offs aids in understanding the pros and cons of each decision
• Systems approach considers the entire organization

Pareto Phenomenon

• The 80-20 Rule asserts that 80% of outcomes result from 20% of causes

History of Operation Management

• The industrial revolution occurred in 1770
• Scientific management occurred in 1911
• Human relations movement occurred in 1920-60

Production/Manufacturing Systems

• Manufacturing systems are the methods used to produce goods
• Craft production involves skilled workers creating customized products

Lean Production

• Lean production minimizes waste while maximizing efficiency

Mass Production

• Mass production involves low-skilled workers using machines to produce large quantities

Agile Manufacturing

• Agile manufacturing reduces inventories and turnaround times, using flexible automation and rapid information processing

Key Elements for Agile Manufacturing

• Reduced inventories and turnaround times
• Automated flexible machinery
• Quick collection and processing of information

Supply Chain Management

• Supply chain is a sequence of activities for producing and delivering goods or services

Basic Supply Chain Flow

• The chain flows from supplier to direct supplies, then producer, distribution, and finally to final consumer

Trends

• Key trends include the internet, management technology, and globalization
• Agile reactions to the market and managing the supply chain are also important

Recent Trends

• Include work involvement and environmental considerations

Other Important Trends

• Key trends involve ethical behavior, operations strategy, and resource management
• Trends also include cost control, productivity, quality improvement, and regulations

Just-In-Time (JIT)

• JIT is a lean operation within a factory that aims to eliminate waste and obsolescence
• JIT produces only what is needed, when needed, with minimal inventory

Elements of JIT

• JIT is a coordinated system where goods move through the system as needed
• Suppliers and components are "pulled" to arrive when needed

JIT vs Lean Production

• JIT is an efficient, waste-free production system, while lean production focuses on continuous improvement
• Lean production supplies customers with exactly what they want, managed through continuous improvement

Goals of JIT

• Balanced system with rapid material flow and waste elimination

Types of Waste

• Overproduction, waiting, unnecessary transport, inefficient work methods, and inefficient processing

Kaizen Philosophy

• Kaizen emphasizes continuous improvement and total employee involvement

Key Aspects of Kaizen

• Encourages workers to spot quality problems and generate improvement ideas

Big vs Little JIT

• Big JIT has a broad focus on vendor relations and technology management
• Little JIT emphasizes scheduling

JIT Building Blocks

• Product design, process design, and organizational elements
• Manufacturing planning, supplier relationships, and preventive maintenance are also included

JIT Building BLocks. for Product Desgin

• Process design with product design and modular design
• Concurrent engineering is emphasized

JIT Building Blocks for Process Design

• Small lot sizes and setup time reduction
• Cellular layouts and reduced inventories are used

Small-Lot Production

• Requires less space, moves processes closer, and makes quality problems easier to detect
• Increases flexibility and makes problems more apparent

Benefits of Small-lot Production

• Reduction in inventory, increased flexibility, and easier balance

Single-Minute Exchange of Die (SMED)

• SMED reduces changeover time by categorizing activities

Layout

• Layout aims to reduce movement, using work-cells, movable machinery, and short distances
• Requires workplace organization, reduced inventory space, and balanced capacities
• A cellular layout arranges workstations in cells for similar products

Layout Tactics

• Build work cells, minimize distance, and improve communication

JIT Building Blocks; Personnel/Organizational Elements

• Workers as assets; cross-trained workers; employee empowerment

Employee Empowerment

• Empowered, cross-trained employees clear bottlenecks and improve processes

Pull/Push Systems

• Pull systems move work when needed, preventing overproduction

JIT Exposes Quality Problems

• It also eliminates defects with small lots, requiring quality by suppliers

JIT Emphasizes Quality

• Quality is maintained by identifying root causes and using team approaches

JIT Requires Total Quality Management (TQM)

• Statistical process control and continuous improvement are useful for this

JIT also Requires and Requires:

• Autonomation (Jidoka) for detecting defects and Jidoka assures quality

Product Flexibility

• Objective is smooth flow of products
• Preventative maintenance helps to reduce breakdown

Balanced System

• Workload is evenly distributed with cycle time matching takt time

Inventories

• JIT aims to eliminate inventory through small lot sizes and low setup times

JIT Inventory Tactics

• Use pull systems, reduce lot sizes, and develop JIT delivery

Limited Work in Process (WIP)

• It Lowers costs, increases flexibility, and aids scheduling
• Kanban focuses on individual stations, while CONWIP focuses on the system as a whole

Kanban Production Control System

• Kanban communicates demand and indicates quantity of production utilizing cards
• It provides direct control over work-in-process inventory

Determination of Kanban Needed

• Establishing a kanban system involves knowing how many are needed
• Each container represents the minimum production lot size

Suppliers for JIT

• JIT partnerships are formed to eliminate unnecessary activities and poor suppliers

Total Productive Maintenance (TPM)

• It prevents maintenance that keeps machines operating and TPM requires design machine easly

Housekeeping

• It is maintaining a clean workspace
• The 5S's focuses on clearing and organizing

Results of JIT

• JIT reduces queues, improves quality, and reduces costs

What Just-In-Time Is

• Streamlined Production & Management philosophy, using a pull system
• Attacks waste, exposes problems and requires employee participation