Operations Mgt Lesson Prelim 1st Sem AY2024-2025 PDF

OPERATIONS MANAGEMENT OLOPSC, 1st Semester AY2024-2025  LEARNING OBJECTIVES understand and familiarize with Operations Management define key terms and concepts in Operations Management, explain the role of operations in an organization 7 Functions of OM, types of Operations Manag...

OPERATIONS MANAGEMENT OLOPSC, 1st Semester AY2024-2025  LEARNING OBJECTIVES understand and familiarize with Operations Management define key terms and concepts in Operations Management, explain the role of operations in an organization 7 Functions of OM, types of Operations Management  What is Operations Management? Definition, Historical Development, etc. OPERATIONS MANAGEMENT - DEFINITION Design, operation, and improvement of the systems that create and deliver the firm’s primary products and services (Chase/Jacobs/Aquilano, “Operations Management”, McGraw-Hill, p.9, 2006) The administration of business practices to create the highest level of efficiency possible within an organization. It is concerned with converting materials and labor into goods and services as efficiently as possible to maximize the profit of an organization (Adam Hayes, “Operations Management”, Investopedia.com, July 23, 2024) Operations management uses resources to appropriately create outputs that fulfill desired market requirements (Ed Chapman, “Key Concepts of Operations Management”,LinkedIn.com, May 1, 2020) Operations management handles various strategic issues like determining plant size, financial health, raw material (RM) acquisition, logistics inventory, productivity, quality control, IT assets, etc.  KEY TERMINOLOGIES https://www.informit.com/articles/article.aspx?p=2167438&seqNum=3 OPERATIONS MANAGEMENT - COMPONENTS Uses resources to convert inputs into some desired outputs Inputs may be a raw material, a customer, or a finished product from another system inputs can be tangible (e.g. raw materials) or intangible (e.g. knowledge) OPERATIONS MANAGEMENT - VIDEO RESOURCES USED EQUIPMENT/MACHINERIES/FACILITIES PEOPLE/MANPOWER TRAINING (Knowledge) SYSTEMS (Quality Control, IT, FINANCE, etc) PROCEDURES (SOP’s, Rules & Regulations)  TRANSFORMATION PROCESS CATEGORIES PHYSICAL (as in Manufacturing) LOCATION (as in Transportation) EXCHANGE (as in Retailing) STORAGE (as in Warehousing) PHYSIOLOGICAL (as in Healthcare) INFORMATIONAL (as in Telecommunications) (Chase/Jacobs/Aquilano, “Operations Management”, McGraw-Hill, p.12, 2006) OTHER BUSINESS EXAMPLES OPERATIONS MANAGEMENT - COMPONENTS  4 V’s - OPERATION PROCESS ANALYSIS Operation processes can be analysed by looking at the four V's: Volume - higher volume allows for the systemisation of repeatability of tasks, this allows for lower costs per unit and a standard procedure, e.g. McDonalds versus Michelin starred restaurant (lower volume usually has a higher cost per unit due to more complex tasks) Variety - higher variety requires higher flexibility and better communication, which usually leads to higher costs. (Chase/Jacobs/Aquilano, “Operations Management”, McGraw-Hill, p.12, 2006)  4 V’s - OPERATION PROCESS ANALYSIS Variation - high variation of required service (e.g. seasonal resort) requires more accurate forecasting. Level demand allows for advance plans, high utilisation of resources and lower unit costs. Visibility - refers to how much the customer can see of the business and its processes and vice versa. Two kinds: a) low-visibility, like a water treatment plant or a supermarket and b) high-visibility such as a coffee shop or an estate agent. Customers expect quicker service, and their satisfaction is closely tied to the perceived quality and attention to detail. often require more client-focused services or processes, leading to higher unit costs (Chase/Jacobs/Aquilano, “Operations Management”, McGraw-Hill, p.12, 2006)  TYPES OF OPERATIONS MANAGEMENT 1. Service Operations Management a. Focus is on delivering top-quality service to customers b. Managing staff schedules, ensuring speedy service, and maintaining high customer service standards are the main responsibilities c. Examples of businesses: hotel, bank, internet services (Agbaje Feyisayo, “Guide to Operations Management”, Wrike.com, August 5, 2024)  TYPES OF OPERATIONS MANAGEMENT 2. Production Operations Management a. A discipline that focuses on planning, organizing, and