OPERTQM mod 1.docx

OPERTQM **MODULE 1**: INTRODUCTION TO OPERATION MANAGEMENT - **Operations management** - science and art of designing, managing, and improving the systems that convert inputs (resources) into outputs (goods or services) in the most efficient and effective way possible. **Key Element...

OPERTQM **MODULE 1**: INTRODUCTION TO OPERATION MANAGEMENT - **Operations management** - science and art of designing, managing, and improving the systems that convert inputs (resources) into outputs (goods or services) in the most efficient and effective way possible. **Key Elements of operations management** 1. **Inputs** - raw materials, labor, equipment, energy, and information 2. **Transformation process** - series of steps that convert inputs into outputs 3. **Outputs** - the finished goods or services delivered to customers 4. **Objectives** -- efficiency, effectiveness, responsiveness, quality and sustainability 5. **Decision areas** -- process design, capacity planning, inventory management , scheduling **Benefits of effective operations management** 1. Reduced costs 2. Improved customer satisfaction 3. Increased competitiveness 4. Enhanced innovation **Crucial role in various industries** 1. Manufacturing 2. Service industries 3. Healthcare 4. Non-profit organizations **3 basic functions of business organization**: 1. Finance 2. Operations 3. Marketing - **Operations Management** is a critical field that has a significant impact on the success of any organization. **Factors** 1. **Production planning and scheduling**: Deciding what to make, when to make it, and how much, while balancing demand and resource limitations. 2. **Supply chain management**: a sequence of organizations their facilities, functions, and activities that are involved in producing and delivering of its product or service. Sourcing materials, managing inventory, and coordinating with suppliers to keep the production line flowing. 3. **Quality control**: Ensuring consistent quality that meets customer expectations and standards. 4. **Process improvement**: Continuously analyzing and optimizing processes to eliminate waste and improve efficiency. 5. **Project management:** Leading and coordinating teams to deliver projects on time and within budget. - Operations Management and Supply Chain are intrinsically linked. - **Supply Chain** -- sequence of organizations -- facilities, functions, and activities that are involved in producing and delivering of goods and services - to ensure that the desired outs are obtained (storing, transporting, repairing) - Goods and services -- occur jointly - The essence of operations is to add value during the transformation process. - "**Value-Added**" is the difference between the costs of inputs and price of outputs **Production of Goods versus Providing Services** Typical differences between production of goods and provision of services: - Output - Degree of customer contact - Labor content of jobs - Uniformity of inputs - - Measurement of productivity - Quality Assurance - Inventory - Wages - Ability to patent **Similarities** 1. Value Creation 2. Resource Needs or forecasting and capacity planning to match supply and demand 3. Process Focus & Management 4. Managing variations 5. Monitoring and controlling of costs and productivity 6. Supply chain management 7. Location planning, inventory management, quality control and scheduling 8. Customer Satisfaction **Differences** 1. Tangibility 2. Storage and inventory 3. Customization and variability 4. Customer interaction 5. Productivity measurement **Cont'd: Why Learn About Operations Management** 1. **Systems Thinking:** OM equips you with the ability to see the big picture and understand how different parts of an organization interconnect 2. **Problem-Solving Skills:** OM teaches you to identify and address challenges in operational processes. 3. **Data Analysis**: In today\'s data-driven world, understanding how to interpret and utilize data is crucial. OM teaches you essential data analysis skills, including forecasting, inventory management, and quality control. 4. **Leadership and Teamwork:** Effective leadership and teamwork are fundamental to any successful organization. OM provides opportunities to develop these skills through project management, team coordination, and communication strategies. 5. **Career Opportunities:** Understanding OM opens doors to a wide range of exciting career paths. **Career Opportunities in Operations Management** **Traditional Roles:** 1. **Production Planner:** Orchestrate production schedules, manage inventory, and ensure smooth flow of materials through the production process. 2. **Supply Chain Manager:** Oversee the network of suppliers, distributors, and transportation providers, ensuring efficient and cost-effective delivery of goods. 3. **Project Manager:** Plan, execute, and control projects within budget and timeframe, leading teams and coordinating resources. 