OPERATIONS MANAGEMENT

BACK 2 BASICS

What is Operation Management ?

Operations Management is the function of managing the operating core of an organization; the activities associated with creation, production, distribution and delivery of the organization's goods and services.

cost

OPERATIONs PERFORMANCE OBJECTIVE

INVENTORY MANAGEMENT Just in time abc analysis eoq, epq vendor managed inventory LOGISTICS MANAGEMENT 3pl/4pl logistics SUPPLY CHAIN MANAGEMENT PROJECT MANAGEMENT scheduling loading assignment TOTAL QUALITY MANAGEMENT six sigma zero defect customer orientation STATISTICAL QUALITY CONTROL STATISTICAL PROCESS CONTROL COLLABORATION FORECASTING AGGREGATE PLANNING FACILITY LAYOUT LEAN MANUFACTURING TOTAL PRODUCTIVE MAINTENANCE POKA YOKE

Excelling at one or more objectives can Enable an organization to pursue a business Strategy on a corresponding competitive factor

MARKETING VS. OPERATIONS

Marketing is identification and creation of customer demand

synch
- Better Operational Performance - Competitive Advantage - Efficient Supply Chain

Conflict
- Mismatch in Demand & Supply - Production Inefficiencies - Unsatisfied Customers

TOTAL QUALITY MANAGEMENT

AN INTEGRATED EFFORT DESIGNED TO IMPROVE QUALITY PERFORMANCE AT EVERY LEVEL OF ORGANIZATION

HOW WE DEFINE QUALITY ???

Conformance to specification Fitness for use Value for price paid Support services Psychological criteria
Manufacturing- Conformance to specification, performance, reliability, serviceability, durability, features. Service Consistency, Responsiveness, friendliness, timeliness, promptness, atmosphere

COST OF QUALITY
- PREVENTION COST- Cost of preparing and implementing a quality plan - APPRAISAL COST- Cost of testing, evaluating and inspecting quality - INTERNAL FAILURE COST- Cost of rework, scrap and material losses - EXTERNAL FAILURE COST- Costs of failure at customer site like returns,
repairs, and recalls.

Time line showing differences between old and new concepts of Quality

QUALITY GURUs
Walter A.

Quality gurus

WALTER A SHEWART - Contributed to understanding of process variability - Developed concept of statistical control charts Edwards W. EDWARDS DEMING- Stressed managements responsibility for quality. W. - Developed 14 points to guide companies in quality Joseph M. Juran
Joseph M.

improvement

- Define quality as Fitness for use

- Developed concept of quality - Coined phrase quality is free

Philip B. Crosby
Armand v.

- Introduced concept of Zero Defects - Developed cause-and-effect diagrams.

kaoru Ishikawa

- Identified concept of internal consumers Genichi Taguchi - Focused on product design quality

- Developed Taguchi Loss Function

QUALITY GURUs
Philip B.

Quality gurus

WALTER A SHEWART - Contributed to understanding of process variability - Developed concept of statistical control charts W. EDWARDS DEMING- Stressed managements responsibility for quality. Kaoru - Developed 14 points to guide companies in quality Joseph M. Juran
Genichi

improvement

- Define quality as Fitness for use

- Developed concept of quality - Coined phrase quality is free

Philip B. Crosby

- Introduced concept of Zero Defects kaoru Ishikawa - Developed cause-and-effect diagrams.

- Identified concept of internal consumers Genichi Taguchi - Focused on product design quality

- Developed Taguchi Loss Function

Demings 14 Points
Create constancy of purpose for improvement of product and service

Adopt a new philosophy- Change into learning organization

Cease dependence on mass inspection

End awarding business on price- Aim at minimum total cost and move to single suppliers

Improve the system of production and service constantly

Institute training

Institute leadership- Result in better job and learning by objective methods

Drive out fear- To assure better Quality and Productivity

Demings 14 Points
Break down barriers between departments

Eliminate slogans, exhortations, and numerical targets for the workforce

Eliminate numerical quotas or work standards- Quota consider only numbers, not quality or methods

