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  1. 1Objectives of COO1. Alignment of operations with strategy, 2.The analysis and improvement of existing processes, 3. The development of new processes, 4. The planning and control of these processes
  2. 2OM defined“Operations management is the activity of managing the full resources which are devoted to the production and delivery of products and services.”
  3. 3Three basic functions of enterprises1. Marketing
    2. Products & Services Development
    3. Operations
  4. 4Operations Input Resources and OutputsOperations Input Resources and Outputs
  5. 5Operations can be analyzed at 3 levels1. Level of the supply network - Flow between operations
    2. Level of the operation - Flow between processes
    3. Level of the process - Flow between resources
  6. 63 Levels of Operations (Cont.)Operations management is concerned with the flow of transformed resources between operations, processes, where External operations interact with internal processes to form the external supply network. Processes form an internal ‘supply network’ and become each others customers and suppliers.
  7. 7A typology of operations and processes (4 Vs)Volume
    Variety
    Visibility
    Variation in demand
  8. 8How Operations Management is different from Operations Strategy?How Operations Management is different from Operations Strategy?
  9. 9The 4 stage model of operations contribution - Hayes and WheelwrightThe 4 stage model of operations contribution - Hayes and Wheelwright
  10. 10Perspectives on Operations StrategiesTop down perspective: What the business wants operations to do (Corporate Level Strategy, Business Strategy, Functional Strategy)
    Bottom- up perspective: What day-to-day experience suggests operations should do (Emergent strategies)
    Market requirements perspective: What the market position requires operations to do (Product/Industry Lifecycle)
    Operations resources perspective: What operations resources can do (Resources based view)
  11. 115 operations performance objectives and the benefits of excelling at the 5 Objectives5 operations performance objectives and the benefits of excelling at the 5 Objectives
  12. 12What is designed in a product or service?A concept
    A package
    A process
  13. 135 stages of product/service design1. Concept generation
    2. Concept screening
    3. Preliminary design
    4. Evaluation and improvement
    5. Prototyping and final design
  14. 14Concept Screening (Broad categories of evaluation criteria for assessing conceptsThe criteria for screening concepts)1. Feasibility- How difficult is it? – What investment both managerial and financial will be needed?
    2.Acceptability- how worthwile is it? – What return in terms of benefits to the operation will it give?
    3. Vulnerability – What could go wrong? – What risks do we run if things go wrong?
    Overall EVALUATION of the concept
  15. 15Process DesignThere are different process types, Process types are defined by the volume and the variety of items they process, Process types go by different names depending on whether they produce products or services (depending on 4Vs)
    - Manufacturing Process Type
    - Service Process Type
  16. 16The natural diagonalThe natural diagonal
  17. 17Definitions: Throughput Time, Throughput rate, Work in progress, Littles LawThroughput time – The time you need to go through the whole process
    Throughput rate – Number of units passing through the process per unit of time
    Work in progress = The number of units in the process
    Little’s Law: Throughput (TH)= Work in Process (WIP) x Cycle Time (CT)
  18. 18Capacity ManagementCapacity Management = Capacity is in the static, physical sense means the scale of an operation, but this may not reflect the operation’s processing capability
    So we must incorporate a time dimension appropriate to the use of assets (5 per day)
  19. 19Key input to capacity management - Demand Forecasting - Forecast ComponentsBase demand – Normal consumption Events – Promotions, Competitors Promotions, Hot weather
    Trend – Market Growth
    Random variation – Natural variation
    Seasonality – Summer, Christmas, etc.
  20. 20How do you cope with variations in demand ?1.Absorb D. (Level capacity)
    2.Adjust output to match D. (Chase D.)
    3.Change D. (D. Management)    How do you cope with variations in demand ?
  21. 21Absorb Demand (Level Capacity)Absorb Demand > Keep Output level > Make customer wait, Keep output level > Have excess capacity, Make to stock: Part finished, Queues (Mme Taussauds), Finished goods, Backlogs, Customer Inventory
    Disadvantage: Inventory Costs, you cannot follow trend because you don’t have enough excess to fill demand
    Advantage: capacity is used more efficiently
  22. 22Adjust output to match demand (Chase demand)Adjust output to match demand (Chase demand): Hire – Fire, Temporary labour – Lay-off, Overtime – Short time, Subcontract – 3rd party workers
    Disadvantage: constantly have to adapt process (Adjustment Costs/Flexibility Costs), exact forecasting needed otherwise you will have over/undercapacity
    Advantage: decrease inventory costs, capacity issues
  23. 23Change Demand (Demand Management)Change demand (Demand Management)
    • Change pattern of demand (Give discounts, promotions, advertisement, Events such as Mothersday, Halloween etc.)
    • Develop alternative products and/or services (Postcards, Chocolate for Halloween)
  24. 24Inventory Management (Pros & Cons of holding inventory)Inventory Management (Pros & Cons of holding inventory)
  25. 25Inventory CostsInventory Costs
  26. 26Economic Order QuantityEconomic Order Quantity
  27. 27When to order (Continuous System)When to order (Continuous System)
  28. 28When to order (Periodic System)When to order (Periodic System)
  29. 29Conclusion Inventory ManagementTrade-off between holding cost and ordering cost – Watch out for stock-out !
    – Complex! Not one product, but 100s or 1000s of products! (see case)
  30. 30Planning & ControlPlanning & Control
  31. 31The core mechanics of planning & controlLoading -How much to do?
    Prioritisation and sequencing – In what order to do things?
    Monitoring & Control – Are activities going to plan?
    Scheduling – When to do things?
