introduction to operation management.pptx

Operation management learning material for accounting and finance department

1. Managing Production Operations PRE.BY HAILE DEMASH . D.B.P.T.C 6/ 2/ 2015 1 pr.by H. D

2. After finish this chapter… Explain what is “process” Describe OM as function TO make or Develop operational plan How to Plan and manage resource acquisition Identify some decisions make by operation manager 6/ 2/ 2015 2 pr.by H. D

3. Learning Outcomes Develop operational plan Plan and manage resource acquisition Monitor and review operational performance 6/ 2/ 2015 3 pr.by H. D

4. LO1: Develop operational plan Production /manufacturing is the process of converting raw materials or semi-finished products into finished products that have value in the market place. This process involves the contribution of labor, equipment, energy, and information. 6/ 2/ 2015 pr.by H. D 4

5. production as ‘ a process by which goods and services are created ’. Some examples of production are: manufacturing custom-made products like, boilers with a specific capacity, constructing flats, some structural fabrication works for selected customers, etc., and manufacturing standardized products like, car, bus, motor cycle, radio, television, etc 6/ 2/ 2015 pr.by H. D 5

6. OPERATIONS MANAGEMENT CONCEPTS 1.1 INTRODUCTION Operation is that part of as organization, which is concerned with the transformation of a range of inputs into the required output (services) having the requisite quality level. The set of interrelated management activities, which are involved in manufacturing certain products, is called as production management . If the same concept is extended to services management, then the corresponding set of management activities is called as operations management. 6/ 2/ 2015 pr.by H. D 6

7. Operation Management as Process Operation Management deal with PROCESS that produce “Goods” & “Service” ? Add value ? Out put in put 6/ 2/ 2015 7 pr.by H. D

8. CON. 6/ 2/ 2015 pr.by H. D 8

9. Concept of Operations Operations in an organization can be categorizedInto manufacturing operations and service operations. Manufacturing operations is a conversion Process that includes manufacturing yields a tangible output: a product, whereas, service operation a conversion process that includes service yields an intangible output: a deed, a performance, an effort. 6/ 2/ 2015 pr.by H. D 9

10. Objectives of Production Management The objective of the production management is ‘to produce goods services of right quality and quantity at the right time and right manufacturing cost ’ 6/ 2/ 2015 pr.by H. D 10

11. Operation Management as Process PROCESS should be design with according to customer “Needs” and “Wants” Customer Internal External 6/ 2/ 2015 11 pr.by H. D

12. Operation Management as Process Manufacturing vs. Service Process Process The main differences between the two: Nature of their output Degree of customer contact Manufacturing: without it there will be “products” Services: 80% of job in business 6/ 2/ 2015 12 pr.by H. D

13. Operation Management as Process Manufacturing and Service is difficult to distinguish Total Customer Offering Automobile is not just manufacture a car but also provide after sale service like arrange finance, offering warranties and guarantees. Computer industry, customer is paying both hardware and software but after sale service is very important like help-line for troubleshooting. Therefore, operation management should not see as manufacturing vs. service BUT as joint effort in the whole supply chain to provide total customer satisfaction. 6/ 2/ 2015 13 pr.by H. D

14. Operation Management as Process Manufacturing and Service some other example: The product is intangible for service operation Is this still true? Service companies speak a lot about their “products” “intangible” become “tangible” Service can not be kept in the stock? Let’s examine the cases In “tangible” services business such as the Pizza Company, KFC, Lucky Burger, the supporting elements of the service (supplies) is clear and will be kept in stock. Pachem dental clinic must have their doctors ready to provide service to customers, therefore “kept stock” Some products can not be stock that long i.e. perishable foods BUT even CD music can last for years, it is not advised to keep it that long. 6/ 2/ 2015 14 pr.by H. D

15. Operation Management as Process Manufacturing and Service some other example: Service vary and can not be mass-produce Depend on where and how we view the service. KFC is consider service but still can produce large volume and diverse types There is high customer contact It is estimated that there is less than 5 min contact between passengers and flight attendances from Phnom Penh to Singapore Crown (Cambodia) spend a lot of time visiting their customers The introduction of ATM machines by ANZ and other banks has reduce tremendous amount of contact between customer and bankers. 6/ 2/ 2015 15 pr.by H. D

16. Operation Management as Process Manufacturing and Service some other example: Customers participate in the service Not really necessary and always the case! With IT system customer could check in without having to see the counter staffs, therefore reduce check in time process for air transport companies. Facilities are located near to customers That was really in the past! Still true for some cases… With modernization of IT, Angkor Home Hotel in Siem Reap can be book from Tokyo, Operation Management books can be bought from Amazon.com and have it ship straight to office door in Phnom Penh. 6/ 2/ 2015 16 pr.by H. D

