robbins9 ppt19

ninth editionninth edition

STEPHEN P. ROBBINSSTEPHEN P. ROBBINS

© 2007 Prentice Hall, Inc. © 2007 Prentice Hall, Inc. All rights reserved.All rights reserved.

PowerPoint Presentation by Charlie CookPowerPoint Presentation by Charlie CookThe University of West AlabamaThe University of West Alabama

MARY COULTERMARY COULTER

Operations and Value Operations and Value Chain ManagementChain Management

ChapterChapter

1919

© 2007 Prentice Hall, Inc. All rights reserved. 19–2

L E A R N I N G O U T L I N E L E A R N I N G O U T L I N E Follow this Learning Outline as you read and study this chapter.Follow this Learning Outline as you read and study this chapter.

What Is Operations Management and Why Is It What Is Operations Management and Why Is It Important?Important?

• Explain what operations management is.Explain what operations management is.

• Contrast manufacturing and services organizations.Contrast manufacturing and services organizations.

• Describe managers’ role in improving productivity.Describe managers’ role in improving productivity.

• Discuss the strategic role of operations management.Discuss the strategic role of operations management.

Value Chain ManagementValue Chain Management• Define value chain and value chain management.Define value chain and value chain management.

• Describe the goal of value chain management.Describe the goal of value chain management.

• Discuss the requirements for successful value chain Discuss the requirements for successful value chain management.management.


L E A R N I N G O U T L I N E (cont’d) L E A R N I N G O U T L I N E (cont’d) Follow this Learning Outline as you read and study this chapter.Follow this Learning Outline as you read and study this chapter.

Value Chain Management (cont’d)Value Chain Management (cont’d)• Describe the benefits that result from value chain Describe the benefits that result from value chain

management.management.

• Explain the obstacles to value chain management.Explain the obstacles to value chain management.

Current Issues in Operations ManagementCurrent Issues in Operations Management• Discuss technology’s role in manufacturing.Discuss technology’s role in manufacturing.

• Tell some of the various quality dimensions.Tell some of the various quality dimensions.

• Explain ISO 9000 and Six Sigma.Explain ISO 9000 and Six Sigma.

• Describe mass customization and how operations Describe mass customization and how operations management contributes to it.management contributes to it.


What Is Operations Management?What Is Operations Management?

• Operations ManagementOperations Management The design, operation, and control of the The design, operation, and control of the

transformation process that converts such resources transformation process that converts such resources as labor and raw materials into goods and services as labor and raw materials into goods and services that are sold to customers.that are sold to customers.

• The Importance of Operations ManagementThe Importance of Operations Management It encompasses both services and manufacturing.It encompasses both services and manufacturing.

It is important in effectively and efficiently managing It is important in effectively and efficiently managing productivity.productivity.

It plays a strategic role in an organization’s It plays a strategic role in an organization’s competitive success.competitive success.


Exhibit 19–1Exhibit 19–1 The Operations SystemThe Operations System


Manufacturing and ServicesManufacturing and Services

• Manufacturing OrganizationsManufacturing Organizations Use operations management in the transformation Use operations management in the transformation

process of turning raw materials into physical goods.process of turning raw materials into physical goods.

• Service OrganizationsService Organizations Use operations management in creating nonphysical Use operations management in creating nonphysical

outputs in the form of services (the activities of outputs in the form of services (the activities of employees interacting with customers).employees interacting with customers).


Managing ProductivityManaging Productivity

• ProductivityProductivity

The overall output of goods or services produced The overall output of goods or services produced divided by the inputs needed to generate that output.divided by the inputs needed to generate that output.

A composite of people and operations variables.A composite of people and operations variables.

• Benefits of Increased ProductivityBenefits of Increased Productivity

Economic growth and developmentEconomic growth and development

Higher wages and profits without inflationHigher wages and profits without inflation

Increased competitive capability due to lower costsIncreased competitive capability due to lower costs


Exhibit 19–2Exhibit 19–2 Deming’s 14 Points for Improving ProductivityDeming’s 14 Points for Improving Productivity

• Plan for the long-term future.Plan for the long-term future.

• Never be complacent concerning the Never be complacent concerning the quality of your product.quality of your product.

• Establish statistical control over Establish statistical control over your production processes and your production processes and require your suppliers to do so as require your suppliers to do so as well.well.

• Deal with the best and fewest Deal with the best and fewest number of suppliers.number of suppliers.

• Find out whether your problems are Find out whether your problems are confined to particular parts of the confined to particular parts of the production process or stem from the production process or stem from the overall process itself.overall process itself.

• Train workers for the job that you Train workers for the job that you are asking them to perform.are asking them to perform.

• Raise the quality of your line Raise the quality of your line supervisors.supervisors.

• Drive out fear.Drive out fear.

• Encourage departments to work Encourage departments to work closely together rather than to closely together rather than to concentrate on departmental or concentrate on departmental or divisional distinctions.divisional distinctions.

