BUSM5112 Chapter 11 Operations management Online.pptx

Operations management Chapter 11 All information in these slides is taken from the following source: Engelbrecht, W.H. and Van Greunen, C. eds. 2020. Business Management: Back to Basics. Cape Town: Juta. Learning outcomes  Theme 1: Impor...

Operations management Chapter 11 All information in these slides is taken from the following source: Engelbrecht, W.H. and Van Greunen, C. eds. 2020. Business Management: Back to Basics. Cape Town: Juta. Learning outcomes  Theme 1: Importance of Operations Management  Define operations Management.  Explain the importance of operations management in an organization.  Explain the principles of operations management.  Describe the characteristics of an operations manager.  Theme 2:  Differentiate between goods and services in the context of southern Africa.  Explain how the various components of the transformation process work in the context of southern Africa.  Theme 3: Strategy importance of operations management  Describe the ten strategic operations management decisions.  Discuss the integrated nature of business functions.  Differentiate between and calculate productivity and efficiency.  Discuss the trend and challenges in operations management. Watch…  What is operations management?  https://www.youtube.com/watch?v=leMORe AE2hk  Definition (pg 228)  Operations management – activities, decisions and responsibilities that tie in with the execution of the operations function DEF: Uses resources such as labor, material, equipment and technology and converts these resources (inputs) into outputs  Operations management is: ◦ Cross functional ◦ Dynamic ◦ The transformation of raw materials into finished goods and services ◦ A continual process Think….  Operations management is cross functional… what does that mean?  Think about the following Scenario:  Operations management work so efficiently that's they decide to increase production by 20%. This increase in production requires more raw materials, marketing will need to sell the excess products, finance will need to provide extra finance for the raw materials, purchasing needs to order greater volumes to keep up with production, more human resources might be needed to cater for the increased production.  Notice how each of the functions have been affected by a decision made by operations management. It is essential that operations management consider and involve all functions when making decisions. Consider:  Consider the following scenario:  1. Operations management have a machine that breaks down and cannot continue production for two days – think of the effect of this on the other functions within an organization.  The importance of OM (pg 229)  achieve its objectives  Being more efficient, less waste  increase employee productivity  improve the goodwill and presence of the organization  enable the manager to efficiently utilize resources  Increase employee morale and motivation  Improves productivity (ratio of input to output)  More error free products with less wastage, or better use of manufacturing staff  Enable positive financial growth and the ability to meet consumer needs Principles of operations management (pg 229)  There are 16 principles of operations management as identified by Schonberger ◦ These principles increase efficiency throughout the operations management process ◦ They involve knowing the customers, competition, operations process , human resources , equipment, quality control and problem solving.  OM Functions (pg 196)  Principles of OM that promote value and save time ◦ Know and team up with the next and final customer ◦ Dedicated to continual and rapid improvement in quality, cost, response time, flexibility, variability and service ◦ Unified purpose ◦ Reduce the number of product/service components and operations ◦ Organising resources ◦ Utilising human resource potential and creativity ◦ Maintaining and improving present equipment and human capital ◦ Aiming for streamlining and simplicity ◦ Cutting flow time, distance and inventory ◦ Cutting set-up, changeover, get-ready and start-up lead-times ◦ Just-in-time production ◦ Recording and processing one’s own data ◦ Cutting administration and reporting; controlling causes, not symptoms Watch….  What do operations of managers do?  https://www.youtube.com/watch?v=W_oErt mbSDU  Watch and compare with the principles provided on pg 230. ◦ Have all the operations principles been considered.  Look at the picture provided And the skills on page 231, identify skills that you would add to this picture Source: https://external-content.duckduckgo.com/iu/?u=https%3A%2F%2Ftxm.com%2Fwp-content%2Fuploads%2F2017%2F08%2FOperations- Who is the operations manager? Pg 231) Operations managers role: ensure resources are used effectively to promote efficiency and productivity ◦ Responsibilities vary depending on the size of the organisation ◦ 10 skills needed to make the OM effective  Understanding customer needs  understanding the organization's financial performance  Delegating  motivating the team  infusing pride in organizational values and mission  enforcing standards  creating a positive learning environment  maximizing staff utilization  communicating effectively  tracking and measuring staff performance Think….  Read through the skills of a manager on page 231.  Identify the skills that you feel are most important for the operations manager in your current organization  Classification of products (pg 232)  Goods: ◦ Things you can see, touch, smell and taste ◦ usually require minimal interaction with the customer – only at point of sale ◦ usually a repetitive process when producing the product ◦ Life span varies ◦ Eg: Manufacturing a car  Services ◦ Intangible (can’t touch them) ◦ Typically hired or rented ◦ short lifespan and perish quickly ◦ consumer and provider usually need to be in the same place at the same time ◦ services adapt to the needs of consumers ◦ Eg: having your car washed  What are the needs of the consumers in each of these pictures? Operations managers need to consider the needs of consumers in the production of their products and services. An operations-management model https://new.edu/resources/operations-management-in-manufacturing-and-service-industries An operations-management model An operations model example Be able to apply the transformation model to practical situations. http://www.grahamwilliamson.com/2012/01/the-process-approach/ Think….  