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Operations managment productivity

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Operations management (OM) is the set of activities that creates value in the form of goods and services by transforming inputs into outputs to acheive organsiaiton productivity.

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Operations managment productivity

  1. 1. 1 Operations Management BSS064-6 Operations Management and PRODUCTIVITY Dr Nasrullah K. Khilji Senior Lecturer in Project and Operation Management Leading and Managing Organisational Resources
  2. 2. 2 Learning Objectives In the end of this session you should be able to: 1. Define operations management 2. Explain the distinction between goods and services 3. Explain the difference between production and productivity 4. Compute single-factor productivity 5. Compute multifactor productivity 6. Identify the critical variables in enhancing productivity Dr Nasrullah K. Khilji ‘Business School, University of Bedfordshire’
  3. 3. 3 What Is Operations Management? Production is the creation of goods and services Operations management (OM) is the set of activities that creates value in the form of goods and services by transforming inputs into outputs Dr Nasrullah K. Khilji ‘Business School, University of Bedfordshire’
  4. 4. 4 Organizing to Produce Goods and Services Essential functions:  Marketing – generates demand  Production/operations – creates the product  Finance/accounting – tracks how well the organization is doing, pays bills, collects the money Dr Nasrullah K. Khilji ‘Business School, University of Bedfordshire’
  5. 5. 5 Organizational Charts Operations Teller Scheduling Check Clearing Collection Transaction processing Facilities design/layout Vault operations Maintenance Security Finance Investments Security Real estate Accounting Auditing Marketing Loans Commercial Industrial Financial Personal Mortgage Trust Department Commercial Bank
  6. 6. 6 Operations Ground support equipment Maintenance Ground Operations Facility maintenance Catering Flight Operations Crew scheduling Flying Communications Dispatching Management science Finance/ accounting Accounting Payables Receivables General Ledger Finance Cash control International exchange Airline Marketing Traffic administration Reservations Schedules Tariffs (pricing) Sales Advertising Organizational Charts
  7. 7. 7 Marketing Sales promotion Advertising Sales Market research Operations Facilities Construction; maintenance Production and inventory control Scheduling; materials control Quality assurance and control Supply chain management Manufacturing Tooling; fabrication; assembly Design Product development and design Detailed product specifications Industrial engineering Efficient use of machines, space, and personnel Process analysis Development and installation of production tools and equipment Finance/ accounting Disbursements/ credits Receivables Payables General ledger Funds Management Money market International exchange Capital requirements Stock issue Bond issue and recall Manufacturing Organizational Charts
  8. 8. 8 Ten Critical Decisions Ten Decision Areas  Design of goods and services  Managing quality  Process and capacity design  Location strategy  Layout strategy  Supply chain management  Inventory management  Scheduling  Maintenance Dr Nasrullah K. Khilji ‘Business School, University of Bedfordshire’
  9. 9. 9 10 Decision Areas OPERATIONS Management Dr Nasrullah K. Khilji ‘Business School, University of Bedfordshire’
  10. 10. 10 Productivity Challenge Productivity is the ratio of outputs (goods and services) divided by the inputs (resources such as labour and capital) The objective is to improve productivity! Important Note! Production is a measure of output only and not a measure of efficiency Dr Nasrullah K. Khilji ‘Business School, University of Bedfordshire’
  11. 11. 11 Service Productivity  Typically labour intensive  Frequently focused on unique individual attributes or desires  Often an intellectual task performed by professionals  Often difficult to mechanize  Often difficult to evaluate for quality Dr Nasrullah K. Khilji ‘Business School, University of Bedfordshire’
  12. 12. 12 Product / Service Design Process Dr Nasrullah K. Khilji ‘Business School, University of Bedfordshire’
  13. 13. 13 ► Organisations exist to provide goods or services to society ► Great products are the key to success ► Top organisations typically focus on core products ► Customers buy satisfaction, not just a physical good or particular service ► Fundamental to an organisation's strategy with implications throughout the operations function Goods and Services Selection Dr Nasrullah K. Khilji ‘Business School, University of Bedfordshire’
  14. 14. 14 ► Limited and predicable life cycles requires constantly looking for, designing, and developing new products ► Utilize strong communication among customer, product, processes, and suppliers ► New products generate substantial revenue Goods and Services Selection Dr Nasrullah K. Khilji ‘Business School, University of Bedfordshire’
