1 Production Operations Management Introduction to POM U. Akinc Introduction to POM U. Akinc

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Production Operations Production Operations ManagementManagement

Introduction to POMU. Akinc

Introduction to POMU. Akinc

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POMPOM Productivity

– What is it to POM?

– What is it to a Company?

– What does it Mean to You?

Production/ Operations Management

– What?

– Who? Business Strategy and Operations Management

Productivity

– What is it to POM?

– What is it to a Company?

– What does it Mean to You?

Production/ Operations Management

– What?

– Who? Business Strategy and Operations Management

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ProductivityProductivity

Definition:

Economic output per unit of input

Productivity = Output/Input (resource)

Definition:

Economic output per unit of input

Productivity = Output/Input (resource)

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US. Productivity TrendsUS. Productivity Trends

600% since 1900

2.6% between 1945 - 1973

1.2% between 1973 - 1980

1.0% between 1980 – 1990

2.5% after 1990

600% since 1900

2.6% between 1945 - 1973

1.2% between 1973 - 1980

1.0% between 1980 – 1990

2.5% after 1990

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Recent US Productivity ChangesRecent US Productivity Changes

Series Id: PRS84006093 Duration: index, 1992 = 100 Measure: Output Per Hour Sector: Business

Year 1 2 3 4 Annual change 1993 100.3 100.1 100.2 101.2 100.5 0.50% 1994 101.6 101.7 101.4 102.1 101.7 1.19% 1995 101.8 102.1 102.2 103.1 102.3 0.59% 1996 104.2 105.3 105.3 105.7 105.1 2.74% 1997 106.1 107.1 108.1 108.3 107.4 2.19% 1998 109.6 109.6 110.2 111.5 110.2 2.61% 1999 112.3 112.1 113.1 114.7 113 2.54% 2000 114.8 116.6 116.8 117.5 116.5 3.10% 2001 117.4 117.8 118.8 121.3 118.8 1.97% 2002 123 .9 124.1 125 .9 126.4 125 .1 5.3 0% 2003 125.8 128.0 130.8 130.3 128.7 2.88% 2004 131.4 132.8 133.0 133.5 132.7 3.11% 2005 134.4 134.3 135.9 135.5 135.0 1.73% 2006 136.4 136.6 136.1 36.5 136.4 1.04% 2007 136.6 137.5

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Productivity TrendsProductivity Trends

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International ComparisonsInternational Comparisons

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International ComparisonsInternational Comparisons

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Pressures on Productivity:Pressures on Productivity:

Why Does Productivity Have to Grow? Aging Population

Why Does Productivity Have to Grow? Aging Population

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Pressures on Productivity:Pressures on Productivity:

Why Does Productivity Have to Grow? Aging Population

Environmental Demands

Why Does Productivity Have to Grow? Aging Population

Environmental Demands

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Pressures on Productivity:Pressures on Productivity:

Why Does Productivity Have to Grow? Aging Population

Environmental Demands

Global Competition

Why Does Productivity Have to Grow? Aging Population

Environmental Demands

Global Competition

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Pressures on Productivity:Pressures on Productivity:

Why Does Productivity Have to Grow? Aging Population

Environmental Demands

Global Competition

Social Pressures

Why Does Productivity Have to Grow? Aging Population

Environmental Demands

Global Competition

Social Pressures

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Sources of productivity?Sources of productivity?

Where does productivity come from? Capital Technology Better Management of Resources:

Specialization Macro (Organizational)

Micro

Where does productivity come from? Capital Technology Better Management of Resources:

Specialization Macro (Organizational)

Micro

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Organizational GoalsOrganizational Goals

Why do organizations exist?

An alliance of at least– Labor

– Management

– Stockholders

Organizational Goals

Productive use of resources

Why do organizations exist?

An alliance of at least– Labor

– Management

– Stockholders

Organizational Goals

Productive use of resources

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OperationsOperations

Activities that organizations perform to achieve their goals.

Definition:

Activities aimed at bringing about goal oriented changes by designing and using processes.

Activities that organizations perform to achieve their goals.

Definition:

Activities aimed at bringing about goal oriented changes by designing and using processes.

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ProcessesProcesses

Any set of activities that use resources, transform and add value to deliver one or more outputs to its customers.

Processes can be nested.. A process may include one or more sub processes

Any set of activities that use resources, transform and add value to deliver one or more outputs to its customers.

Processes can be nested.. A process may include one or more sub processes

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Porter’s Value ChainPorter’s Value Chain

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Domain of POM (WHAT?)Domain of POM (WHAT?)

Determining the Desired Outputs Determining the Necessary Inputs Determining the Technology Necessary Planning and Controlling the

– quality

– availability

– cost of Work Processes and Their Results

Delivery and Distribution of the Output

Determining the Desired Outputs Determining the Necessary Inputs Determining the Technology Necessary Planning and Controlling the

– quality

– availability

– cost of Work Processes and Their Results

Delivery and Distribution of the Output

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POM DecisionsPOM Decisions

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The Professionals (WHO?)The Professionals (WHO?)

V P -M a rk etin g

P ro d u ctio nS ch ed u lin g

P u rch a sin g S to ckC o n tro l

S h ip p in ga n d rece iv in g

M a ter ia lsM a n a g er

Q u a lityC o n tro l

M a n u fa c tu r in gM a n a g er

M a in ten a n ceE n g in eer

P erso n n e ll

P la n tM a n a g er (s)

V P -O p era tio n s

V P -F in a n ce

C E O

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WHAT? DesignWHAT? Design

Many of the design functions are strategic Facilities design

– Locations

– Sizes

– Layouts

– Equipment

– Transportation means

Product/Product Line Management Systems

Many of the design functions are strategic Facilities design

– Locations

– Sizes

– Layouts

– Equipment

– Transportation means

Product/Product Line Management Systems

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WHAT? PlanningWHAT? PlanningDetermining the ways in which the

productive facility will be used

Demand Forecasting Production Planning Material Requirements Planning Inventory Planning Staffing Needs Equipment Needs

Determining the ways in which the productive facility will be used

Demand Forecasting Production Planning Material Requirements Planning Inventory Planning Staffing Needs Equipment Needs

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WHAT? SchedulingWHAT? Scheduling

Determining the time and the resources with which the tasks will be performed.

Examples: Assignment of specific customer orders to

individual machines or individuals Assignment of workers to work centers Sequencing of work Vehicle Dispatching

Determining the time and the resources with which the tasks will be performed.

Examples: Assignment of specific customer orders to

individual machines or individuals Assignment of workers to work centers Sequencing of work Vehicle Dispatching

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WHAT? ControlWHAT? Control

Determining the degree of match between actual and planned outcomes

Examples: Quality Control

– Conformance

– Design Materials Control (Inventory Control) Equipment Control (Maintenance) Cost Control (Variance Analysis)

Determining the degree of match between actual and planned outcomes

Examples: Quality Control

– Conformance

– Design Materials Control (Inventory Control) Equipment Control (Maintenance) Cost Control (Variance Analysis)