• Do not adopt strictly numerical Do not adopt strictly numerical goals.goals.

• Require your workers to do quality Require your workers to do quality work.work.

• Train your employees to understand Train your employees to understand statistical methods.statistical methods.

• Train your employees in new skills Train your employees in new skills as the need arises.as the need arises.

• Make top managers responsible for Make top managers responsible for implementing these principles.implementing these principles.

Source: W.E. Deming, “Improvement of Quality and Productivity Through Action by Management,” National Productivity Review, Winter 1981–1982, pp. 12–22. With permission. Copyright 1981 by Executive Enterprises, Inc., 22 West 21st St., New York, NY 10010-6904. All rights reserved.


Strategic Role of Strategic Role of Operations ManagementOperations Management

• The era of modern manufacturing began in the U.S over The era of modern manufacturing began in the U.S over 100 years ago.100 years ago.

• After WWII, U.S. manufacturers’ focused on functional After WWII, U.S. manufacturers’ focused on functional areas other than manufacturing.areas other than manufacturing.

• By the 1970’s, foreign competitors’ integrated By the 1970’s, foreign competitors’ integrated manufacturing technologies were producing quality manufacturing technologies were producing quality goods at lower costs.goods at lower costs.

• U.S manufacturers responded by investing in updated U.S manufacturers responded by investing in updated technology, restructuring organizations, and including technology, restructuring organizations, and including production requirements in their strategic planning. production requirements in their strategic planning.


Value Chain ManagementValue Chain Management

• ValueValue The performance characteristics, features and The performance characteristics, features and

attributes, and any other aspects of goods and attributes, and any other aspects of goods and services for which customers are willing to give up services for which customers are willing to give up resources (i.e., spend money).resources (i.e., spend money).

• The Value ChainThe Value Chain The entire series of organizational work activities that The entire series of organizational work activities that

add value at each step beginning with the processing add value at each step beginning with the processing of raw materials and ending with the finished product of raw materials and ending with the finished product in the hands of end users.in the hands of end users.


Value Chain Management (cont’d)Value Chain Management (cont’d)

• What is Value Chain Management?What is Value Chain Management? The process of managing the entire sequence of The process of managing the entire sequence of

integrated activities and information about product integrated activities and information about product flows along the entire value chain.flows along the entire value chain.

• Goal of Value Chain ManagementGoal of Value Chain Management To create a value chain strategy that fully integrates To create a value chain strategy that fully integrates

all members into a seamless chain that meets and all members into a seamless chain that meets and exceeds customers’ needs and creates the highest exceeds customers’ needs and creates the highest value for the customer.value for the customer.


Exhibit 19–3Exhibit 19–3 Six Requirements for Successful Value Chain ManagementSix Requirements for Successful Value Chain Management



• Requirements for Value Chain ManagementRequirements for Value Chain Management A new business model incorporating:A new business model incorporating:

Coordination and collaborationCoordination and collaboration

Investment in information technologyInvestment in information technology

Changes in organizational processesChanges in organizational processes

Committed leadershipCommitted leadership

Flexible jobs and adaptable, capable employeesFlexible jobs and adaptable, capable employees

A supportive organizational culture and attitudesA supportive organizational culture and attitudes


Benefits of Value Chain ManagementBenefits of Value Chain Management

Improved Improved ProcurementProcurement

Improved Improved ProcurementProcurement

Improved Improved LogisticsLogistics

Improved Improved LogisticsLogistics

Enhanced Enhanced Customer Order Customer Order

ManagementManagement

Enhanced Enhanced Customer Order Customer Order

ManagementManagement

Improved Improved Product Product

DevelopmentDevelopment

Improved Improved Product Product

DevelopmentDevelopment

Benefits of Benefits of Value Change Value Change ManagementManagement

Benefits of Benefits of Value Change Value Change ManagementManagement


Exhibit 19–4Exhibit 19–4 Obstacles to Successful Value Chain ManagementObstacles to Successful Value Chain Management



• Obstacles to Value Chain ManagementObstacles to Value Chain Management Organizational barriersOrganizational barriers

Refusal or reluctance to share informationRefusal or reluctance to share information Reluctance to shake up the status quoReluctance to shake up the status quo Security issuesSecurity issues

Cultural attitudesCultural attitudes Lack of trust and too much trustLack of trust and too much trust Fear of loss of decision-making powerFear of loss of decision-making power

Required capabilitiesRequired capabilities Lacking or failing to develop the requisite value chain Lacking or failing to develop the requisite value chain

management skillsmanagement skills



• Obstacles to Value Chain Management (cont’d)Obstacles to Value Chain Management (cont’d)

PeoplePeople Lacking commitment to do whatever it takesLacking commitment to do whatever it takes

Refusing to be flexible in meeting the demands of a changing Refusing to be flexible in meeting the demands of a changing situationsituation

Not being motivated to perform at a high levelNot being motivated to perform at a high level

Lack of trained managers to lead value chain initiativesLack of trained managers to lead value chain initiatives


Current Operations Management IssuesCurrent Operations Management Issues

• Technology’s Role in ManufacturingTechnology’s Role in Manufacturing Increased automation and integration of production Increased automation and integration of production

facilities with business systems to control costs.facilities with business systems to control costs. Predictive maintenance, remote diagnostics, and utility cost Predictive maintenance, remote diagnostics, and utility cost

savingssavings

• The Concept of QualityThe Concept of Quality The ability of a product or service to reliably do what The ability of a product or service to reliably do what

it’s supposed to do and to satisfy customer it’s supposed to do and to satisfy customer expectations.expectations.


