c




 


  
 Learning Objectives of this Paper
!Gain an appreciation of strategic importance of
operations in a global business environment

!Understand how operations relates to other business

functions

!Develop a working knowledge of concepts and methods

related to designing and managing operations

Develop a skill set for quality and process improvement

!
 @
 

!Definition
!Historical Milestones in POM

!Factors Affecting POM Today

!Different Ways of Studying POM

!Wrap-Up: What World-Class Producers Do

 What Is Production Operations
Management?

c

 
 
   
 


m




 
 
 


 


 



  
 

 ’




 




! 
  

   


a M

 
a 
  
a 
  
a     

a 

 

a   

a 
   
  


a    
3



 



The management of systems or processes

that |

 
   

 |


Organization

Finance Operations Marketing

m
   

 

m



 


POM in the Organization Chart

M 
 
"  

   


     

  
  
 
 




!   


   
 

0
 How is Operations Relevant to my
Major?
u
 ³As an auditor you must
understand the fundamentals of
operations management.´

³IT is a tool, and there¶s no better




  


place to apply it than in
operations.´

³We use so many things you learn


 in an operations class²
scheduling, lean production,
theory of constraints, and tons of
quality tools.´
 6

   


  
³It¶s all about processes. I
Œ


  live by flowcharts and Pareto
analysis.´

³How can you do a good job

  marketing a product if you¶re
unsure of its quality or
delivery status?´

  ³Most of our capital

budgeting requests are from
operations, and most of our
cost savings, too.´
{
 
    
What is operations?
a function or system that transforms inputs into outputs of greater value

What is a transformation process?

a series of activities along a 
| extending from supplier to
customer
activities that do not add value are superfluous and should be eliminated

What is operations management?

design, operation, and improvement of productive systems
 { 
  


! 
! #

! 

!@ 

! 
Why Study Production Operation Management?


 u
 

 


Π 
   





 

u 

[
 Historical Milestones in POM

!d $ 
% 
! 
&{ 
!
  
   

!' % 
 ( 


! 
%



!d  
% 
 The Industrial Revolution
! d  
      !   
 [



! d 
      )
{ [m
  
     



! *
d






  [m
  
 
 
  

# 
 
! d
  &[


 

  
 
 

    
   

"
 " 
 [3
 The Industrial Revolution
! d  
  
  !  
 !  
 
  +  

! $ [
  
 !{     


   
   

! d  
  
  +
  , 
 

! $  [0


      
 
   

  
 
  
! ( &[0


 
 

   

   
  
 [m


 

 !{ 
( [m3
 [03
$ [0
 
   
 

" [




" 

 
 



" 
 # 

 ,



 


å 1995 Corel Corp.


" 

 

  
" 
 
&{ 
!   
&{   ,
 
 
 



 
! (
&{      


 
    
  ,
   



a 
 

 
 


a   ,   " 

a {
  +" 

a  
   

 

 

[0
 
  
   
! M  
"d
"  
   

  

   '



   


 

a !
" *

"
       
   
a 


  
 
 




  "   

"
a  

 

" 
  



  
 #  

a  

  
 

   
a $
 

 
    
! 
[
 
  
   
! $  [

M *
  
  "    
 

  

   
a
 # 



a 



a   
 



a 
 # 



a

#  
a   
   



 M  
"{d

( [03m
 [[3

  
-   

  

   *
$ [00[

    
  
 

"
  
(   
 . 



   





d   d"  

%

 

  
/
     
  " 
 

!

   

 " 



 
 M ".@ 0 
M "1[0m0&[
@ 
1[00&[
! '
 & & 

   
! M    "
 
   

!   

 


  .[

 2
! 1(". 3  
 # 4" å 1995 Corel Corp.

3( 
 d d
4
 ' M
( [0m
 [
! $ [

  M

 
! $ [[  


 

 
"  d
a ˜
 
 




 
  

! " 
    å 1995 Corel

[[[1532 Corp.

{!
  

R orn 1900; died 1993

R Engineer & physicist
R Credited with teaching Japan
quality control methods in post-
WW2
R Used statistics to analyze
process
R His methods involve workers in
decisions

3
   
[  


6 [

 

6 d  


6  
  
 




6 ! 
  
 


6 3$   

6 m$
     /
6 $
   

6 0  
m
   
[  


6 ( "  

6 [
!   ,

6 [[!    
 

6 [   "


6 [ !
  

6 [d   
  



 ' % 

 ( 

! $  [&[  

 
  
' 
 #   


  
 
 
! %

 
   
"   
 # 



 


 


 

 
! M "  


 

      
 
  " 


0
  
%


!  {{$$ 
 
 



1 
 

  7   

!  



 1% 
    
  
 ,    

!     



 
   
"
  

 
    

  


! % 
 
  
" 


 
 
 
 ,  


 



 d  
% 
! d 
   


 #


  

  {{$$
! d  &
  +" 


   



! &
 +0 
 



! d  
  

 



! $ 
   
"   ,

 
 
   
" 
! d
  
   

 

   


   
 ! 
  

  1[m
 # 
1{ [0



  
   1d[00[
  

 1M[[ 
0 

10 [[m
 
1 0 
[

 1 [
   
 ! 
&    
  !%d1 [3
% 1
"[m


M ,   
 

 
1M
  
  
1 
      
 1$
  #  

M 


'%



"  

$
!    

