Managing Service and Manufacturing

Operation

Arlian Riva H.Harummi S.A.

Introduction to Business, Ch.9

Overview Operation Management Transformation Process

Input Process Output Operation Management in Service and Nonprofit

Organization Differences between Manufacturers and Service

Providers in Nature and Consumption of Output Planning and Designing Operation Systems Managing Supply Chain Managing Quality

Operation Management Manufacturing

Produce tangible goods.

Production

Produce tangible goods.

Operation

Produce both tangible and intangible goods.

Transformation Process Input Process Output Input Transformation Output

Inputs: Land, Labor, Capital, Raw Materials

Time, Information, Energy

Processes: Procedures, Equipment, Facilities

Technologies, Knowledge

Outputs: Goods, Services, Ideas Customer Control Feedback

Flow Diagram in ManufacturingPupuk Kalimantan Timur Tbk.

Inputs:

Natural GasLabor

Processing PlantsWater

Catalyst

Outputs:

UreaNPK

MethanolAmmonium

SulfateAmmonia

Transformation

Physicaland

ChemicalProcesses

Managing Supply Chain Outsourcing

Contracting of manufacturing or other tasks to independent companies, often overseas.example: HP call center in India

Routing and SchedulingRouting Sequence of operations that inputs will

pass to produce desired outputs.Scheduling Assigning each tasks to the specific

department, machine, workers or teamsProgram Evaluation and Review Technique (PERT) Identifies major activities to complete a project. Arranges them in a sequence of path. Determines the critical path. Estimates the time required for each event.

Operation Management in Service and Nonprofit Organization

Examples:

Colleges, Language Courses, Airlines, WWF.

Input, Process and Output differences.

Service Provider such as an Airline;

Inputs: Employees, Equipments, Money.

Processes: Booking flights, Flying Planes, Maintenance.

Output: Fly passengers and packages.

Manufacturing and Service Operation Differences

Nature and Consumption of Output# Manufacturers: tangible goods.# Service providers: contact with customers.

Uniformity of Inputs and Outputs# Manufacturers: less customization, such as

the goods they produce.# Service providers: more customizations,

each customer has different need.

Manufacturing and Service Operation Differences

Labor Required

# Manufacturers: Less employees, especially

when they applied automatic equipments.

# Service providers: More employees, they

interact more with customers.

Measurement of Productivity

# Manufacturers: Productivity of Outputs.

# Service providers: Variations in demand and in their service requirements.

Planning and Designing Operation System

Planning the Product

Market researches, including the customers’ needs, Inputs, Equipments, Competitors, etc.

Designing the Operation Process:

Standardization, produces identical, interchangeable components or even complete products.

Modular Design, builds unit or modules able to combined or interchanged to be different products.

Customization, produce outputs to meet particular customers’ needs or wants.

Planning and Designing Operation SystemPlanning Capacity

The maximum load an organization can carry

or operate.

Planning Facilities: Location Facilities

Proximity to market; Raw Materials, transportation, power, and labor availability; climatic influences; community characteristic; and taxes and inducements.

Planning and Designing Operation System Layout Facilities

# Fixed-Position Layout/Project organization.

All inputs are placed in central location.

example: Exploration or Construction activities.

# Process Layout/Intermittent organization.

Transformations organize into departments.

example: Hospital has X-Ray and obstetric unit.

# Product Layout/Continuous Manufacturing Organization.

Processes are divided into simple tasks.

example: automobiles, toothpaste, TV sets.

Planning and Designing Operation System Technologies

# Computer-assisted Design (CAD)

Engineering soft-wares help engineers in designing the

processes, equipments, components and products.

# Computer-assisted Manufacturing (CAM)

Computer systems conduct and control processes.

# Flexible Manufacturing

Computers direct machines to conduct several tasks.

# Robots

Integrated technologies form the Computer-integrated

Manufacturing (CIM), a complete system for products

design, machines and material management and control.

Managing Supply ChainSupply Chain Management Connects and integrates all parts or

members of the distribution system to satisfy customers.

Involves activities to manage raw materials, component parts, finished products, packaging, and distribution.

Managing Supply Chain Purchasing = Procurement

Activities to buy all materials needed byorganizations.

Purchasing Department aims to obtain items of the desired quality in the right quantities at the lowest possible cost.

Managing Supply Chain Managing Inventory:Inventory Raw materials, components, completed or partially completed products, and the equipments used.

Finished-goods inventory Ready to sell products.

example: fully assembled automobile.

Work-in-process inventory Partly completed products or intermediate outputs that

need more process stages.example: baked plain croissant in Dunkin Donuts.

Raw Materials inventory All materials purchased to be the inputs for other products.

example: vegetables for making salad in Pizza Hut.

Managing Supply Chain Managing Inventory:

The Economic Order Quantity (EOQ) Model Identify optimum number of items to order to

minimize cost of managing (ordering, storing and using) them.

Just-in-Time Inventory (JIT) Management Minimize inventory by providing almost continuous

flow of items from suppliers to production facilities.

Material-Requirement Planning (MRP) Schedule precise quantity of materials needed to

make the products.

Managing Supply Chain Outsourcing

Contracting of manufacturing or other tasks to independent companies, often overseas.

A Firm outsource some aspects of its operations

to other companies that can provide their needs

more efficiently, at a lower cost and greatercustomer satisfaction.

example: HP call center in India

Managing Supply Chain Routing and Scheduling

Routing Sequence of operations that inputs will pass to produce desired outputs.

Scheduling Assigning each tasks to the specific department, machine, workers or

teams

Program Evaluation and Review Technique (PERT) Identifies major activities to complete a project. Arranges them in a sequence of path. Determines the critical path. Estimates the time required for each event.

Managing QualityQuality reflects the degree a product or service meets the customers’ demands and requirements.

Quality Control (QC)Processes use to maintain the products quality standards.

Total Quality Management (TQM)Developing a culture in organization that meets customers’ perception of quality.

Statistical Process ControlCollects and analyze information about production process to pinpoint the quality problems.

Managing Quality Establishing Standard – ISO 9000

Certification granted to organizations that manage their business by meeting the customers’ quality standards.

InspectionActivities to maintain quality. The techniques depend onthe products.

SamplingTest a sample of the output. If it pass the quality standard, items in the lot the sample was drawn are assumed to have the same quality.