17. Operation Management as Process Manufacturing and Service some other example: Quality is difficult to measure and depends on the server In services industry, time is an important dimension in measure quality – speed and reliability of response are measurable and quantifiable… Gone in 60 seconds! By McDonald fast food chain… vs. long line up of Lucky Burger, KFC, Pizza Company… during peak time! 6/ 2/ 2015 17 pr.by H. D

18. Operation Management as Process The service management system 1. Culture & Philosophy 5. Service Delivery System 4. Service Concept 2. Market Segment 3. Service Image Service Management System (Norman, 2000) Who we target for? Where we choose to be and not to be? External environment Internal environment Specification that describe the benefit offered by service. The way service concept is delivered. 6/ 2/ 2015 18 pr.by H. D

19. Operation Management as Process Manufacturing and Service – the key points It is not always helpful when trying to manage operation by making a total distinction between service and manufacturing Manufacturing and service is about the collaboration activities in providing customers the goods or services The effort should use to distinction between input that manufacturing & service process (materials & customers) Remember: materials do not think or act for themselves while customers can and do . Service companies that forget this would die soon… 6/ 2/ 2015 19 pr.by H. D

20. The production system The production system The production system is a system whose function is to transform an input into a desired output by means of a process (the production process) and of resources. Of an organization is that part, which produces products of an organization. The definition of a production system is thus based on four main elements: the input, the resources, the production process and the output. It is that activity whereby resources, flowing within a defined system, are combined and transformedin a controlled manner to add value in accordance with the policies communicated by manag ement. 6/ 2/ 2015 pr.by H. D 20

21. The production system has the following characteristics: 1. Production is an organized activity, so every production system has an objective. 2. The system transforms the various inputs to useful outputs. 3. It does not operate in isolation from the other organization system. 4. There exists a feedback about the activities, which is essential to control and improve System performance. 6/ 2/ 2015 pr.by H. D 21

22. Types of Production Systems A production system can be defined as a transformation system in which a saleable product or service is created by working upon a set of inputs. Inputs are usually in the form of men, machine, money, materials etc. Production systems are usually classified on the basis of the following: • Type of product, • Type of production line, • Rate of production, • Equipment used etc. Production systems can be classified as Job Shop, Batch, Mass and Continuous ProductionSystems . 6/ 2/ 2015 pr.by H. D 22

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24. JOB SHOP PRODUCTION Job shop production are characterized by manufacturing of one or few quantity of products designed and produced as per the specification of customers within prefixed time and cost. The distinguishing feature of this is low volume and high variety of products. A job shop comprises of general purpose machines arranged into different departments. Each job demands unique technological requirements, demands processing on machines in a certain sequence 6/ 2/ 2015 pr.by H. D 24

25. Characteristics The Job-shop production system is followed when there is: 1. High variety of products and low volume. 2. Use of general purpose machines and facilities. 3. Highly skilled operators who can take up each job as a challenge because of uniqueness. 4. Large inventory of materials, tools, parts. 6/ 2/ 2015 pr.by H. D 25

26. Advantages Following are the advantages of job shop production: 1. Because of general purpose machines and facilities variety of products can be produced. 2. Operators will become more skilled and competent, as each job gives them learning opportunities. 3. Full potential of operators can be utilized. 4. Opportunity exists for creative methods and innovative ideas 6/ 2/ 2015 pr.by H. D 26

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28. BATCH PRODUCTION Batch production is defined by American Production and Inventory Control Society (APICS) “as a form of manufacturing in which the job passes through the functional departments in lots or batches and each lot may have a different routing.” It is characterized by the manufacture of limited number of products produced at regular intervals and stocked awaiting sales. 6/ 2/ 2015 pr.by H. D 28

29. Characteristics Batch production system is used under the following circumstances: 1. When there is shorter production runs. 2. When plant and machinery are flexible. 3. When plant and machinery set up is used for the production of item in a batch and change of set up is required for processing the next batch. 4. When manufacturing lead time and cost are lower as compared to job order production. 6/ 2/ 2015 pr.by H. D 29

30. Advantages Following are the advantages of batch production: 1. Better utilization of plant and machinery. 2. Promotes functional specialization. 3. Cost per unit is lower as compared to job order production. 4. Lower investment in plant and machinery. 5. Flexibility to accommodate and process number of products. 6. Job satisfaction exists for operators. 6/ 2/ 2015 pr.by H. D 30

31. Limitations Following are the limitations of batch production: 1. Material handling is complex because of irregular and longer flows. 2. Production planning and control is complex. 6/ 2/ 2015 pr.by H. D 31