4. **Quality Control Manager**: Implement and monitor quality control measures, ensuring consistency and adherence to standards throughout the production process. 5. **Operations Analyst**: Gather and analyze data to identify areas for improvement in operational efficiency, cost reduction, and process optimization. 6. **Inventory Control Specialist**: Manage inventory levels to minimize costs while ensuring sufficient stock to meet demand. 7. **Logistics Coordinator**: Optimize transportation routes and scheduling, ensuring timely and cost effective delivery of goods **Professional Societies:** 1. **APICS (American Production and Inventory Control Society):** The world\'s largest professional society for supply chain and operations management, offering certifications, resources, and networking opportunities. 2. **The Production and Operations Management Society (POMS):** A leading academic society focused on research and advancement of knowledge in operations management, providing publications, conferences, and webinars. 3. **American Society for Quality (ASQ):** Dedicated to promoting quality principles and practices, offering certifications, training programs, and networking opportunities for quality professionals. 4. **Institute for Supply Chain Management (ISCM):** Focuses on advancing supply chain management knowledge and practices, offering certifications, research, and networking opportunities. **Emerging Roles:** roles are often driven by new technologies, changing customer demands, and globalization 1. **Data Scientist in Operations Data Analysts:** Utilize data analytics and machine learning to improve forecasting, optimize processes, and predict potential challenges. 2. **Sustainability Manager:** Integrate sustainability principles into operational processes, minimizing environmental impact and promoting resource efficiency. 3. **E-commerce Operations Manager:** Oversee the online fulfillment process, ensuring seamless customer experience from order placement to delivery. 4. **Operations Consultant or Supply Chain Optimization Specialist:** Provide expert advice and solutions to organizations looking to improve their operational efficiency, supply chain management, and overall performance. 5. **Robotics Process Automation (RPA) Specialist:** develops and implements RPA solutions to automate routine tasks. **OM offers valuable knowledge and skills that empower to:** 1. Understand how organizations function and create value. 2. Analyze and solve complex operational problems. 3. Make data-driven decisions for continuous improvement. 4. Lead and collaborate effectively within teams. 5. Pursue diverse and rewarding career opportunities. - **Process** -- one or more actions that transforms inputs into outputs - **\"Process management\"** is a broad term encompassing various methodologies and techniques used to analyze, design, implement, and continuously improve the processes that organizations use to accomplish their goals. **Key aspects of process management** 1. **Process identification and analysis:** Mapping out the existing processes, understanding their steps, and identifying areas for improvement 2. **Process design and optimization:** Streamlining processes to eliminate waste, reduce errors, and increase efficiency. 3. **Process implementation and control: Putting** the improved process into action, monitoring its performance, and making adjustments as needed. 4. **Continuous improvement**: Regularly evaluating and refining processes to ensure they remain effective and adaptable to changing needs **3 categories of process management** 1. **Upper-management processes** -- govern the operation of the entire organization 2. **Operational process** -- core processes that make up the value team (purchasing, production, mktg, sales) 3. **Supporting processes** -- support the core processes (Acctg, HR, IT) **2 major aspects of process management:** 1. Managing a process to meet demand -- output matches demand 2. Process Variation **4 basic sources of variations:** 1. The variety of goods or services being offered -- the greater the variety of goods the greater variation in production or service requirements 2. Structural variation in demand -- these are variations that includes trends and seasonal variations 3. random variation -- natural variability is present to some extent in all processes that cannot generally influence by the managers 4. Assignable variation -- variations are caused by defective inputs, incorrect work methods, out of adjustment equipment, etc. **Benefits of Process Management** 1. Increased efficiency and productivity 2. Improved quality and consistency: 3. Enhanced customer satisfaction 4. Greater responsiveness and agility 5. Reduced risk and improved compliance **The Scope of Operations Management** 1. Product and service design 2. Process selection 