Operations Management

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Operations Management
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Operations Management

• Broad range of business activities
• Manufacturing Production
• E.g. Harley Davidson, automotive industry
• Service
• E.g. HR Block, Schwab, Merrill Lynch
• Distribution
• FedEx, Maersk
• Processes
• Aetna, IRS

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Importance of Operations

• Productivity
• Quality
• Inventory management
• Cost control
• Lead to profitability

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Designing Operations Systems

• Product-service mix
• Range of products impacts costs
• E.g. number of parts, processes
• Capacity
• Affects costs and profitability
• E.g. Telcos, Randys on the River

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Designing Operations Systems

• Facilities
• Location how many and where
• Degree of automation
• Layout
• Product layout
• Process layout (functional)
• Fixed-position layout
• Cellular
• A cell might create similar products or
  components
• E.g. picture frames

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Manufacturing Technology

• Automation
• Often specialized machines
• Feedback loop
• CAD, computer aided manufacture
• CAM, computer aided design
• CIM, computer integrated manufacture
• FMS, flexible manufacturing systems
• Robotics
• Assembly
• Material handling
• Medical

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Service Technology

• Computers in
• Banking
• Insurance
• Education
• Restaurants

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Supply Chain Management

• Managing operations and inventory
• Purchasing management
• Procurement
• Balance cost and inventory (tradeoff)
• Inventory management
• Materials control
• Cost of too much or too little
• Continuous management
• Vendor-controlled
• JIT, just-in-time

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Managing Quality

• What is quality?
• ISO 9000
• Malcolm Baldridge Award
• Importance
• Competition
• Meet
• Differentiate
• Productivity
• Costs

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Total Quality Management, TQM

• Also quality assurance
• Requires top level strategic commitment
• There will be costs to transition
• Needs to be more than lip service
• Employee commitment
• Work teams, quality circles
• Technology
• Materials
• Methods processes

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TQM Tools and Techniques

• Value-added analysis
• Evaluate all work flows to determine value they
  add for customers
• Benchmarking
• Compare to competition
• Buy competitive products
• Visit competitors
• Reverse engineer
• Outsourcing
• Focus on core competencies
• Reduce cycle time
• Speed can improve quality

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TQM Tools and Techniques

• Statistical Quality Control, SQC
• Sample inputs
• In-process sampling
• Acceptance sampling
• Acceptance refers to final product
• Establish acceptance criteria
• May include documentation, features, performance,
  maintainability, etc.
• Six Sigma
• Three errors per million
• Analyze root causes of errors and eliminate

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Managing Productivity

• Aggregate productivity
• Productivity of a country
• Industry productivity
• Company productivity
• Individual productivity
• Productivity outputs / inputs
• or
• Productivity outputs / direct labor

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Improving Productivity

• RD
• New products
• Automate/revamp production
• Increase employee involvement
• E.g. the red button
• Training
• Rewards