You are going to buy a new expensive laptop for work purposes. ◦ What do you expect from that product and the company providing the product? ◦ Whose product would you buy? Why? The transformation model (pg319)  Operations function is primarily concerned with the application of resources by means of a transformation process to provide outputs  Model could apply to both manufacturers and service providers  Model comprises three main components: ◦ Inputs ◦ Transformation process itself ◦ Outputs. The Transformation Model – Inputs (pg 319) This is important!! Inputs Transformed resources:  Material (iron, wood etc)  Information (accountancy firms, news)  Customers/clients (hairdresser) Transforming resources:  Human resources  Workers and supervisors  Equipment and facilities  The Transformation Model – transformational process (pg321)  Converts inputs to outputs  Can convert:  Materials  Changes physical characteristics OR service providers change location, change ownership or store materials  Information  Information changes composition or shape, changes ownership, changes location or stored  Customers/clients  Change the physical characteristics, change physiological condition or emotional condition The transformation process (pg 234)  Transformation can occur across various industries ◦ Manufacture ◦ Service ◦ Supply ◦ Transport  The Transformation Model – Outputs (pg 321) Assume the form of products or services Manufacturers – products Service providers – service All businesses are, to a greater or lesser Degree, involved both in manufacture of products And provision of services Consider….  Look at Table 11.1 on page 235 of your textbook.  Describe the inputs, transformation process and outputs for the following businesses:  A Cheese manufacturer  Nandos Takeout  Why is the transformation process so important? (pg236) Read through pg 236: 1. Identify 3 reasons why the transformation model is so important. 2. Identify areas in the transformation model that could lead to improvement to make the transformation process more efficient.  Why is the transformation process so important? (pg236) Read through pg 236: 1. Identify 3 reasons why the transformation model is so important. 2. Identify areas in the transformation model of a shoe manufacturer that could lead to improvement to make the transformation process more efficient.  Examples of answers:  Ensuring raw materials are delivered on time and the correct amount is delivered  ensuring raw materials of the right quality  make sure the equipment is maintained  make sure the staff have the correct skills in order to be productive The strategic importance of operations management (pg 236)  A central role of all management.  The processes associated within the different functional areas are the following three process categories:  Upper management – visioning, designing (5-20years)  Operational processes -purchasing, production, marketing (1-3 years)  Supporting processes – IT, accounting, HR (day to day decisions) ◦ Process is not just confined to the main manufacturing process, it cuts across departmental boundaries (transformation is NOT confined to the factory) ◦ Everything the company is doing to get the product/service to the customer TEN strategic operations management decisions  these must be disseminated throughout the organization's decision levels ◦ Design of goods and services ◦ Managing quality ◦ Process and capacity strategy ◦ Location strategy ◦ Layout strategy ◦ Human resources and job design ◦ Supply chain management ◦ Inventory management ◦ Scheduling ◦ Maintenance Watch…  To help understand operations management’s strategic role:  https://www.youtube.com/watch?v=AbDUEp FrIy4 ◦ This video incorporates many aspects of this chapter Think…  Look at the operations management decisions provided on pg 236. Explain how each of the decisions impact on the varipus departments within the organisation:  Eg: Design of goods and services  this will impact purchasing as they need to purchase the right components at the right price and quality, finance, as finance is needed to purchase components, marketing , can a profit be made of the design of the product or service etc. Activity:  Read through page 237 to 238 on the integrated business functions ◦ create a mind map or a diagram that shows the relationship between operations management and the following functions in a business:  finance  Marketing  human resources  Purchasing  Operational efficiency(pg 238)  Productivity measurement defined ◦ Productivity is not only efficiency – it is also quality of inputs, resource utilisation and effectiveness (how good) ◦ Productivity: the rate at which goods and services are produced ◦ Productivity = ◦ The productivity ratio is a good indication of whether the organization is using time and resources effectively Efficiency (pg 240)  Efficiency: ◦ measures the actual output produced against the predetermined standard for the output ◦ Efficiency =100% x ◦ the efficiency ratio is a good indication of whether resources and inputs are being used to their full potential Trends in operations management (pg 240)  The fourth industrial revolution - AI  A global focus – shift from local markets to international markets  Supply chain partnerships - focus on value rather than price  Employee empowerment – a critical component in maintaining competitive advantage  Product development – Shorter product lifecycles to allow for products to enter the market more quickly  Just-in-time production – Producing goods according to customers orders  Green production – Being aware of how purchases affect forestry, wildlife and the natural environment  Customized production – Customizing products to the needs of consumers example: BMW Trends in operations management (pg 240)  Think…  How can the trends mentioned help improve the effectiveness and sales of an organisation?  How can the trends create challenges for operations managers? See pg 242 Challenges in operations management (pg 242)  Globalization – Being aware of changes in technology and the needs of consumers  4th industrial revolution - create a divide between those who are trade trained and those with the technological skills  Strategy – Sustainable and ethical practices while making of profit across all levels in the organization  culture – Challenge in blending international customs with local customs  customer contact – effective communication is vital