operations and supply chain management
DESCRIPTION
Operations management is concerned with overseeing, designing, and controlling the process of production.TRANSCRIPT
Operations and Supply Chain Management
Operations Management
• Operations management is an area of management concerned with overseeing, designing, and controlling the process of production and redesigning business operations in the production of goods or services. It involves the responsibility of ensuring that business operations are efficient in terms of using as few resources as needed, and effective in terms of meeting customer requirements. It is concerned with managing the process that converts inputs (in the forms of raw materials, labor, and energy) into outputs (in the form of goods and/or services)
Industrial Revolution
• The beginning of the Industrial Revolution is usually associated with 18th century English textile industry, with the invention of flying shuttle by John Kay in 1733, the spinning jenny by James Hargreaves in 1765, the water frame by Richard Arkwright in 1769 and the steam engine by James Watt in 1765. In 1851 at the Crystal Palace Exhibition the term American system of manufacturing was used to describe the new approach that was evolving in the United States of America which was based on two central features: interchangeable parts and extensive use of mechanization to produce them.
Industrial Revolution 2.0
• Henry Ford was 39 years old when he founded the Ford Motor Company in 1903, with $28,000 capital from twelve investors. The model T car was introduced in 1908, however it was not until Ford implemented the assembly line concept, that his vision of making a popular car affordable by every middle-class American citizen would be realized. The first factory in which Henry Ford used the concept of the assembly line was Highland Park (1913), he characterized the system as follows:
• "The thing is to keep everything in motion and take the work to the man and not the man to the work. That is the real principle of our production, and conveyors are only one of many means to an end"
• This became one the central ideas that led to mass production, one of the main elements of the Second Industrial Revolution, along with emergence of the electrical industry and petroleum industry.
What Successful 21st Century Supply Chains Look Like
• Characteristics of Successful Partnerships in Supply Chains
• Peer to Peer• Measurable Goals and
Objectives• Traceability • http://www.royaltalkies.c
om/fora-tv/what-successful-21st-century-supply-chains-look-like-81837
Peer to Peer
• Move from internal hierarchy to flat supplier network
• Evolution from Internal production and vertical integration to: – Purchasing
– Supplier networks
– Outsourcing
• Negotiation
• Power dynamics have shifted
• Leverage/Power– Walmart
Measurable Goals and Objectives
• What gets measured gets managed– Peter Drucker
• On time/lead time• Quality
– Defect Rates– Rejection Rates– Return Rates
• Working Conditions– Apple/FoxConn– Garment works Bangladesh
• Financial Health– Liquidity– Sustainability– Solvency
Information Transparency
• Traceability
• Agility
• Sourcing: where everything comes from
• Aggregation
• Efficiency
• E-beer – Factory
– Distributor
– Wholesaler
– Retailer
ProcessValue Chain
Step Step Step
Value Add
1Value Add
2Value Add
3
Sustainability
• Energy use per unit of product
• How much we consume
• What is it we make
• Byproducts
• Pollution
• Accountability
Operations Comparison
Restaurant
• Time
• Variety
• Quality
• Price
Emergency Room
• Time
• Right Care
• Quality
• Price
4 Dimensions
• Cost – Efficiency
• Quality– Product
– Process
• Responsiveness– Time
• Variety– Customer Heterogeneity
– Choice
– Preferences
Performance Measures
• Flow Rate
– Throughput
• Inventory
– How much in system
– Mismatch between Supply & Demand
• Flow Time
– How long in system
• Flow Unit
Strategy
• Competitive Advantage
– Cost Leadership
– Differentiation
• Michael Porter
Elements in the Process
Value Add Chain and Flow
Match Supply & Demand
• Price• Quantity • Inventory
– Excess/Surplus– Shortfall
• Demand Curve• Elasticity • Information
– Feedback– Sales– Speed & Accuracy
• Delivery
Match Supply & Demand
Process Flow Diagrams
• Bottlenecks
• Pinch points
Process Management vs. Project Management
• Cyclical
• Repetitive
• Uniform Deliverables
• Linear
• Milestones
• Unique Deliverables
Terms
• Processing Time PT• Capacity 1/PT=C• Bottleneck
– Weak Link– Rate Limiter
• Flow Rate FR• Utilization FR/C• Flow Time• Inventory
– # Flow Units in System
• Line Balance
Labor Productivity Measures
Labor Productivity
• Line Balancing
– Labor Utilization
– Idle time
• Labor Content
• Direct Labor Cost
• Cost Accounting
Financial Reporting of Labor
• Outsourcing
• Suppliers
• Obscures Labor amounts from books
• Eschew Obfuscation
– (promote clarity)
From Spreadsheet
0
0.2
0.4
0.6
0.8
1
1.2
1 2 3 4 5 6
Performance Measures
Capacity
Utilization
John Cousins
• Twitter: @jjcousins