CEMBA/CEMPA 557 PRODUCTION & OPERATIONS MANAGEMENT

ISSUESy ABUBAKARI YAKUBU y QUIZZES y EXAMS y ANY OTHER ISSUES : y RULES OF ENGAGEMENT

LECTURE ONE BLOCKS ONE & TWOy Block 1 Issues in POM y Issues in POM an Overview y Production System: Issues & Environment y Total Quality Management y Block 2 Forecasting y Need & Importance of Forecasting y Qualitative methods of Forecasting y Quantitative methods of Forecasting

Unit 1 Production and Operations Mgt: An Overview

Definitiony Operations management is the process of obtaining and utilising resources to produce useful goods and services so as to meet the goals of the organisation

Significant Sig ifica t Ev nts in O

Figure 1.3

Contributions FromHuman factors Industrial engineering Management science Biological science Physical sciences Information science

New Challenges in OMFromLocal or national focus Batch shipments Low bid purchasing Lengthy product development Standard products Job specialization

ToGlobal focus Just-inJust-in-time Supply chain partnering Rapid product development, alliances Mass customization Empowered employees, teams

Characteristics of GoodsTangible product Consistent product definition Production usually separate from consumption Can be inventoried Low customer interaction

Characteristics of ServiceIntangible product Produced and consumed at same time Often unique High customer interaction Inconsistent product definition Often knowledge-based knowledgeFrequently dispersed

Goods Versus ServicesAttributes of Goods (Tangible Product) Can be resold Can be inventoried Some aspects of quality measurable Selling is distinct from production Product is transportable Site of facility important for cost Often easy to automate Revenue generated primarily from tangible product Attributes of Services (Intangible Product) Reselling unusual Difficult to inventory Quality difficult to measure Selling is part of service Provider, not product, is often transportable Site of facility important for customer contact Often difficult to automate Revenue generated primarily from the intangible serviceTable 1.3

How is Operations relevant to my work or area of expertise?y Accounting

understand the fundamentals of operations management. y Information y IT is a tool, and there s no better Technology place to apply it than in operations. y Management y We use so many things you learn in operations management scheduling, lean production, decision theory, materials management and lots of quality tools.

y As an auditor you must

How is Operations Relevant to my Major? (cont)y Economics

y It s all about processes. I live by

y Marketing

y Finance

flowcharts and Pareto analysis. y How can you do a good job marketing a product if you re unsure of its quality or delivery status? y Most of our capital budgeting requests are from operations, and most of our cost savings, too.

Scope and Significancey The name of production management was changed to

operations mgt as a result of the need to encompass the rapidly expanding service sector y Operations mgt can be described as mgt of manufacturing and services y Some of the functional sub areas have achieved great importance that they are being explored as distinct subjects of study eg quality mgt, technology mgt, project mgt and ergonomics.

Productivity ChallengeProductivity is the ratio of outputs (goods and services) divided by the inputs (resources such as labor and capital) The objective is to improve this measure of efficiencyImportant Note! Production is a measure of output only and not a measure of efficiency

Productive Use of resourcesy Operations personnel should make maximum use of

resources at their disposal y Input=Output+Waste y There are two approaches for enhancing productivity a. Increasing productivity Productivity=Output/Input The ratio can be improved in various ways 1. Increasing output while keeping inputs constant 2. Decreasing inputs while keeping output constant 3. Increasing output in greater proportion than increase in input

Productive Use of resourcesb. Decreasing wastivity Reduction of waste or scrap is another way of enhancing productivity One way of reducing waste is to minimize the generation of waste The emphasis is shifting to tacking the problem at the source of the generation of the waste rather than dealing with the waste

Environmental Concerns of Operationsy Operations management has impacted negatively to

the environment (comments ) y As a result of the increase of production, the environment has been damaged to an extent that the ozone layer is threatened y Various laws have been enacted to control the following pollutants- solid waste, liquid waste, atmospheric waste and noise pollution

Social Concerns of Operationsy Operations mgt can rightly pride itself for being in the

vanguard of material progress y It has made life more comfortable and enjoyable y Industrialisation has created the need and awareness of knowledge and information

Intoduction

Role of Production Mgty Production mgt is concerned with proper mgt and

utilisation of enterprise resources required to produce goods and service y In this competitive environment organisations are compelled to develop strategy which will make them competitive y For achieving this the functional level strategies shd contribute to the coherent strategy of the organisation

