Flashcards
Process and operations management
Cards in this deck (19)
- 1POM is focused ontechniques that limit the incidence and consequence of supply-demand mistmatches
- 2Course outline: first componentBusiness process analysis and improvement - analyze, improve and design internal firm activities
- 3Course outline: second componentSupply chain management - sourcing raw materials and delivering goods
- 4Goals of better POM1. Throughput higher
2. Inventory lower
3. Operational cost lower - 5Main implications of a bottleneck1. You are only as fast as your bottleneck [bn]
2. Mistakes after bn very costly
THERFORE
1. Place auditors before bn
2. Six sigma after - 61. What is throughputThe rate at which the system generates sales/revenue
Production is not revenue
Revenue = min[production, demand] - 72. What is operating expense?The rate at which the system generates costs
- 83. What is inventoryThe level of capital invested in the system
- 9The systemOperating expense = $ going in the system
Inventory = $ sitting in the system
Throughput = $ coming from the system - 10Operational measures as financial measures1. NOPAT = throughput - operating expenses
2. EVA = NOPAT - (WACC x inventory)
3. ROIC = NOPAT/Inventory = (NOPAT/COGS)x(COGS/Inventory) - 11Symptoms of a bottleneckResource with min capacity
Resource which is always busy
Resource with longest wait
Resource with most inventory - 12Improving bottlenecksAny improvement in bn capacity increase system capacity
Lost capacity at bn is lost for the system
Always use bn fully - 13Improving bn'sStrategies
Offload work to non-bn steps (contract out steps)
Create inventory buffer before bn to avoid starving
Quality check before bn
Increase capacity by reducing number of batches - reduces setups - 14Improving inventory managementNeed inventory at bn's
Min inventory and non-bn's
Reduce batch sizes at non-bns
Bn early in the process simplify flow management - 15ID the bnStep1 Step2 Step3 etc
Service time [e.g. minutes/unit]
Capacity [e.g. units/hour]
Bottleneck [which step lowest capacity]
Bottleneck capacity
System capacity [=bn capacity]
Utilization at max capacity [of each step]
Benefit of additional resources [only at bn] - 16What is batchingBatch processes with set up time
E.g. baking cookies more efficient all at once - 17Larger batches leads toCapacity = Q / B + QxP
Larger batches = more capacity
Inventory costs will increase linearly with Q
So increase batch size increases throughput but also increase inventory costs - 18Batch size prescriptionsAt bn steps - use large batch sizes to increase throughput
At non-bn steps use smaller batch sizes and focus on reducing costs - 19Summary approachIdentify the goal
Identify the obstacles to achieve it
Manage the bn's
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- Flashcards on Process and operations management, created by Tom Duncan on 23/05/2015.
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- Tom Duncan
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