  15. 15. 15 The objective of the product decision is to develop and implement a product strategy that meets the demands of the marketplace with a competitive advantage Product Decision Dr Nasrullah K. Khilji ‘Business School, University of Bedfordshire’
  16. 16. 16 Product Strategy Options ► Differentiation  Shouldice Hospital ► Low cost  Taco Bell ► Rapid response  Toyota Dr Nasrullah K. Khilji ‘Business School, University of Bedfordshire’
  17. 17. 17 Generating New Products 1. Understanding the customer 2. Economic change 3. Sociological and demographic change 4. Technological change 5. Political and legal change 6. Market practice, professional standards, suppliers, distributors Dr Nasrullah K. Khilji ‘Business School, University of Bedfordshire’
  18. 18. 18 Product Development Stages Scope of product development team Scope for design and engineering teams Evaluation Introduction Test Market Functional Specifications Design Review Product Specifications Customer Requirements Feasibility Concept
  19. 19. 19 Robust Design ► Product is designed so that small variations in production or assembly do not adversely affect the product ► Typically results in lower cost and higher quality Dr Nasrullah K. Khilji ‘Business School, University of Bedfordshire’
  20. 20. 20 Adding Service Efficiency ▶ Service productivity is notoriously low partially because of customer involvement in the design or delivery of the service, or both ▶ Complicates product design Dr Nasrullah K. Khilji ‘Business School, University of Bedfordshire’
  21. 21. 21 Service Products & Services as a Continuum Service in a Manufacturing Setting • Traditional approaches to services in a manufacturing organisation – After-sales service supply chains • Latest trends – “From services that support the product to services that support the client” ‘Servitisation’ ‘Productisation’ Dr Nasrullah K. Khilji ‘Business School, University of Bedfordshire’
  22. 22. 22 Products and services should be designed in such a way that they can be created effectively Designing the product or service Processes should be designed so they can create all products and services which the operation is likely to introduce Designing the process Product / service design has an impact on the process design and vice versa Process DESIGN: Product / Service Dr Nasrullah K. Khilji ‘Business School, University of Bedfordshire’
  23. 23. 23 Process Analysis and Design • Questions – Is the process designed to achieve competitive advantage in terms of differentiation, response, or low cost? – Does the process eliminate steps that do not add value? – Does the process maximize customer value as perceived by the customer? – Will the process win orders? • Tools – Flow Diagrams: A diagram used to analyze movement of people or material. (E.g., diagram on process focus) – Process Charts: Charts using symbols to analyze the movement of people or material. – Time-Function/Process Mapping: A flow diagram with time added on the horizontal axis. – Service Blueprinting: A process analysis technique that lends itself to a focus on the customer and the provider’s interaction with the customer.
  24. 24. 24 Techniques for Improving Productivity • Layout • Human Resources • Technology • Sustainability issues Dr Nasrullah K. Khilji ‘Business School, University of Bedfordshire’
  25. 25. 25 Productivity OPERATIONS Management Dr Nasrullah K. Khilji ‘Business School, University of Bedfordshire’
  26. 26. 26 Quality and Strategy ► Managing quality supports differentiation, low cost, and response strategies ► Quality helps firms increase sales and reduce costs ► Building a quality organization is a demanding task Dr Nasrullah K. Khilji ‘Business School, University of Bedfordshire’
  27. 27. 27 Two Ways Quality Improves Profitability Improved Quality Increased Profits • Increased productivity • Lower rework and scrap costs • Lower warranty costs Reduced Costs via • Improved response • Flexible pricing • Improved reputation Sales Gains via Dr Nasrullah K. Khilji ‘Business School, University of Bedfordshire’
  28. 28. 28 The Flow of Activities: Integration and Transformation Organizational Practices Leadership, Mission statement, Effective operating procedures, Staff support, Training Yields: What is important and what is to be accomplished Quality Principles Customer focus, Continuous improvement, Benchmarking, Just-in-time, Tools of TQM Yields: How to do what is important to be accomplished Employee Fulfillment Empowerment, Organizational commitment Yields: Employee attitudes that can accomplish what is important Customer Satisfaction Winning orders, Repeat customers Yields: An effective organization with a competitive advantage
  29. 29. 29 Continuous Improvement • Never-ending process of continuous improvement • Covers people, equipment, suppliers, materials, procedures • Every operation can be improved Dr Nasrullah K. Khilji ‘Business School, University of Bedfordshire’
  30. 30. 30 Guided Learning • Chapter - 1 Operations and Productivity (pp 37-62) Heizer, J. and Render, B., (2014), 11th Global Ed
  31. 31. 31 Any Question Please ….

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