Remove barriers that prevent workers from taking pride in their workmanship

Institute a vigorous program of education

Take action to accomplish the transformation- Requires Top Management team with Plan of Action

TQM-Principles
- Produce quality work the first time - Focus on the customer- Product Design - Empowerment of Employees - Improve continuously- P-D-S-A Cycle & Benchmarking - Encourage mutual respect and teamwork - Process Management- Quality Built in Process - Managing Suppliers Quality

Basic idea of TQM:

Customer Determines Quality Commitment toward Sustained Continuous Improvement Prevention not Detection Effective Quality Metrics Leadership and support from Top Management

Quality control tools

Cause-and-Effect Diagram Flowchart Checklist Control Charts Scatter Diagram Pareto Chart Histogram

QUALITY TOOLS

Statistical Quality Control

tools to evaluate Organizational quality 3 categories:- Descriptive Statistics - Statistical Process Control - Acceptance Sampling CAUSES OF VARIATION - Random Causes - Assignable Causes

Statistical Process Control

Types of control charts:- Control charts for Variables

X Chart- Central Tendency of process

R Chart- Dispersion or Variation in the Process

- Control charts for Attributes P- Chart- For proportion of Defects NP- Chart- For Number of defects C- Chart- For Percentage Defectives

Process Capability- Cp

Specification Width/ Process width

= (USL- LSL)/6

Cp = 1

Cp < 1Cp > 1

Process Variability Process Variability

Process Variability Just

Meets Specification More than the Tighter than Specification Specification

Six sigma
- Coined by Motorola Inc. in 1980s - 3.4 defects per million
marketing ensures that product characteristics are exactly what customers want. Operations ensures that exact product characteristics can be achieved through product design, the manufacturing process, and the materials used.

- Five step process:- DMAIC

DEFINE: identify the problem and use numerical definition MEASURE: Benchmark Capability of current process ANALYZE: analyze the result & verify cause-and-effect relationship IMPROVE: implement changes to do things better, cheaper and faster CONTROL: ensure that any deviations from target are corrected before
defects they result in

Quality function deployment (QFD)

Customers talk in everyday language

QFD customers everyday language into specific technical requirements.

relationships among the variables involved in the design of a product, such as technical versus customer requirements.

House of quality (hoq) CONSISTS OF:- customer requirements

- competitive evaluation - product characteristics - relationship matrix - trade-off matrix - setting targets

HOUSE OF QUALITY

Balanced scorecard
A tool for performance evaluation Incorporating both financial and non-financial parameters
Traditional financial reports look backward Reflect only the past: spending incurred and revenues earned Do not measure creation or destruction of future economic value

It improves financial performance by better resource allocation and investment trade-offs

It directs the Physical, Human and Finance resources to plans and policies to get maximum output

Continuous Communication to Empower the Workforce

Aligning Personal Goals, Incentives, and Competencies With the Strategy

Aligning Resources, Budgets and Initiatives With the Strategy

A Feedback Process That Encourages Learning and Experience Sharing

BSC - Translating Vision and Strategy: Four Perspectives

To succeed financially, how should we appear to our shareholder s?

FINANCIA L
Objectiv es

Measure Targets s

Initiative s

To achieve Objectiv es our vision, how should we appear to our customers?

CUSTOMER

Measure Targets s

Initiative s

INTERNAL BUSINESS PROCESS VISION AND STRATEGY

To satisfy our shareholder s and customers, what business processes must we excel at? Objectiv es Measure Targets s

Initiative s

LEARNING AND GROWTH

To achieve our vision, how will we sustain our ability to change and improve? Objectiv es Measure Targets s

Initiative s

Why Balanced Scorecard?

To Implement Business Strategy Business Strategy is now the single most important issue and will remain so for the next five years Business
Week

Less than 10% of strategies effectively formulated are effectively executed

Fortune

Four Barriers to Strategic Implementation

The Vision Barrier Only 5% of the work force understands the strategy The People Barrier Only 25% of managers have incentives linked to strategy

9 of 10 companies fail to execute strategy

60% of organizations dont link budgets to strategy The Resource Barrier

The Management Barrier teams 85% of executive spend less than one hour per month discussing strategy

THANK YOU