Operations management is important because

Operations management is important because

Objectives

 

·         Define operations management, explain its role (4
2. Nature and purpose of value chain management (9
3. How value chain management is done (12
4. Contemporary issues in managing operations (17

 

Operations Management

 

·         The design, operation, and control of the transformation process that converts resources, such as labor and raw materials, into goods and services that are sold to customers.

 

operations management is important because:

 

·         it encompasses processes in both service and manufacturing organizations
2) it's key to effectively and efficiently managing productivity
3) it plays a strategic role in an organization's competitive success

 

improving productivity

 

·         productivity = people + operations variables

-productivity gains capable in both manufacturing and service

-high productivity --> economic growth and development of countries, and to higher wages and company profits without causing inflation

 

Deming: Improving Managers' Productivity

 

·         -To improve productivity, managers must focus on both people and operations.
-Deming believed that managers (not workers) were primary source of increased productivity and outlined 14 points for improving management's productivity

-The truly effective organization will increase productivity by successfully integrating people into the overall operations system.

 

Operations Management and Company Strategy

 

·         Successful organizations recognize the crucial role that operations management plays as part of the overall organizational strategy to achieve and maintain global leadership.

This can be seen clearly as more organizations more toward managing their operations from a value chain perspective

 

Goals of Value Chain Management

 

·         A good value chain = a sequence of participants works together as a team, each adding some component of value (such as faster assembly, more accurate information, better customer response/service) to the overall process

-The better the collaboration among the various chain participants, the better the customer solutions
-When value is created for customers and their needs/desires are satisfied, everyone along the chain benefits

 

Benefits of Value Chain Management

 

·         improved procurement (acquiring needed resources)
2. improved logistics (managing materials, service, and information)
3. improved product development (close relationships with customers leads to developing products they value)
4. enhanced customer order management (managing every step to make sure customers are satisfied)

 

The Value Chain Management Process

 

·         The dynamic, competitive environment facing contemporary global organizations demands new solutions.

Understanding how and why value is determined by the marketplace has led some organizations to experiment with a new business model -
a strategic design for how a company intends to profit from its broad array of strategies, processes, and activities

 

6 requirements of successful value chain management

 

·         coordination and collaboration
2) technology investment
3) organizational process
4) leadership
5) employees/human resources
6) organizational culture/attitudes

 

(6 requirements of successful value chain management)

·        
1) coordination and collaboration

·         -above all others are absolutely necessary to achieve goal of meeting/exceeding customer needs/desires
-to successfully collaborate, all partners must identify what their customers value, share information, and be flexible as far as who does what

 

(6 requirements of successful value chain management)
2) technology investment

 

·         -necessary to restructure the value chain to better serve end users
-key tools include: a supporting enterprise resource planning software (ERP) system that links all organization activities, work planning, business intelligence capabilities, and e-business connections with trading network partners

 

(6 requirements of successful value chain management)
5) employees and human resources

 

·         -employees are organization's most important resource, so they play an important part in value chain management
-three main human resource requirements for value chain management are:
1. Flexible approaches to job design
2. An effective hiring process
3. Ongoing training

-Traditional functional job roles (marketing, sales, accounts payable, customer service representatives, etc.) are inadequate in a value chain management environment
>instead, jobs need to be designed around work processes that link all functions involved in creating and providing value to customers

-In designing jobs, focus needs to be on how each activity performed by an employee can best contribute to creation/delivery of customer value, which requires flexibility in what employees do and how they do it.

 

(6 requirements of successful value chain management)
6) supportive organizational culture and attitudes

 

·         -sharing, collaborating, openness, flexibility, mutual respect, trust

-these attitudes encompass not only the internal partners in the value chain but also external partners

 

Barriers and Cultural Attitudes

 

·         Organizational Barriers:
[are among the most difficult to handle]
-refusal/reluctance to share information
-reluctance to break up status quo
-security issues


Cultural attitudes:
-trust
-control

>Unsupportive cultural attitudes, especially attitudes toward trust and control, can also be obstacles to value chain management

 

Capabilities and People obstacles

 

·         Capabilities: (needed by value chain partners; not easy to attain, but essential to capturing and exploiting the value chain)
-coordination and collaboration
-configuration that satisfies customers and suppliers
-education of internal and external partners

People: (value chain requires their unwavering commitment to do whatever it takes)
-commitment
-time
-energy

 

3 contemporary issues that managers face in managing operations

 

·         technology
2. quality initiatives
3. project management

 

1.    technology

 

·         Managers who understand the ability of technology to create ore effective and efficient performance know that managing operations is more than the traditional view of simply making a product.
Instead, the emphasis is on working together with all the organization's business functions to find solutions to customers' business problems

 

2.    quality initiatives

 

·         quality - the ability of a product/service to reliably do what it's supposed to do and to satisfy customer expectations

good way to look at quality initiatives:
-in relation to the management functions (planning, organizing, leading, and controlling) that need to take place
-when planning for quality, managers must have quality improvement goals, strategies, and plans to achieve those goals

organizations with successful quality improvement programs rely on two important approaches to their employees:
a) cross-functional work teams
b) self-directed or empowered work teams

quality improvement initiatives aren't possible without a way to monitor and evaluate progress (i.e. standards for inventory control, defect rate, raw materials procurement, or other operations management areas, controlling for quality is important)

 

two worldwide best known quality goals

 

·         ISO 9000:
-series of standards which set guidelines for processes to ensure that products conform to customer requirements
-standards cover everything from contract review to product design and delivery
-can be a prereq for doing business globally

2) Six Sigma
-quality standard that establishes a goal of no more than 3.4 defects per million units or procedures
-extremely high standard to achieve but many quality-driven businesses benefit from it
-manufacturers make up bulk of users, but also service companies (financial institutions, retailers, and HCOs)

 

3.    project management

 

·         project - one-time-only set of activities with a definite beginning and end point

project management - the task of getting project activities done on time, within budget, and according to specifications

Charts:
-Gantt Chart
-Load chart
-PERT charts

 

-Gantt Chart

 

·         -planning tool to help with scheduling
-essentially a bar graph with time on horizontal axis and activities on vertical axis
-bars show output (both planned and actual) over period of time
-visually shows when tasks are supposed to be done and compares the assigned date with the actual progress on each

 

-Load Chart

 

·         -modified version of Gantt chart
-instead of listing activities on vertical axis, load charts list either whole departments or specific resources
-this info allows managers to plan and control for capacity utilization
-(aka load charts schedule capacity by workstations)

 

-PERT Chart

 

·         your PERT network tells you that if everything goes as planned, it will take you just over 32 weeks to build the house.
-this time is calculated by tracing network's critical path: A B C D E I J K L M N P Q.
-any delay in completing events along path will delay completion of entire project

slack time
- difference time needed for critical activity and time needed for noncritical activity
-difference between critical path and all other paths
-if project manager notices some slippage on a critical activity, perhaps slack time from a noncritical activity can be borrowed and temporarily assigned to work on the critical one