controlling the activities involved in the production of goods or services b. Encompasses a wide range of functions, including procurement, scheduling, inventory management, quality control, and maintenance c. By effectively managing these activities, companies can streamline their production process, improve productivity, and meet customer demand efficiently (Agbaje Feyisayo, “Guide to Operations Management”, Wrike.com, August 5, 2024)  TYPES OF OPERATIONS MANAGEMENT 3. Project Management a. emphasizes executing specific organizational projects b. Projects can be constructing a building, developing new software or product, or organizing a marketing campaign c. It focuses on hitting those milestones and achieving the project goals within the set time frame and budget (Agbaje Feyisayo, “Guide to Operations Management”, Wrike.com, August 5, 2024)  TYPES OF OPERATIONS MANAGEMENT 4. Supply Chain Operations Management a. It is all about making sure products move smoothly through every stage of the supply chain, from suppliers to manufacturers, then to warehouses, and finally to stores or directly to customers b. It oversees the entire supply chain to minimize costs and maximize efficiency c. Coordination and collaboration across different segments ensures that customers get what they want, when they want it (Agbaje Feyisayo, “Guide to Operations Management”, Wrike.com, August 5, 2024)  TYPES OF OPERATIONS MANAGEMENT 5. Inventory Management a. Focuses on the efficient management of inventory levels b. This type of operations management is important in industries where inventory plays a significant role, such as retail, manufacturing, and e-commerce c. To do this effectively, you should have a central spot where you can see everything about your inventory (Agbaje Feyisayo, “Guide to Operations Management”, Wrike.com, August 5, 2024) TYPES OF OPERATIONS MANAGEMENT Activity SERVICE PRODUCTION SUPPLY CHAIN PROJECT INVENTORY MGT. SERVICE PRODUCTION SUPPLY CHAIN SERVICE NO NO YES YES PRODUCTION NO NO YES YES SUPPLY YES YES YES YES PROJECT MGT. CHAIN INVENTORY PROJECT YES NO NO NO MGT. INVENTORY YES NO NO YES  QUIZ Operations Management (OM) Components of OM 4V’s of Operations Process analysis Types of OM  What do Planning: Operations managers are Operations responsible for developing strategic plans to achieve organizational goals. This involves Managers do? forecasting demand, setting production targets, and creating schedules to optimize resource utilization. (Agbaje Feyisayo, “Guide to Operations Management”, Wrike.com, August 5, 2024)  CAPACITY PLANNING It is the process of balancing demand for a good or service with the ability of a manufacturer or organization to produce enough to meet demand involves understanding how many items can be produced in a given period based on materials and equipment available The goal of capacity planning in operations management is better and more efficient operations Lauren Remes, “Getting Started with Capacity Planning”, BIGTIME.net, Feb. 3, 2022  CAPACITY PLANNING Ability of a manufacturer or organization to produce enough WHAT IS IT REFERRING TO? CAPACITY More efficient operations WHAT IS EFFICIENCY? Doing something at the lowest possible cost HOW DO YOU MEASURE? * Eff = Actual output / Standard output Note: * from Jacobs & Chase, Operations and Supply Chain, 14th Global Edition, p. 271  MANUFACTURING/PRODUCTION EFFICIENCY Raw materials or resources not converted to good products become scrap material or waste (loss of potential revenue, COST) INPUT EFFICIENCY OUTPUT a. Eff = 100% Products/Goods Raw materials, Machine b. Eff = 85% Order/Requirement capacity, other resources (example) Materials/capacity a. 100M pcs equivalent product = 100M b. 85M pcs pcs 15% becomes scrap/waste  CAPACITY PLANNING - MANUFACTURING/PROJECTS involves understanding how many items can be produced in a given period based on materials and equipment available INPUT PLANNING OUTPUT Management”s “MWB” strategic plan Production target/Volume Forecast/Demand Production schedules (Volume, Seasonality) PROCESS Optimized resource allocation/utilization Existing Capacity Project Management (for (Machines) capacity expansion) Existing resources (RM, Manpower, etc.) Raw Material price trend Lauren Remes, “Getting Started with Capacity Planning”, BIGTIME.net, Feb. 3, 2022  CAPACITY PLANNING - SERVICES trying to