Operations Management Lecture Notes PDF

Module 1 Lesson 1.1- Operations and Productivity Lesson 1.2- Forecasting Lesson 1.1: Operations and Productivity Learning Outcome: 1. Define operations management 2. Understand the contribution of some people in OM’s history 3. Explain the distinction between goods and services 4. Compute s...

Module 1 Lesson 1.1- Operations and Productivity Lesson 1.2- Forecasting Lesson 1.1: Operations and Productivity Learning Outcome: 1. Define operations management 2. Understand the contribution of some people in OM’s history 3. Explain the distinction between goods and services 4. Compute single-factor productivity and multifactor productivity Motivation Question Is operations management just about production? What do you think about: The more we produce, the better our performance? Operations Management According to Heizer, Render and Munson (2017), Operations Management (OM) is the set of activities that creates value in the form of goods and services by transforming inputs into outputs. Value relative worth, utility, or importance (Merriam Websters.com) how useful or important something is (dictionaroy.cambridge.org) Creating---Communicating----Delivering  VALUE Innovation and Product Development  Operations management is more than just production, which is about creating goods and services. OM include organizing work, selecting methods, arranging layouts, and measuring performance. SERVICES https://www.cnbc.com/2024/07/19/microsoft-says-it-restored-cloud-services-after-they-suffered-outage.html  Whether it is a department, a restaurant, an online class, or a factory, OM techniques can be applied to different kinds of productive enterprises. It is also important to remember the need to be effective and efficient in OM.  EFFICIENT Efficiency refers to the ability to accomplish a task with the least amount of resources, time, or effort. It’s about doing things in a way that maximizes productivity and minimizes waste. What is the most efficient way of doing this?  Being efficient: How to maximize 24 hours? Some strategies to be efficient: Process optimization Lean Management: Implementing lean principles to eliminate waste (e.g., excess inventory, redundant processes) and streamline operations. Process Mapping: Analyzing and mapping out workflows to identify bottlenecks or inefficiencies, then reengineering these processes for better flow and productivity. Some strategies to be efficient: Technology Integration Enterprise Resource Planning (ERP): Implementing ERP systems to integrate all facets of an operation, from supply chain management to human resources, ensuring seamless communication and data flow. Data Analytics: Leveraging data analytics to gain insights into operational performance, predict trends, and make informed decisions. OM as the Core According to Russell and Taylor (2011), the operations is the technical core or hub of the organization because they interact with the other functional areas in an organization.  1. OM is one of three primary functions of any organization; we want to study how people organize themselves for productive enterprise 2. We want (and need) to know how goods and services are produced 3. We want to understand what operations managers do 4. OM is such a costly part of an organization  Outside the organization, the operations department is also responsible for building relationships with suppliers, communicating production, certifying the quality, and negotiating for a contract  Thus, to become good managers in the future, we must study operations management. Theories Practice The Supply Chain A supply chain is a global network of organizations and activities that supply a firm with goods and services (Heizer et al., 2017). Each company's expertise is helpful when members of a supply chain collaborate to achieve customer satisfaction. Nescafe in Cavite Chicken Calamansi Value Chain Inputs Company Customers Crowdstrike Microsoft Customers??? The outage has affected consumers and businesses across the globe, including airlines, banks, health care providers, telecoms, retailers and even billboards in New York City's Times Square. The blue screens were visible on computer screens at multiple airports Friday, according to images shared on social media. https://www.cbsnews.com/news/microsoft-crowdstrike-outage-blue-screen-of-death-how-to-fix/  Businesses have been trying to make their supply chain competitive as a whole. Together, companies have been working to offer something of value to customers while reducing overall costs. The cutting-edge businesses realized that the competition is not between companies but rather, between supply chains (Christopher, 2005). Let’s appreciate the agribusiness sectors: INPUT PRODUCTION PROCESSING MARKETING SUPPORT Strategic Operations Management Strategic Management + Operations Management Designing of goods and services Managing quality Process and capacity design Location strategy The Heritage of OM Traditional Modern https://www.delmontephil.com/about-us/at-a-glance DMPI operates a fully-integrated pineapple operation with its 30,000-hectare pineapple plantation in Bukidnon, Philippines, and a factory that is about an hour away from the plantation. It also operates a frozen fruit processing facility in Bukidnon and a beverage bottling plant in Cabuyao, Laguna.  Operations management will continue to grow and progress, incorporating other concepts from other disciplines to improve decision-making. Goods vs. Services Throughout your life, how many products and services have you consumed? As you may have experienced, there are those tangible products you have bought from the store like ballpen or notebook and the food! On the other hand, you may have enjoyed consuming intangible products such as your haircut or your mani-pedi. Service Goods  However, you may not have noticed that you have been enjoying a mix of service and a good. The Tangibility- Intangibility continuum shows that offerings we have consumed could be a mix of a tangible and an intangible element (Fig.4). Productivity, Social Responsibility and Challenges I’m wondering. What did you do today? Were you just sleeping? Or maybe playing ML? or perhaps helping your parents in farming? Or did you do the laundry and other chores? I am asking you these because I am curious if you were able to have a productive day. Productivity is the ratio of outputs (goods and services) divided by the inputs (resources such as labor and capital).  Our objective must be to improve our productivity (Heizer, et al., 2017). As you can see in the figure below, there can be different types of measuring productivity: Single-factor productivity and multifactor productivity.  Multi-factor productivity =200,000/ (10,000*250) + (5000*150) + 500,000 + 300,000 = 0.049  Labor Productivity Company A: 20 units/ hour Company B: 30 units/ hour Your company: 10 units/ hour Output= 240 crates Measurement problems Measurement Problems. In actuality, computing for productivity can be hard because of measurement problems. 1. Quality- may change from time to time. How should we be consistent? 2. External elements-may affect our overall productivity (e.g., rules, technology, suppliers) 3. Precise units of measure- there is a challenge in accurately measuring units. QUALITY EXTERNAL MEASUREMENT PRECISION Operational Indicators  According to Heizer, et al., (2017), our challenge is to maintain and enhance skills despite the ever-changing technology and knowledge. Social responsibility and sustainability As we grow towards a high-technology and ever-wise society, we can also observe that there has also been an increase in the market's products. We may think that producing a lot is good because of the profits.  Social responsibility- means that businesses must act in a way that would benefit society (Ganti, 2020). To clarify, even though companies need to maximize shareholders' wealth, they should also be careful about the impacts of their actions. Sustainability- focuses on meeting the needs of the present without compromising the ability of future generations to meet their needs (Grant, 2020) Environmental issues Air pollution- carbon dioxide emissions Deforestation Plastic pollution Social issues Gender inequality Child labor Social responsibility and Sustainability Water hyacinth  Thus, as operations managers, you need to commit to having a mindset geared towards social responsibility and sustainability, such as: - The need to develop and produce safe, high-quality green products - The obligation to train, retrain, and motivate employees in a safe workplace - The duty to fulfill stakeholders' commitments As operation managers, you should still have that commitment despite the challenges. Some challenges in OM ▶ Globalization- The global market increases the number of competitors. How would your supply chain compete against others? ▶ Supply-chain partnering- How fast and accurate are you able to communicate with your suppliers and your other supply chain partners? ▶ Sustainability- Can you sustain your operations, and are you socially responsible? Management It is crucial to be able to take advantage of your available resources, such as technology, knowledge, and capital.  There were various concepts introduced in this lesson. What's necessary is that you become familiar with these concepts as we venture deeper into operations management.