Wishing you all a “Total Quality” New Year!vkteaching.weebly.com/uploads/1/4/3/9/14393508/om_s02e01_s02e02.… · •Processes must fit the operations strategy of the firm •Competing

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Session 1

Vinay Kumar Kalakbandi

Assistant Professor

Operations & Systems Area

1/7/2016 Vinay Kalakbandi 1

Operations Management - II Post Graduate Program 2015-17

Wishing you all a

“Total Quality” New Year!

Hope you achieve Six sigma heights

Hope you are able to produce excess inventory of high quality happiness

Hope all your bottlenecks are removed


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Agenda

• Introductions

• Course Overview

• The Systemic perspective of OM

• Performance metrics in OM

• Key Challenges in OM


INTRODUCTIONS


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Course overview

• Course website where details of all readings,

PPTs could be accessed anytime.

– http://vkteaching.weebly.com/

• Availability

– On prior appointment only

• Textbook and Course pack

– Has been provided by the PGP office


About the course

• Assessment pattern

• Case analysis

• Class participation

• Team Project

• Quizzes

– Engrade???


http://vkteaching.weebly.com/

http://vkteaching.weebly.com/

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Teams

• Form teams

• Name your teams after a well known company

• Always be seated by teams!

– You never know when a team activity would happen!


Team Names – Section B

1. BMW

2. Toyota

3. Fedex

4. Tesla

5. Lufthansa

6. Honda

7. IKEA

8. Boeing

9. Starbucks

10. Royal Enfield

11. Virgin

12. Apple


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Team names (Section A)

1. 7 Sigma

2. Bottlenecks

3. Bullwhippers

4. Kaizens

5. Mavericks

6. Dabbawalas

7. 4PGP2LKG

8. Taskar

9. House of SWAGs

10. The Undecideds

11. Nagshakti


To begin with

• A Sweet example

• Authority

• Responsibility

• Transformation process


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What is Operations?


What is the transformational process in

the following examples

• Toyota

• Indigo/Ola

• Big Bazaar/Walmart/Flipkart

• Narayana Hrudalaya

• PVR cinemas/Netflix

• Airtel/Vodafone/Skype


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Transformation Process

• Physical: as in manufacturing operations

• Locational: as in transportation operations

• Exchange: as in retail operations

• Physiological: as in health care

• Psychological: as in entertainment

• Informational: as in communication


A Systems Perspective


INP

UT

OU

TP

UT

Labour

Capital

Material

Goods

Services

Forecasting

Operations

Planning &

Control

Process &

Product

Design

Material &

Capacity

Planning

Fee

db

ack

Purchasing &

Inventory

Control

Maintenance

Management

Process

Improvement

Quality

Management

PROCESSING

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OM Functions

• Design issues in Operations Management lay down overall constraints under which the operations system functions

• Operational Control issues focuses on optimizing the use of available resources in the short-term while delivering goods and services as per plan under the given design constraints

Design Issues Operational Control Issues

Product & Service Design Forecasting the Demand

Process Design Operations Planning & Control

Quality Management Supply Chain Management

Location & Layout of Facilities Maintenance Management

Capacity Planning Continuous Improvement of

Operations


Further on systems perspective

• Transformational process is integral to all verticals of the organization

• What is the transformational process in

– Finance

– Marketing

– HR

• Organizational sub-process could be viewed as systems in themselves and OM logic applied

• Systems are a point of analysis in OM


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„Operations‟ as a source of

competitive advantage

Vinay Kumar Kalakbandi

Assistant Professor

Operations & Systems Area


Operations Management – s2e02 Post Graduate Program 2015-17

Disclaimer!

This course is not a spa, this is a Gym

Warm-up, Lift weights, do cardio

Read, Analyse, Participate

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Recap

• Introduction

• Systems perspective

– Transformation process


What do firms compete on?

• Firms compete on attributes of the output

• Price (Cost)

• Quality

– Customer service

– Product quality

• Lead Time

– Rapid, reliable delivery

• Variety

– Degree of customization


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Operations Management From What to How?

What do firms compete on?