optimize their project staffing and resource management to generate as many billable hours as possible while avoiding burning out employees, delaying project delivery or missing revenue targets INPUT PLANNING OUTPUT Adequate staff Corporate Plans ○ W/ appropriate skills Existing Services PROCESS ○ Experienced Existing Staff resources Hiring plan ○ No. of personnel Training plan for new ○ Experience/Skills employees (existing or Expansion Plans expansion) Lauren Remes, “Getting Started with Capacity Planning”, BIGTIME.net, Feb. 3, 2022  CAPACITY PLANNING - 4 STEPS 1. Understand current capacity ○ What projects, using what people do we currently have under management? ○ What extra time do people have to do more work? 2. Project future demand ○ What projects are in our sales pipeline? ○ How certain are they to close and when will they start? ○ What skills will be required for those projects? Lauren Remes, “Getting Started with Capacity Planning”, BIGTIME.net, Feb. 3, 2022  CAPACITY PLANNING - 4 STEPS 3. Identify where additional capacity could come from ○ Can we work extra hours, develop new skills? Should we hire more people? 4. Assess your risks ○ Will people burn out if we load in more work? ○ What happens if we don’t meet demand? ○ Calculate and quantify the risk of lower customer satisfaction if a project can’t start on time, or the cost of hiring and retraining employees if people quit. ○ Get the lost opportunity costs associated with not having capacity to sell your services when demand is high. Lauren Remes, “Getting Started with Capacity Planning”, BIGTIME.net, Feb. 3, 2022  Organizing: Operations managers oversee project management and coordinate the allocation of resources, such as personnel, equipment, and facilities. They design workflows, establish production processes, and implement systems to maximize efficiency. (Agbaje Feyisayo, “Guide to Operations Management”, Wrike.com, August 5, 2024)  ORGANIZING 1. Used for Project Management ○ For expansion of existing manufacturing line ○ Construction of a new manufacturing plant 2. Establishes the task/activities on: ○ Location identification, production layout & process needed ○ Raw material sourcing, purchasing, and delivery to the manufacturing facility ○ Needed requirements for a smooth production process (ex. Equipment, special tools, etc.) ○ Manpower needed, Sales & Marketing plans, Packaging, & Logistics needed (Agbaje Feyisayo, “Guide to Operations Management”, Wrike.com, August 5, 2024)  ORGANIZING 3. Establishes a composite team 4. Utilizes Project Management Tools ○ MS Project ○ Excel (manual creation) ○ Other available PM tools in the market 5. Fixed timetable and budget ○ Target: finish the project within the agreed timetable and within budget (Agbaje Feyisayo, “Guide to Operations Management”, Wrike.com, August 5, 2024)  Problem-solving: Operations managers handle unexpected challenges and obstacles that pop up during daily operations. They figure out what’s causing the issue, come up with solutions, and put them into action to keep everything running smoothly and avoid disruptions. (Agbaje Feyisayo, “Guide to Operations Management”, Wrike.com, August 5, 2024)  Controlling: Operations managers monitor production processes, assess performance against targets (including Financials), and implement corrective actions when necessary. They use key performance indicators (KPIs) to measure productivity, quality, and cost-effectiveness. (Agbaje Feyisayo, “Guide to Operations Management”, Wrike.com, August 5, 2024)  Improving: Operations managers continually seek ways to improve processes and enhance performance. They analyze data, identify bottlenecks, and implement process improvements (Kaizen), such as Lean manufacturing techniques or automation. (Agbaje Feyisayo, “Guide to Operations Management”, Wrike.com, August 5, 2024) JOB ROLE OF OPERATIONS MANAGERS HOW Planning Organizing WILL YO Problem-solving U Controlling Improving DO IT? GAIN EXPERIENCE BY STARTING AT THE BOTTOM!!  