3. Selection and management of technology 4. Design of work systems 5. Location planning 6. Facilities planning, 7. Quality improvement - **System Design** -- involves decisions that relate to system capacity, the geographic location of facilities, the arrangement of departments and the placement of equipment within physical structures, product and service planning and acquisition of the equipment (typically strategic decisions) - **System Operations** -- involves management of personnel, inventory planning, and controlling, scheduling, project management, and quality assurance. **Primary function** -- guide the system by decision making 1. Tactical 2. Operational 3. Measurement and control **Support functions:** 1. Purchasing -- procurement 2. Industrial engineering -- schedule 3. Distribution -- logistics 4. Maintenance -- responsible for general upkeep and the repair of equipment - **Operations Manager** -- key figure in the system 1. **Lean Operations:** A methodology focused on eliminating waste and optimizing value in both goods and service production. 2. **Service Operations Management**: Understanding the unique challenges of managing intangible offerings like healthcare, education, and consulting services. 3. **Global Operations Management:** Navigating the complexities of operating across different cultures, legal systems, and geographical boundaries. 4. **Sustainability in Operations:** Integrating environmental and social responsibility into operational processes to minimize environmental impact and promote resource efficiency. 5. **Digital Operations Transformation**: Leveraging technology and data analytics to drive automation, improve decision-making, and create new business models. **Operations management and decision making** - OM provides the framework and tools for analyzing situations, evaluating options, and choosing the best course of action to achieve operational goals. **How OM informs decision-making:** 1. **Data Analysis:** OM provides robust data about processes, inventory, costs, and customer trends. This data informs decisions about resource allocation, production scheduling, and capacity planning, and pricing strategies. 2. **Modeling and Simulation**: OM utilizes various models and simulations to predict the outcomes of different decisions. This helps assess risks, compare scenarios, and make informed choices with greater certainty 3. **Process Optimization**: OM focuses on streamlining processes to eliminate waste and inefficiencies. By understanding the flow of operations, decision-makers can identify areas for improvement and implement changes that optimize outcomes. 4. **Risk Management:** OM helps identify and mitigate potential risks in the supply chain, production process, and other operational areas. This allows for proactive decision-making to minimize disruptions and ensure smooth operations **Types of decisions facilitated by OM** 1. **Strategic Decisions**: Long-term choices about facility location, technology investments, outsourcing, and new product development. OM provides data and analysis to support these strategic choices. 2. **Tactical Decisions:** Shorter-term decisions about production scheduling, inventory management, workforce allocation, and quality control. OM offers tools and models to optimize these tactical decisions in real-time. 3. **Operational Decisions**: Day-to-day choices about routing orders, managing machine downtime, resolving production issues, and handling customer inquiries. OM empowers staff to make quick and informed decisions at the operational level. - **Model** -- an abstraction of reality , a simplified representation of something 1. Physical models -- look like their real --life counterparts 2. Schematic models -- more abstract that physical counterpart. Less resemblance to physical reality 3. Mathematical Models -- do not look like at all like their real life counterparts (numbers, formula, symbols) 1. How it is used to generate results 2. How are the results interpreted and used 3. Assumptions and limitations 1. Easy to use and less expensive 2. Requires users to organize and sometimes quantify information , and in the process, often indicate areas where traditional information is needed 3. Increase understanding of the problem 4. Enable managers to analyze what --if questions 5. Serve as consistent tool for evaluation and standardized format for analyzing problems 6. Enable users to bring the power of mathematics to bear n a problem **Limitations:** 1. Quantitative information may be emphasized at the expense of qualitative information - embody an attempt to obtain mathematically optimal solutions to managerial problems 2. Models may be incorrectly applied and the results misinterpreted. - Managers use metrics to manage and control operations. -- related to profits, costs, quality, productivity, flexibility, assets, inventories, schedules and forecast accuracy. 