• Price (Cost)

• Quality

– Customer service

– Product quality

• Lead Time

– Rapid, reliable delivery

• Variety

– Degree of customization

How do firms achieve desired output attributes?

• Capability

– Flexibility

– Vertical integration

• Connectivity

– Location /Accessibility

– Distribution

– Inventory

• Capacity

– Speed

– Scale


Strategic questions?

Trading off performance metrics

Priorities

• cost/quality

• cost/variety

• cost/lead time

• lead time/quality

• lead time/variety

Qualifier or Differentiator

• Qualifier: Necessary for basic

survival

• Differentiator: distinguishes

you from your competitors


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Fit between Strategy and Processes

• Processes must fit the operations strategy of the firm

• Competing on

– Cost (Southwest Airlines, Tiger Airways, Aravind Eye Care, Shouldice)

– Quality (Toyota, Shouldice)

– Variety (Donner, American Connector)

– Time (McDonalds, Manzana)

all require different process design and different performance measures to focus on.


In summary

• Operations Management is a systematic approach to address all issues pertaining to the transformation process that converts some inputs into useful output

– Firms strategically determine the desirable output attributes they intend to compete on

– These desired output attributes drive the operational choices made by the firm

– Operational choices and output attributes should be aligned to each other to achieve Operational Excellence


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Role of Performance Measures

• What are the performance metrics for

Operations Management?

• What do we infer from such metrics?


Operations performance measures

• Provide critical linkage between order winning and order qualifying attributes and choices made in operations

• Help organisations evaluate how well the operations system is responding to the requirements at the marketplace

• Serve a useful purpose in comparing performances amongst competitors and for benchmarking


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Operational Excellence Quality Cost

First Pass Yield Average days of inventory (No. of inventory turns)

Quality Costs Manufacturing cost as percent of sales

Defects per Million Opportunities Procurement costs, total cost of ownership

Number of suggestions per employee Value of import substitution, cost reduction

Process Capability Indices Target cost reduction efforts

Delivery Flexibility

Lead time for order fulfillment Number of models introduced

Procurement and Manufacturing Lead time New product development time

On time delivery for supplies Breadth and depth of the product and service offerings

Schedule adherence Process flexibility

Indirect Measures

Indirect-labour to Direct-labour ratio Number of suggestions per employee

Ratio of Lead time to work content Non-value added content in processes

Process rate to sales rate ratio No. of certified deliveries

Average training time per employee Delivery quote for customised products and services


Which airline is better?


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Measures for operational excellence

Performance Criterion for Comparison (1987) Japan@ U.S.*

Production of vehicles (Million) 4 8

Number of employees 37,000 850,000

Parts on which detailed Engg. is done (%) 30 81

No. of employees in purchasing 337 6,000

Number of suppliers for upholstery 1# 25**

Design to customer delivery time (million Hrs.) 1.7 3

Design to customer delivery time (months) 46 60

@ - Data pertaining to Toyota; * - Data pertaining to GM # - Single supplier; ** - 25 Suppliers were supplying components to seat building department.

Source: J. P. Womack, D. T. Jones, and D. Roos, The Machine That Changed the World (New York: Rawson Associates , 1990)


Key challenges in Operations

Management

• Managing Trade-offs appropriately

• Dealing with uncertainty in demand and supply

• Appropriation and product/service proliferation

• Volatility of technology, market place, economy

• Focus on social and environmental sustainability

apart from financial sustainability


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Southwest Airlines


Slides provided by Prof. Pierrie Dussage, HEC Paris 1/7/2016 Vinay Kalakbandi 32

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Source: “Putting the Service-Profit Chain to Work”, Heskett et al 1994

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Source: “Putting the Service-Profit Chain to Work”, Heskett et al 1994


http://money.cnn.com/infographic/news/companies/airline-merger/

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Southwest Airlines in Baltimore

• SWA Operating strategy

• Turnaround process

• BWI performance

• Plans for the future


THANK YOU


Documents

Wishing you all a “Total Quality” New Year!vkteaching.weebly.com/uploads/1/4/3/9/14393508/om_s02e01_s02e02.… · •Processes must fit the operations strategy of the firm •Competing