The reactive role of production/operations mgty Many companies fail to embrace operations mgt in

their strategy formulation as a result of the following: 1. The production /operations mgr should have the ability to handle the strategic aspects of production/operations mgt consistently 2. Production/operations mgrs rely more on verbal communication and have little interest in written words 3. The production/operations mgrs has the tendency to view themselves as holding a reactive corporate brief

The reactive role of production/operations mgt (Cont).y Companies also view the role of production/operations

mgt as a short term and reactive to and do not stress the long term nature of this task

Production/Operations mgt-A system view point

y Production /operations mgt is greatly influenced by

the rapid economic change and technological advancement y According to Ogawa production mgt may be defined as the planning, implementation and control of production activities conducted by organisational entity with define performance objectives subject to modifications according to ambient conditions y Production mgt encompasses all the activities right to the end of the production process y The production system which are responsive to rapid changes are capable of reducing the start up period.

The Production System

Systems Perspectivey Inputs y Transformation System y Alter y Transport y Store y Inspect y Outputs y Environment

Inputsy Inputs include facilities, labor, capital, equipment, raw

materials, and supplies. y A less obvious input is knowledge of how to transform the inputs into outputs.

Characteristics of production systemsy System discrimination- A production system

consisting primarily of inputs and output does not have the wider connotations involving all phases from technology forecasting to manufacturing y Interrelationship among systems- The closed relationships that exist between production and preproduction arrangements is known as the interrelationships between systems y Stratum Formulation- A production system consisting of various strata of corporate hierarchy wherein each stratum has a role to play

Characteristics of production systemy Specification of functions-As the production system

expands it trends to have large number of hierarchical strata each performing specialised functions y Increase of Entropy- according to Ogawa entropy is a measure of the degradation of the matter and the energy in the universe to an ultimate state of inert uniformity. To cope with the rapid changes of technological innovation the organisation as well as production system needs to be rejuvenated. y Insofinality Insofinality is the process of reaching the same goal by different routes. There are different approaches to converting input to output.

Types of production systems controlsy Control is the basis for production mgt. There are two types of controls

Feedback control- In this type of control the output is obtained as a result of input and processing. It is then measured to see if it is in agreement with the goal. If the output is not in agreement with the goal, corrective measures are taken to address the shortfall 2. Feedforward control- In this type of control mechanism, input is checked against pre-specified standards prior to processing as well as output phase. The feedforward control system collects measurement data, compares them against the specification and1.

initiate corrective measures.

Production system designy Design of production systems aims to achieve the right

mix of varying proportions of the element of production y The production system design must be effective in its overall context y Production system must be designed with both the internal and external factors in mind

Productivity Improvementy Productivity is a function of the relationship between

input and output y Productivity improvement results when a given output is achieved with less input or a given output is achieved with less input y Productivity is a summary measure of the quantity and quality of work performance with optimal utilisation of scare resources y In order to maximise the output and minimise the input it is necessary to control the whole of production systems

What does TQM meany TQM is a systems approach to ensuring quality in an

organisation y Total Quality Management means that the organization's culture is defined by and supports the constant attainment of customer satisfaction through an integrated system of tools, techniques, and training. This involves the continuous improvement of organizational processes, resulting in high quality products and services. y Quality activities are planned and managed into systems and are oriented towards the achievement of complete customer satisfaction

What s the goal of TQM?Do the right things right the first time, every time.

TQM:A HISTORIC PERSPECTIVEy Quality mgt systems have evolved through quality

control, quality assurance and total quality control y Quality control is concerned with defect detection by using post-production inspection procedures y Quality assurance systems aim to produce as per design specifications and emphasise defect prevention y Total quality control systems are concerned with cost reduction efforts as a drive towards continual improvement

Defining Qualityy In technical usage, quality can have two meanings: y the characteristics of a product or service that bear on its ability to satisfy stated or implied needs, and y a product or service free of deficiencies

Defining Quality- Different Viewsy Customer s view (more subjective)y the quality of the design (look, feel, function) y product does what s intended and lasts

y Producer s viewy conformance to requirements (Crosby) y costs of quality (prevention, scrap, warranty) y increasing conformance raises profits

y Government s viewy products should be safe y not harmful to environment

TQM s Customer Approachy the customer defines quality. y the customer is always right. y the customer always comes first. y the customer is king. y quality begins and ends with the customer