3. The use of models does not guarantee good decisions. - **analysis of trade-offs** (listing the pros and cons) 4. **Degree of customization** - Impact goes beyond operations and supply chains. It affects marketing, sales, and accounting, finance and information systems. 5. **A systems perspective** - A system can be defined as a set of interrelated parts that must work together. 6. **Establishing priorities** - like Pareto phenomenon -- a few factors account for a high percentage of the occurrence of some events(s) **Challenges in OM decision-making** 1. **Uncertainty and Volatility**: Market fluctuations, supply chain disruptions, and unexpected events can complicate accurate forecasting and decision-making. OM emphasizes agility and adaptability to cope with such uncertainties. 2. **Cost-Benefit Analysis:** Balancing short-term costs with long-term benefits can be challenging. OM models and simulations help evaluate trade-offs and determine the most cost-effective course of action 3. **Data Overload:** With vast amounts of data available, it can be difficult to identify and analyze the most relevant information. OM tools and techniques help extract key insights and optimize data-driven decision-making. **Building effective decision-making skills in OM** 1. Quantitative Analysis 2. Critical Thinking 3. Problem-Solving 4. Communication **Historical Evolution of OM** **Pre-Industrial Revolution (Before 18th Century)** 1. **Craft Production:** Operations were primarily manual and craft-based. Skilled artisans produced goods by hand, often working independently or in small groups. This period was characterized by low productivity and high variability in quality. 2. **Agricultural Economy**: The focus was more on agricultural production, with limited operations management in manufacturing. **Industrial Revolution (Late 18th to Early 19th Century)** 1. **Mass Production:** The Industrial Revolution marked a shift from hand production to machine-based manufacturing. The introduction of steam engines and mechanization revolutionized production processes. 2. **Factory System:** Factories became the centers of production, with workers performing specialized tasks. The concept of the assembly line emerged, significantly increasing efficiency and output. 3. **Scientific Management (Taylorism):** Frederick Winslow Taylor introduced principles of scientific management, emphasizing efficiency, standardization, and time studies to optimize labor productivity. **Early 20th Century** 1. **Fordism:** Henry Ford implemented assembly line production, revolutionizing mass production with the Model T. This approach reduced costs and made products more affordable. 2. **Quality Control:** The early 20th century also saw the development of statistical quality control, pioneered by Walter Shewhart. This laid the foundation for modern quality management practices. **Mid-20th Century** 1. **Operations Research:** During World War II, operations research emerged as a discipline to improve military logistics and resource allocation. After the war, these techniques were applied to business operations. 2. **Lean Manufacturing:** Post-war Japan, particularly Toyota, developed the Toyota Production System (TPS), which introduced lean manufacturing principles like Just-In-Time (JIT) production, waste reduction, and continuous improvement (Kaizen). **Late 20th Century** 1. **Total Quality Management (TQM):** In the 1980s and 1990s, TQM became a dominant philosophy, emphasizing customer satisfaction, continuous improvement, and employee involvement. 2. **Globalization:** As companies expanded globally, operations management had to adapt to managing complex supply chains across multiple countries. 3. **Information Technology:** The advent of computers and information systems revolutionized operations, enabling better planning, scheduling, and inventory management. **21st Century** 1. **Supply Chain Management (SCM):** The focus shifted to managing entire supply chains, from raw materials to end customers. SCM integrates operations management with logistics, procurement, and distribution. 2. **Sustainability and CSR**: Modern operations management increasingly considers sustainability, ethical practices, and corporate social responsibility (CSR) in decision-making. 3. **Industry 4.0:** The integration of digital technologies, such as the Internet of Things (IoT), artificial intelligence (AI), and big data analytics, is transforming operations management into a more connected and intelligent system. **Current Trends** 1. **Agile and Flexible Operations:** In response to rapidly changing markets, businesses are adopting agile methodologies to increase flexibility and responsiveness. 2. **Digital Transformation**: The ongoing digital transformation is leading to smarter factories, autonomous systems, and real-time data-driven decision-making.