Lecture 1 Flashcards
Introduction to Operations Management
Process design
- What is the best process/method for producing our products/services?
Managing Quality
- How to ensure high quality products / services are produced?
Location & Layout Strategy
- Where should we put a new manufacturing plant? New distribution center?
- How should we arrange the facility?
Human Resources & Job Design
- How do we motivate our employees to have higher performance?
- How to design an appropriate reward/compensation package for our employees?
Supply Chain management
- Should we make or buy this component?
- Who should be our suppliers and how can we integrate them into our strategy?
Inventory management
- How much inventory of each item should we have?
- When do we reorder?
Scheduling
- How to schedule our staff to minimize staffing cost and maximize customer service?
- Given a set of jobs to do, what is the sequence (order) that the jobs be done?
Define strategy
Strategy is how the mission of a company is accomplished. It unites an organization, provides consistency in decisions and keeps organization moving in right direction.
Defining a primary task of the company
- What is the firm in the business of doing?
E.g.,
Canadian Pacific Railway (www.cpr.ca) is in business of transportation, not railroads.
Assessing core competencies
- Core competency is what a firm does better than anyone else.
E.g.,
Sony: Best in the world at electromechanical miniaturization design.
Positioning the firm
- How will the firm compete? Cost, Speed, Quality, Flexibility.
Positioning the firm: Cost
- Waste elimination - relentlessly pursuing the removal of all waste
- Examination of cost structure - looking at the entire cost structure for reduction potential
- Lean production - providing low costs through disciplined operations
Positioning the firm: Speed
- Service organizations - always competed on speed (McDonald’s, LensCrafters, and Federal Express)
- Manufacturers - time-based competition: build-to-order production and efficient supply chains
- Fashion industry - two-week design-to-rack lead time of Spanish retailer, Zara
Positioning the firm: Quality
- Minimizing defect rates or conforming to design specifications
- Employees empowerment, high performance work teams, e.g.,
- Ritz-Carlton: Employees empowered to satisfy a guest’s wish
- Each hotel has a quality leader
Positioning the firm: Flexibility
- Ability to adjust to changes in product mix, production volume, or design
- Mass customization: the mass production of customized parts, e.g.,
- National Bicycle Industrial Company offers 11,231,862 variations
- delivers within two weeks at costs only 10% above standard models
What is Manufacturing?
- Application of physical and chemical processes to alter geometry, properties, and/or appearance of a starting material to make parts or products.
- Manufacturing also includes assembly
- Almost always carried out as a sequence of operations
Process industries
- Chemicals, petroleum, basic metals, power generation
Discrete product
- Cars, aircraft, appliances, machinery, and their component parts
Fixed-position layout
- If product is large and heavy (aircraft) product remains in fixed position workers and equipment are brought to product
Process layout
- Equipment arranged according to function/type
eg. mill dept, lathe dept. - Different parts, each requiring a different operations sequence, are routed through the depts. in the order needed for processing, usually in batches.
- Highly flexible – can accommodate many alternative operation sequences for different part configuration.
Disadvantages:
* Machinery/methods to produce part not designed for high efficiency.
* Lots of material handling to move parts between depts., high WIP.
Product Variety P
- Product variety P refers to different product types or models produced in the plant
- Soft product variety - small differences between products
e.g., between car models made on the same production line, with many common parts among models - Hard product variety - products differ substantially, e.g., between a small car and a large truck, with few common parts
Production Quantity Q
- The quantity of products Q made by a factory has an important influence on the way its people, facilities, and procedures are organized
Annual production quantities can be classified into three ranges:
1. Low production → 1 to 100 units
2. Medium production → 100 to 10,000 units
3. High production → 10,000 to millions of
* Different production facilities are required for each of the 3 ranges
Low Production Quantities
- This type of production facility is commonly call a Job Shop
- A job shop makes low quantities of specialized and customized products
- Products are typically complex, e.g., prototype aircraft, special machinery
- Equipment in a job shop is general purpose, Labor force is highly skilled, designed for maximum flexibility
- Can be Fixed Position Layout if product is large or Process Layout if product is smaller
High Production Quantities
- Often referred to as mass production or Flow Production
- Manufacturing system dedicated to the production of that product
- Involves the use of production lines.
Medium Production Quantities
- Batch production: A batch of product is produced, and then facility is changed over to produce another product
* Changeover takes time – setup time between batches
* Usually uses a process layout
* Used when you have hard product variety - Cellular manufacturing & Group Technology: A mixture of products is made without significant change-over time between products
* Use when you have soft product variety
* Determined by principles of Group Technology: a manufacturing philosophy in which similar parts are identified and grouped together to take advantage of their similarities in design and production
* In each part family, processing steps are similar, e.g., ten parts are different in size, shape, and material, but quite similar in terms of manufacturing
* Machines are grouped into cells, each cell specializing in the production of a part family called cellular manufacturing
The product-process matrix
- a tool for analyzing the relationship between the product life cycle and the technological life cycle.
- The x-axis is the process life cycle and y-axis is product life cycle.
- Think about the launch of new product: Only sale a few units in beginning, then sell more and more of it over time.
- Use Job Shop to make product in beginning but will need to move towards processes that are more suited to produce larger quantities of the product over time.
Limitations & Capabilities of a Manufacturing Plant
- Companies don’t produce everything in one factory.
Manufacturing capability refers to the technical and physical limitations of a plant
3 dimensions of manufacturing capability:
1. Technological processing capability - the available set of manufacturing processes. Eg. Casting / CNC / injection mold
2. Physical size/weight of product plant can produce
3. Production capacity (plant capacity) - quantity that can be made in a given time
Production & Manufacturing metrics
- Production & Manufacturing metrics help company track performance, compare alternative production methods (eg. different line layouts)
Two types of metrics:
(1) Production performance measures:
Production rate, cycle time, capacity, manufacturing lead time, utilization, productivity
(2) Manufacturing costs
Labor, material, overhead, cost to produce a unit of product
Production Rates, Cycle Time, Manufacture lead time
★ Production Rate (Rp) - parts processed or assembled per hour.
★ Cycle Time (Tc) - time between one work unit completing and next unit completing in minutes
★ Manufacturing lead time: the total time required to process a given part or product through the plant.
Components of MTL: processing operations, assembly operations, material handling, lost time due to delays, time spent in storage, inspections, etc.