Current Issues… (cont’d)Current Issues… (cont’d)

• Quality InitiativesQuality Initiatives

Planning for qualityPlanning for quality

Organizing and leading for qualityOrganizing and leading for quality

Controlling for qualityControlling for quality

• Quality GoalsQuality Goals

ISO 9000 certificationISO 9000 certification

Six Sigma standardsSix Sigma standards


Exhibit 19–5Exhibit 19–5 Product Quality DimensionsProduct Quality Dimensions

1.1. Performance—Operating characteristicsPerformance—Operating characteristics

2.2. Features—Important special characteristicsFeatures—Important special characteristics

3.3. Flexibility—Meeting operating specifications over some period Flexibility—Meeting operating specifications over some period of timeof time

4.4. Durability—Amount of use before performance deterioratesDurability—Amount of use before performance deteriorates

5.5. Conformance—Match with preestablished standardsConformance—Match with preestablished standards

6.6. Serviceability—Ease and speed of repair or normal serviceServiceability—Ease and speed of repair or normal service

7.7. Aesthetics—How a product looks and feelsAesthetics—How a product looks and feels

8.8. Perceived quality—Subjective assessment of characteristics Perceived quality—Subjective assessment of characteristics (product image)(product image)

Sources: Adapted from J.W. Dean, Jr., and J.R. Evans, Total Quality: Management, Organization and Society (St. Paul, MN: West Publishing Company, 1994); H.V. Roberts and B.F. Sergesketter, Quality is Personal (New York: The Free Press, 1993): D. Garvin, Managed Quality: The Strategic and Competitive Edge (New York: The Free Press, 1988); and M.A. Hitt, R.D. Ireland, and R.E. Hoskisson, Strategic Management, 4th ed. (Cincinnati, OH: SouthWestern, 2001), p. 211.


Exhibit 19–5 (cont’d)Exhibit 19–5 (cont’d) Service Quality DimensionsService Quality Dimensions

1.1. Timeliness—Performed in promised period of timeTimeliness—Performed in promised period of time

2.2. Courtesy—Performed cheerfullyCourtesy—Performed cheerfully

3.3. Consistency—Giving all customers similar experiences each Consistency—Giving all customers similar experiences each timetime

4.4. Convenience—Accessibility to customersConvenience—Accessibility to customers

5.5. Completeness—Fully serviced, as requiredCompleteness—Fully serviced, as required

6.6. Accuracy—Performed correctly each timeAccuracy—Performed correctly each time

Sources: Adapted from J.W. Dean, Jr., and J.R. Evans, Total Quality: Management, Organization and Society (St. Paul, MN: West Publishing Company, 1994); H.V. Roberts and B.F. Sergesketter, Quality is Personal (New York: The Free Press, 1993): D. Garvin, Managed Quality: The Strategic and Competitive Edge (New York: The Free Press, 1988); and M.A. Hitt, R.D. Ireland, and R.E. Hoskisson, Strategic Management, 4th ed. (Cincinnati, OH: SouthWestern, 2001), p. 211.


Current Issues… (cont’d)Current Issues… (cont’d)

• Mass CustomizationMass Customization Is a design-to-order concept that provides consumers Is a design-to-order concept that provides consumers

with a product when, where, and how they want it.with a product when, where, and how they want it.

Makes heavy use of technology (flexible Makes heavy use of technology (flexible manufacturing techniques) and engages in a manufacturing techniques) and engages in a continual dialogue with customers.continual dialogue with customers.

• Benefits of Mass CustomizationBenefits of Mass Customization Creates an important relationship between the firm Creates an important relationship between the firm

and the customer in providing loyalty-building value to and the customer in providing loyalty-building value to the customer and in garnering valuable market the customer and in garnering valuable market information for the firm.information for the firm.


Terms to KnowTerms to Know• operations managementoperations management• manufacturing manufacturing

organizationsorganizations• service organizationsservice organizations• productivityproductivity• valuevalue• value chainvalue chain• value chain managementvalue chain management• organizational processesorganizational processes• intellectual propertyintellectual property• qualityquality• ISO 9000ISO 9000• Six SigmaSix Sigma• mass customizationmass customization

robbins9 ppt19

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