EM 420EM 420Production and Operations ManagementProduction and Operations Management

Eng. Rodger L. NKUMBWAEng. Rodger L. NKUMBWADept. of Electrical EngineeringDept. of Electrical EngineeringCopperbelt UniversityCopperbelt Universityhttp://www.nkumbwa.weebly.com/

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What is Operations Management?What is Operations Management?

OM is the designdesign, operationoperation, and improvementimprovement of the systems that create and deliver primary products and services.

It is a field of management, and should notnot to be confused with operations research, management science, or industrial engineering.

OM is concerned with the management of the entireentire system.

– Decisions fit into three broad areas:– Strategic (long term)– Tactical (intermediate term)– Operational (short term)

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Why Study Operations Management?Why Study Operations Management?

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DefinitionsDefinitions

AutomationAutomation is a technology concerned with the application of mechanical, electronic, and computer-based systems to reduce the amount of clerical and manual effort in product design, manufacturing planning and control, and the business functions of the firm.

Computer-aided designComputer-aided design (CAD) is the use of computer systems to support the product design functions.

Computer-aided manufacturingComputer-aided manufacturing (CAM) is the use of computer systems to perform functions related to manufacturing engineering.

CAD/CAMCAD/CAM is the integration of CAD and CAM into one. Computer-integrated manufacturingComputer-integrated manufacturing (CIM) combines

CAD/CAM with other business functions.

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Definitions (2)Definitions (2)

Flexible Manufacturing SystemFlexible Manufacturing System (FMS) is an automated, mid-volume, mid-verity, central computer-controlled manufacturing system

Supply chain managementSupply chain management is the term used to describe the management of materials and information across the entire supply chain, from suppliers to component producers to final assemblers to distributors and ultimately to the customers.

– Total Quality ManagementTotal Quality Management (TQM) is management approach that pursues three main objectives:

– achieving customer satisfaction,– continuous improvement, and– encouraging involvement of the entire workforce.

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What are Business Functions?What are Business Functions?

Business functionsBusiness functions are the principal means of communication with the customer. – These functions include:– Design– Marketing– Sales– Forecasting– Cost accounting

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What is a Production System?What is a Production System?

– A production systemproduction system uses resources to transform inputs into desired outputs.

Inputs: raw materials, parts, and customers Resources: labour, equipment, and supplies Outputs: goods, services, and satisfied customers

– Examples of transformation processestransformation processes: Physical – manufacturing Locational – transportation Exchange – retailing Storage – warehousing Physiological – health care Informational – telecommunications

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Goods versus ServicesGoods versus Services

– ServicesServices are intangible processes Location of the service facility and customer interaction

are important

– GoodsGoods are physical outputs of a process Location of the service facility and customer interaction

are not important

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Value-Added ServicesValue-Added Services

– Value-added servicesValue-added services are qualities of a product or service that make a customer’s life easier.

– Commonly grouped into four categories: Information Problem solving Sales support Field support

– Provide two benefits: Differentiate the organization from the competition. Build relationships with customers.

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OM in the Organization ChartOM in the Organization Chart

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Importance of Operations ManagementImportance of Operations Management

– SynergiesSynergies need to exist with other functional areas of the organization.

Sharing between customer service processes, purchasing, distribution, manufacturing, etc.

– Operations account for 60-80%60-80% of the direct expenses that burden a firm’s profit.

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ProductProduct Design

Product design involves both determinations of which products are to be produced and the detailed design of individual products.

– The product design process involves: Identification of need (some deficiency in machine design, adding

more features to existing products, developing new product). Generation of preliminary ideas with respect to technical choices,

materials, etc. Refinement of the product idea. Analysis of best designs from point of view of cost, functional

requirements, manufacturability, etc. Selection of the best design. Creation of a detailed design that provides detailed specifications with

respect to materials, tolerance, etc.

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Manufacturing PlanningManufacturing Planning

– Process planningProcess planning determining the sequence of individual processing and

assembly operations needed to produce the product.

– Master schedulingMaster scheduling a listing of the products to be made, when they are to be

delivered, and in what quantities.

– Requirements planningRequirements planning ensures that all required material and parts are available when

needed.

– Capacity planningCapacity planning ensures that the factory is capable of producing what is required

by its given number of machines and manpower.

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Manufacturing ControlManufacturing Control

– Concerned with managing and controlling physical operations to implement manufacturing plans.

– Shop floor controlShop floor control deals with the problem of monitoring the progress of the

product as it is being processed, assembled, moved, and inspected.

– Inventory controlInventory control is concerned with striking a balance between having too little

inventory (with possible material stock-outs) and the carrying costs of too much inventory.

– Quality controlQuality control ensures that the quality of the product meets the standards

specified by the product design (and customer expectations.

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Business Strategies and Product Life CycleBusiness Strategies and Product Life Cycle

– IntroductionIntroduction Research and product development Process modification Supplier development

– Acceptance and growthAcceptance and growth Forecasting Manufacturing capacity

– MaturityMaturity Production innovation Cost control

– DeclineDecline Reduction and phase-out Transition to new products

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Product Life CycleProduct Life Cycle

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Business Strategies and Product Life Cycles 2..Business Strategies and Product Life Cycles 2..

– First-to-marketFirst-to-market Strong applied research is needed. Set high prices to achieve large short term-profits (focus only on the

introduction and acceptance phases and then license production), or set a lower initial price to secure a high market share.

– Second-to-marketSecond-to-market Imitate successful outputs offered by first-to-market organizations. Learn from their mistakes and offer improved or enhanced versions of

the original products.– Late-to-market (or cost minimization)Late-to-market (or cost minimization)

Wait until a product becomes fairly standardized and is demanded in large volume.

Attempt to compete on the basis of costs. Strong production systems research is needed.

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Significant Operations Management ConceptsSignificant Operations Management Concepts

Just-in-time (JIT) ProductionTotal Quality Control (TQC)Manufacturing StrategyTotal Quality Management (TQM) and

Quality CertificationBusiness Process ReengineeringSupply Chain Management

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Current Issues in Operations ManagementCurrent Issues in Operations Management

Coordinate the relationships between mutually supportive but separate organizations.

Optimizing global supplier, production, and distribution networks.

Increased co-production of goods and services.Managing the customers experience during the

service encounter.Raising the awareness of operations as a

significant competitive weapon.

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Trends in BusinessTrends in Business

– Recent TrendsInternet and e-businessSupply chain management

– Continuing TrendsQuality and process improvementTechnology integrationGlobalizationEnvironmental issuesTime-based competition

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Strategic ManagementStrategic Management Issues

Strategic Management ThinkingStrategic Management Thinking The Strategic Management ProcessThe Strategic Management Process Customer AnalysisCustomer Analysis Competitor AnalysisCompetitor Analysis Strategy FormulationStrategy Formulation ExecutionExecution of Manufacturing strategy

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Wrap up…

““Plans are nothing, planning is everything.”Plans are nothing, planning is everything.”

Dwight D. EisenhowerDwight D. Eisenhower

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