05-Operations Management

MANAGING OPERATION AND IMPROVING

QUALITY

Lecture Notes for Business IntroductionBy Fahmy Radhi

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Operations Management

Planning and controlling in a systematic process that transform inputs into outputs of greater value

It deals with the production of goods and services

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Transformation Process

Input Process Output

MaterialsMachinesMan/workersMoney/capitalInformation

ManufacturingAssemblingTransportingStoringConsulting

AutomobilesTelevisionsServices

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Differences between Goods and Services

Goods ServicesTangible and durableOutput can be inventoriedLow customer contactLong response timeLarge facilitiesCapital intensiveQuality easily measured

Intangible outputs Can not be inventoriedHigh customer contactShort response timeSmall facilitiesLabor intensive Not be easily measured

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Proportion of goods and services

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Types of Manufacturing Operations

Job Shop Manufacturing – make-to-order product in accordance with design supplied by the customer.

Its characteristics: High variety product with low volume, Using the multipurpose equipments and flexibility material handling, Need broad range skills. E.g. custom-built home, custom tailor clothes, specific machines

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Types of Manufacturing Operations

Repetitive Manufacturing – make-to-stock produced to anticipation of customer demand.

Its characteristics: High volume with low variety as standardized product for mass marketRepetitive process using the single purpose equipment for the same process Need a specialist skills. E.g. Television, Refrigerator, most costumer goods

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Types of Manufacturing Operations

Batch Manufacturing – similar standard product produced periodically in batches.

Its characteristics: Combination of product variety and average volume per product, Using flexible Equipment that must be capable of performing some variety of tasks, Need a variety of skills. E.g. hand tools, bakeries

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Types of Services OperationService Factories: Low labor intensity - Low customer interaction. E.g.: airline, hotel.Service Shops: Low Labor intensity - high customer interaction. E.g.: hospital, repair serviceMass Service: high labor intensity - low customer interaction. E.g.: Banking, EducationProfessional Services: both highly labor-intensity and customer interaction. E.g.: Doctors, Lawyer

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Operations Planning

1. Capacity Planning2. Location Planning3. Layout Planning4. Product design planning5. Process Planning6. Drawing and Scheduling7. Quality Planning

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Layout Types

Process/functional Layouts – arranged by group similar process or function or activities in department or work centersProduct/line Layouts – arranged in line according to the sequence of operations for particular product or serviceFixed-position Layout – arrangement in which the product is in fixed place, while worker along with equipments are move to the product

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Material Management

Materials Management - an integrated activities in purchasing, transporting, storage, handling of materials, and inventory control

Material Control Methods:EOQ – Economic Order QuantityJIT – Just-In-TimeMRP – Material Requirement Planning

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Improving Quality

Quality is the totally of features and characteristic of a product or service that bears on its ability to satisfy given needs

Major Areas of quality:Quality of DesignQuality of transformation processQuality of ProductsQuality of Service after delivery

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Quality Dimensions

Performance – the main characteristics Features – extra characteristic added. Reliability – consistency its performance Conformance – how well a product meets standard Durability, Serviceability, Aesthetics and Safety

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Total Quality Management

TQM is a philosophy and approach to managing an organization that involves everyone in the quest for quality as perceived by customer

The TQM approach:Find out what customer wantDesign should meet with customer wantNever ending improvementExtend these concept to supplier and to distribution

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TQM Strategy

1. Continuous improvement2. Competitive benchmarking 3. Quality Function Deployment4. Employee Empowerment 5. Team approach 6. Skills and knowledge

Improvement

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