  
 
 
 
Operations
Marketing
Finance and accounting
Human resources
Outside suppliers
  # M


R"  
R0 


 

ROperations
!   
 
 

RFinance/Accounting
! m  
 
!  

å 1995 Corel Corp.
3
 M

& ( "



 

å 1984-1994
T/Maker Co.

 
   

u


    


  
     


m
 M

& 

u 

 
   

u


 
  

 
 
 
  


 M

&   
 

  

 
   

u



 
 
    


 



0
 


 
$ 

!   
  






  

 
% 

@ 

 



   $ 
 {     )
8
Rd
  

RM



#
R 


R%


R      
R
 


R 
R
 

R$   

R 
  



   
  
R @
   R Global focus


R Just-in-time
R (

 
R Supply chain
R @

  partnering
R Rapid product
R @ 

    development,
alliances
R  

R Mass
R )

# customization
R Empowered
employees, teams
[
   
   

  
Past Causes Future

Local or Reliable worldwide Global focus,

communication and moving
national focus transportation networks production
offshore

atch (large) Short product life cycles and Just-in-time

shipments cost of capital put pressure on performance
reducing inventory

Supply chain competition Supply chain

Low-bid requires that suppliers be partners,
purchasing engaged in a focus on the end collaboration,
customer alliances,
outsourcing


   
   

  
Past Causes Future

Shorter life cycles, Internet, Rapid product

Lengthy product rapid international development,
development communication, computer-aided alliances,
design, and international collaborative
collaboration designs

Affluence and worldwide Mass

Standardized markets; increasingly flexible customization with
products production processes added emphasis
on quality

Changing socioculture milieu; Empowered

Job increasingly a knowledge and employees, teams,
specialization information society and lean
production


   
   

  
Past Causes Future

Environmentally
Low-cost Environmental issues, ISO sensitive production,
focus 14000, increasing disposal costs green manufacturing,
recycled materials,
remanufacturing

Ethics not at usinesses operate more High ethical

openly; public and global review standards and social
forefront of ethics; opposition to child responsibility
labor, bribery, pollution expected


 d 




R’
 


 
R

  

R
 
3

 
 d 




Ru



R {


  8
R '   8

R’









  8
R {


R '
 
 


 


8

m
 d 



&    
Rc



 


R {




    
 8
R {   
 


 



8
R@


R {  
   

R  
 
 


 


 8


 d 



&    
R@



R '
     
8
R '  

  8

R6


 






R '   
  "   8
R '

   ,
 

8

0
 d 



&    
R’ 
 



R  " 
 8
R { 
 
  
 
 8
Rî









îd

 





R '
    
 

  8
R {   & 8


 d 



&    

Rî













R $


 
 
 8
R      "      
 

8
Ra


R {


    
8

3

   {
 
! 
 

 
! 
 
  # M

! 

 "   

3[
 
 

 


 
 

  

$ 




 

 


 

3
 $ 
  
 
 
! !,  
a @ !
 

d
 

! " 
a   
 

 
$ 
! %


a  
 
 +

3
 
  
 
 
! 

a 


a  

! $ 

a {

a 
a d
 


3
   
 

 

! 

1  
 
! @
  

1d
 
! !,
   

1%  
!   

1{ 
 
!     

1$


! 0    

1M   @


33
 d  
  

c | as in manufacturing operations

@|   as in transportation operations
| 
 as in retail operations
as in health care
c  |as
c  |
c| |as in entertainment
c| |as
    as
  as in communication

   d  
 
 

 ! 
Ë 
$u $u  ! ! 
Ë 
$Œ Ë


Ë"#

Ë % 
Ë

Ë
 
 
  # M


! {  

  
  " 

 




   

/  *
" 




 
,


 
! d


 
 
  


      # 




30
 c
  
 

 
&  

 


Ë ,
  
 
Ë  
 

Ë Œ

 
( *
Ë   Ë  % 
Ë   ' Ë 


Ë  %  ) +
Ë "
Ë Œ 






 

 
£


 



Planning Organizing
> Capacity > Degree of centralization
> Location > Process selection
> Products & services Staffing
> Make or buy > Hiring/laying off
> Layout > Use of Overtime
> Projects Directing
> Scheduling > Incentive plans
Controlling/Improving > Issuance of work orders
> Inventory > Job assignments
> Quality
> Costs
> Productivity m

  


  
  

! {
{


 

! {

  

    
! { 

{" 
! '


 
! {

d "
m[
 Types of POM Decisions
!  



! 

! 
! 

! @

! @
!   



 

 "   
!  




!   



!  



m
 
 


 0

R Tangible product
R Consistent product
definition
R Production usually
separate from
consumption
R Can be inventoried
R Low customer
interaction

å 1995 Corel Corp.

m
 
 


  

R $   

R 
.

 
 

R    
R '

   

R $


 
  
R   "   &

R M  
 


å 1995 Corel Corp.

m3
 0
9 

 

0
 

R  
 R%
  

R      R 
  
R  

 

R 


 
R  
 


 

R  






mm
 0
9 

 

&    
0
 

R 


 RProvider, not product is
transportable
R   
 


 a Site of facility important for
customer contact
R   

a Often difficult to automate
R%     
   

 a Revenue generated
primarily from intangible
service. m