NORMAL OPERATIONS Understand the Operation Learn the inputs, process, and outputs Set weekly meetings You must be on TOP of the operations; ALL departments are represented in the meeting Regular morning visit with department managers Regular plant tour with the team  WEEKLY MEETING ROLE PLAYING 1. Read the Instructions and task of each position assigned to the team member 2. Professor to explain each role and expectations from the role 3. Each team to perform 4. Class to reflect and discuss on the performing team  PROCESS MAPPING WHAT IS IT? (Team ASANA, “Guide to Process Mapping”, Asana.com, January 8, 2024)  PROCESS MAP: DEFINITION Process mapping is a technique used to visually map out workflows and processes. It involves creating a process map, also referred to as a flowchart, process flowchart, or workflow diagram The purpose of process mapping is to communicate how a process works in a concise and straightforward way. It allows any team member to be able to easily understand how to complete a given process without lengthy verbal explanations. (Team Asana, “Guide to Process Mapping”, asana.com, January 8, 2024)  HOW TO CREATE? Step 1: Identify a problem or process to map First, determine the process you’d like to map out. Is there an inefficient process that needs improvement? A new process you’d like to concisely communicate to your team? A complex process that employees often have questions about? Identify what you want to map and name it. (Team Asana, “Guide to Process Mapping”, asana.com, January 8, 2024)  HOW TO CREATE? Step 2: List the activities involved Make a list of all the activities involved, as well as who is responsible for each Collaborate with teammates and other stakeholders who will participate in the process so you can accurately account for all of the steps required and determine what level of detail is needed. Make sure you establish where the process begins and ends so you know which tasks should be included to produce the desired result. (Team Asana, “Guide to Process Mapping”, asana.com, January 8, 2024)  HOW TO CREATE? Step 3: Write out the sequence of steps Arrange these activities in the proper sequence, until the full process is represented from beginning to end. This is a good place to check if there are any gaps you may have missed in the previous step. (Team Asana, “Guide to Process Mapping”, asana.com, January 8, 2024)  HOW TO CREATE? Step 4: Draw a flowchart using process mapping symbols Select the appropriate process mapping format and draw out the process, representing the steps with process mapping symbols (Team Asana, “Guide to Process Mapping”, asana.com, January 8, 2024)  HOW TO CREATE? Step 5: Finalize and share the process map Once you’ve finished drawing your process map, review it with other stakeholders involved in the process Make sure everyone understands it and agrees with how the process is mapped Make sure no steps have been left out and there are no redundancies or ambiguities. (Team Asana, “Guide to Process Mapping”, asana.com, January 8, 2024)  HOW TO CREATE? Step 6: Analyze the map to find areas of improvement After you establish that the process map accurately describes the process workflow, analyze to discover ways of improving the process. With the help of feedback from your team, identify where there are bottlenecks and inefficiencies in the process. What steps can be eliminated? Which tasks can be completed more efficiently? After you’ve identified the areas of improvement, take action to fix them and rework the process map to reflect the improvements (Team Asana, “Guide to Process Mapping”, asana.com, January 8, 2024) VIDEO SUMMARY  WHY USE A PROCESS MAP? Identify inefficiencies: Helps you identify bottlenecks, gaps, and other issues in a process flow Simplify ideas: Breaks down complex ideas into smaller steps Increase comprehension: Promotes thorough understanding of a process Plan for contingencies: Allows for contingencies and provides problem-solving guidance (Team Asana, “Guide to Process Mapping”, asana.com, January 8, 2024)  WHY USE A PROCESS MAP? Delegate responsibilities: Coordinates responsibilities between various individuals or entities Create documentation: Provides documentation of the process Communicate clearly: Simplifies communication through a user-friendly, visual format (Team Asana, “Guide to Process Mapping”, asana.com, January 8, 2024)  WHY USE A PROCESS MAP? Make decisions faster: Enables faster decision making due to faster communication Assist employees: Improves employee performance and job satisfaction Meet standards: Helps businesses comply with ISO 9000 and ISO 9001 standards. (Team Asana, “Guide to Process Mapping”, asana.com, January 8, 2024) THANK YOU!! PRELIMS NA!