Types of Customersy External - outside the organization (people who pay

the bills.)y End-user customers y Manufacturer (OEM) for suppliers.

y Internal - people within your organization who receive

your work y In many situations, producers have multiple customers and therefore find it useful to identify core customers

Understanding the customery Quality function deployment is a method used to

identify critical customer attributes and to create a specific link between customer attributes and design parameters y It helps marketing and design to answer three primary question? a. What attributes are critical to our customers? b. What design parameters are important in driving those attributes? c. What should the design parameter targets be for the new design?

Process of developing the house of qualityy Establishing critical customer attributes for the y y y y

product based on their expectations and give them weights according to their importance Establishing critical design parameters that drive system performance Establishing the relationship between customer wants and design parameters Identifying the inter-relationships between the various design parameters to establish trade-offs Focusing on customer perceptions of the company s existing product compared to its competitors

Process of developing the house of quality involves(cont)y Focusing on the internal assessment by filling in the

engineering section y Analysing the matrix and choosing priority items

Some Data on Customer Attitudes and Loyaltyy (Source: Winning Back Angry Customers, Quality y y y y

Progress, 1993) An average customer with a complaint tells 9-10 people; if it is resolved he/she only tells 5 people. For every complaint received, there are twenty others that are not reported. It costs 5-10 times more in resources to replace a customer than it does to retain one. Companies spend 95% of service time redressing problems and only 5% trying to figure out what made the customer angry.

Productivity and TQMy Traditional view: y Quality cannot be improved without significant losses in productivity. y TQM view: y Improved quality leads to improved productivity.

Basic Tenets of TQMy 1. The customer makes the ultimate determination

of quality. y 2. Top Management must provide leadership and support for all quality initiatives. y 3. Preventing variability is the key to producing high quality. y 4. Quality goals are a moving target, thereby requiring a commitment toward continuous improvement. y 5. Improving quality requires the establishment of effective metrics. We must speak with data and facts not just opinions

The three aspects of TQMy Counting

Tools, techniques, and training in their use for analyzing, understanding, and solving quality problems y Customers Quality for the customer as a driving force and central concern. y Culture Shared values and beliefs, expressed by leaders, that define and support quality.

Total Quality Management and Continuous Improvementy TQM is the management process used to make

continuous improvements to all functions. y TQM represents an ongoing, continuous commitment to improvement. y The foundation of total quality is a management philosophy that supports meeting customer requirements through continuous improvement

What are ISO 9000 Standardsy ISO 9000 Standards y Define the required elements of an effective quality management system y Can be applied to any company y Adopted by the United States as the ANSI/ASQC Q90 series. y Revised 2000

wider applicability

Who created the standards?y International Organization for Standardization -

Geneva y ISO tech committee - TC 176 started in 1979 y Standards created in 1987y To eliminate country to country differences y To eliminate terminology confusion y To increase quality awareness

How did ISO get started?y 1906 - International Electro-technical Commission y 1926 - International Federation of the National

Standardizing Associations (ISA) y 1946 London - delegates from 25 countries decided to create a new international organization "the object of which would be to facilitate the international coordination and unification of industrial standards y 1947 - ISO began to officially function y 1951 - The first ISO standard was publishedy "Standard reference temperature for industrial length

measurement".

What has ISO Accomplished?y ISO film speed code y Standard format for telephone and banking cards y ISO 9000 which provides a framework for quality y y y y y

management and quality assurance ISO 14000 series provides a similar framework for environmental management Internationally standardized freight containers Standardized paper sizes. Automobile control symbols ISO international codes for country names, currencies and languages

ISO 9000:2000 Consists of 3 Areasy ISO 9000:2000 Quality Management Systems:

fundamentals and vocabulary y ISO 9001:2000 Quality Management Systems Requirements (required for certification) Management responsibility Resource management Product/service realizationMeasurement, analysis, improvement

y ISO 9004-2000 Quality Management Systems

Guidelines for performance improvement

Unit 4 - Need & Importance of Forecasting Unit 5 - Qualitative methods of Forecasting Unit 6 - Quantitative methods of Forecasting