Lecture 1: Introduction to operations management Flashcards
Whats the difference between Operations Management (OM) and Supply Chain Management (SCM)?
- OM typically refers to processes within a single firm.
- SCM refers to processes and exchanges across multiple firms.
Why does OM matter?
- OM involves the greatest portion of a company’s employees and capital assets (typically 70-80%)
- Operational decisions have strong financial, social/ethical and ecological implications and also determine the day-to-day service level at the customer end.
Draw the Input-Transformation-Output model and define what is a process.
- A process is the sequence of operations and involved events, taking up time, space, expertise or other resources, which lead/(should lead) to the production of some outcome.
What does the “management” in “operations management” entail?
- The design of the transformation process
- The provision of resources (planning)
- The allocation of resources to tasks (scheduling)
- The control (measurement) and improvement of the transformation process
What are the internal and external objectives for operations management?
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Internal objetives:“Shareholder value”
- 100% effective use of resources
- Minimal operating expenses: zero defects, zero stock.
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External objectives:
- Quality: doing things right, to a standard
- Speed: time to satisfy order
- Dependability: reliable delivery when promised
- Flexibility: ability to change what is delivered
- Cost: price competitiveness
What are the different costs involved in processing?
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Cost of inventory
- Cost of capital & warehousing
- Cost of handling, quality implications, obsolescence
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Cost of production
- Cost of inventory is a function of production batch sizes
- Cost of machines, labour
- Opportunity cost of set-ups
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Costs of logistics & distribution
- Cost of transportation, depending on frequency
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Cost of sales
- Opportunity cost of lost sales
- Cost of making a sale (interface to marketing…)
Explain the customer value equation.
Value = Performance/Cost
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Performance is a function of:
- Quality: doing things right, to a standard
- Speed/Dependability: reliability/speed of delivery
- Flexibility: ability to change (volume, product mix, design)
- Firms differentiated by their trade-off across these performance objectives.
What features do high quality companies tend to demonstrate?
- Superior product features
- Excellent customer service
- Consistent delivery
- Process quality - error free delivery
What are features of a flexible company?
- Company environment changes rapidly -> company must accommodate change by being flexible.
- Easily customize product/service to meet specific requirements of a customer.
- Ability to ramp capacity up and down to match market demands.
What are parts that a company can change to be flexible?
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Associated with an operations ability to change
- The product and services it brings to the market
- The mix of products and services it produces at any one time
- The volume of products and services it produces
- The delivery time of its products and services
Explain what flexibility means in 1) an automobile plant 2) a hospital.
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Automobile Plant
- Introducing new models
- Range of options/model mix
- The ability to adjust the number of vehicles manufactured
- The ability to alter manufacturing priorities and reschedule
-
A hospital
- Introducing new treatments
- A wide variety/mix of treatments
- The ability to adjust the number of patients treated
- The ability to reschedule appointments
Explain the difference between order winners from order qualifiers.
Explain what performance frontiers are.
What are the two types of key operating decisions? Explain them.
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Structural - long term decisions relating to the delivery process, and the flow of goods and services.
- Location
- Capacity
- Technology
- Vertical Integration
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Infrastructural - short term decisions related to planning and control systems of operations
- Workforce
- Quality Management
- Organization Structure
- Policies/Procedures
Explain the 4V’s
Draw a graph (x: Volume, y: Variety) to illustrate the different manufacturing process types.
Explain/illustrate the four different types of manufacturers ( x: Majority of costs, y: Majority of revenues).
- Service-led producers who provide customers with services based on a significant production capability
- Product manufacturers who focus on generating value through production
- Service manufacturers who have little or no production and generate value from services which are based around a product
- System integrators who control the channel to customers and manage an external production network
Draw a graph showing a range of different industrie/businesses that are between pure products and pure services.
Draw Schmenner’s Service Process Matrix (x: Degree of customisation, y: Labour intensity)