  32. 32LoadingLoading
  33. 33SequencingSequencing
  34. 34SchedulingScheduling
  35. 35Theory of ConstraintsTheory of Constraints
  36. 36Monitoring & ControlMonitoring & Control
  37. 37MRP > MRP II > ERP > CCEMRP > MRP II > ERP > CCE
  38. 38Supply Chain ManagementSupply chain management is the management of the interconnection of organisations that relate to each other through upstream and downstream linkages between the processes that produce value to the ultimate consumer in the form of products and services’.
  39. 39How to reduce Bullwhip effect ?How to reduce Bullwhip effect ?
  40. 40Conclusion: SCMConclusion: SCM
  41. 41Improvement1. Quality
    2. Lean
    3. Improvement
  42. 42Quality CharacteristicsQuality Characteristics
  43. 43Perceived Qualityis governed by the Gap between customers’ expectations and their perceptions of the product or servicePerceived Quality
  44. 44A GAP Model of Quality The perception – expectation GAPA GAP Model of Quality The perception – expectation GAP
  45. 45Total Quality Management (TQM) Quality Inspection Quality Control* Quality Assurance TQMTotal Quality Management (TQM) Quality Inspection Quality Control* Quality Assurance TQM
  46. 46*Process Control ChartingIf we understand the normal distribution which describes random variation when the process is operating normally then we can use the distribution to draw the control limits.In this case the final point is very likely to be caused by an ‘assignable’ cause, ie. the process is likely to be out of control*Process Control Charting
  47. 47The internal customer-supplier concept involves understanding the relationship between processesBetween each process, the requirements of the customer process must be understood and met by the supplier processThe internal customer-supplier concept involves understanding the relationship between processes
  48. 48TQMTQM
  49. 494 Broad approaches for managing improvement4 Broad approaches for managing improvement
  50. 50Some of the elements of improvement approachesSome of the elements of improvement approaches
  51. 51The Drum, Buffer, Rope Conceptcomes from the theory of constraints: Bottleneck in process should be the control point of whole process
    Drum= Bottleneck activity (sets the beat)
    Buffer= Inventory (in front of Drum) - make sure it has always sth to work on
    Rope= Communication rope controls prior activities
  52. 52Pareto Law80/20 Rule - ABC Analysis
    a - 80%
    b - 15%
    c - 5%
  53. 53Business Process ReeingineeringBPR = advocates reorganizing processes to reflect the natural processes that fulfill customer needs
  54. 54Two Improvement CyclesThe plan-do-check-act, or “Deming” improvement cycle,
    and the define-measure-analyse-improve-control, or DMAIC six sigma improvement cycle
  55. 55DMAIC CycleDefine- identify problem, define requirements and set the goal
    Measure- gather data, refine problem and measure inputs and outputs
    Analyse- develop problem hypotheses, identify root causes and validate hypotheses
    Improve - develop improvement ideas, test, establish solution and measure results
    Control - establish performance standards and deal with any problems
  56. 56Tools DMAICDevelop -
    Measure - Process Mapping
    Analyse -
    Improve - Input/Output Analysis; Flow Chart/process Mapping; Scatter diagrams; Cause-effect diagrams(Fishbone,Ishikawa) , Pareto diagrams; Why-why analysis
    Control -
  57. 57Lean1. Eliminate Waste
    2. Involve Everyone
    3. Continous imrpovement
  58. 587 Wasters (Muda) Activities that consume time, resources and space, but do not contribute to satisfying customer needs7 Wasters (Muda) Activities that consume time, resources and space, but do not contribute to satisfying customer needs
  59. 59Value Stream Mapping‘Value stream’ mapping focuses on value-adding activities and distinguishes between value-adding and non-value- adding activities. It is similar to process mapping but is different in four ways:
    – It uses a broader range of information than most process maps.
    – It is usually at a higher level (5–10 activities) than most process maps. – It often has a wider scope, frequently spanning the whole
    supply chain.
    – It can be used to identify where to focus future improvement
    activities.
  60. 60Lean SynchronizationMany of the concepts in Lean are about workflow design and management
    • Focus on making things only in response to customer demand
    – Low inventory
    – Single Piece flow
    – Kanban
  61. 61Problem with inventoryReduce the level of inventory (water) to reveal the operations’ problems
  62. 62Single Piece Flow• Traffic lights – typical batch processing
    – Flow of traffic in batches may cause uneven loads of traffic – traffic may jam on one side while no vehicle come from other directions.
    • Roundabout – single-piece flow
    – Traffic flows as soon as there is capacity in the roundabout piece by piece.
  63. 63KanbanKan Ban literally means = Sign Board; Kanban is used to control flow along a process; Production is pulled through the process as needed; One unit to the next; Items made only when needed for the next step; Avoids build up of WIP inventory
  64. 64Low inventoryDelivering smaller quantities more often can reduce inventory levels
    Large Machines: Conventional Western approach is to purchase large machines to get “economies of scale”. These often have long, complex set-ups, and make big batches quickly creating “waste”.
    Small Machines: Using several small machines rather than one large one allows simultaneous processing, is more robust and is more flexible.....
  65. 65Conclusion LeanLean is an operations Strategy and not just a tool for improvement - Can be applied ANY Operation
    • Quality, Lean and Improvement overlap
    • Applicable everywhere – not just in businesses which make
    products
    • Quality and Lean are Operations Strategies or Philosophies
    • Improvement is more of an attitude
    • They share tools and techniques
    • Focus on the intention:
    • Exceed Customer expectations
    • Always seek to get better
    • Eliminate waste

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Karteikarten am OM, erstellt von Neusser Meppi am 27/04/2015.
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