32. MASS PRODUCTION Manufacture of discrete parts or assemblies using a continuous process are called mass production. This production system is justified by very large volume of production. The machines are arranged in a line or product layout. Product and process standardization exists and all outputs follow the same path. 6/ 2/ 2015 pr.by H. D 32

33. Characteristics Mass production is used under the following circumstances: 1. Standardization of product and process sequence. 2. Dedicated special purpose machines having higher production capacities and output rates. 3. Large volume of products. 4. Shorter cycle time of production. 5. Lower in process inventory. 6. Perfectly balanced production lines.   6/ 2/ 2015 pr.by H. D 33

34. Advantages Following are the advantages of mass production: 1. Higher rate of production with reduced cycle time. 2. Higher capacity utilization due to line balancing. 3. Less skilled operators are required. 4. Low process inventory. 5. Manufacturing cost per unit is low. 6/ 2/ 2015 pr.by H. D 34

35. Limitations Following are the limitations of mass production: 1. Breakdown of one machine will stop an entire production line. 2. Line layout needs major change with the changes in the product design. 3. High investment in production facilities. 4. The cycle time is determined by the slowest operation. 6/ 2/ 2015 pr.by H. D 35

36. CONTINUOUS PRODUCTION Production facilities are arranged as per the sequence of production operations from the first operations to the finished product. The items are made to flow through the sequence of operations through material handling devices such as conveyors, transfer devices, etc. Characteristics Continuous production is used under the following circumstances: 1. Dedicated plant and equipment with zero flexibility. 2. Material handling is fully automated. 3. Process follows a predetermined sequence of operations. 4. Component materials cannot be readily identified with final product.. 6/ 2/ 2015 pr.by H. D 36

37. Advantages Following are the advantages of continuous production: 1. Standardization of product and process sequence. 2. Higher rate of production with reduced cycle time. 3. Higher capacity utilization due to line balancing. 4. Manpower is not required for material handling as it is completely automatic. Limitations Following are the limitations of continuous production: 1. Flexibility to accommodate and process number of products does not exist. 2. Very high investment for setting flow lines. 6/ 2/ 2015 pr.by H. D 37

38. Objectives of Production Management The objective of the production management is ‘to produce goods services of right quality and quantity at the right time and right manufacturing cost’.  1. RIGHT QUALITY The quality of product is established based upon the customers’ needs. The right quality is not necessarily best quality. It is determined by the cost of the product and the technical characteristics as suited to the specific requirements. 2. RIGHT QUANTITY The manufacturing organization should produce the products in right number. If they are produced in excess of demand the capital will block up in the form of inventory and if the quantity is produced in short of demand, leads to shortage of products. 6/ 2/ 2015 pr.by H. D 38

39. 3. RIGHT TIME Timeliness of delivery is one of the important parameter to judge the effectiveness of production Department. So, the production department has to make the optimal utilization of input resourcesto achieve its objective. 4. RIGHT MANUFACTURING COST Manufacturing costs are established before the product is actually manufactured. Hence, all attempts should be made to produce the products at pre-established cost, so as to reduce the variation between actual and the standard (pre-established) cost. 6/ 2/ 2015 pr.by H. D 39

40. Distinction between Manufacturing Operations and Service Operations 1. Tangible/Intangible nature of output 2. Consumption of output 3. Nature of work (job) 4. Degree of customer contact 5. Customer participation in conversion 6, Measurement of performance. 6/ 2/ 2015 pr.by H. D 40

41. Objectives of Production Management The objective of the production management is ‘to produce goods services of right quality and quantity at the right time and right manufacturing cost’. 1. RIGHT QUALITY The quality of product is established based upon the customers’ needs. The right quality is not necessarily best quality. It is determined by the cost of the product and the technical characteristics as suited to the specific requirements. 6/ 2/ 2015 pr.by H. D 41

42. 2. RIGHT QUANTITY The manufacturing organization should produce the products in right number. If they are produced in excess of demand the capital will block up in the form of inventory and if the quantity is produced in short of demand, leads to shortage of products 6/ 2/ 2015 pr.by H. D 42

43. 3. RIGHT TIME Timeliness of delivery is one of the important parameter to judge the effectiveness of production Department. So, the production department has to make the optimal utilization of input resources to achieve its objective. 6/ 2/ 2015 pr.by H. D 43

44. 4. RIGHT MANUFACTURING COST Manufacturing costs are established before the product is actually manufactured. Hence, all attempts should be made to produce the products at pre-established cost, so as to reduce the variation between actual and the standard (pre-established) cost. 6/ 2/ 2015 pr.by H. D 44

45. Distinction between Manufacturing Operations and Service Operations Following characteristics can be considered for distinguishing manufacturing operations with service operations : 1. Tangible/Intangible nature of output 2. Consumption of output 3. Nature of work (job) 4. Degree of customer contact 5. Customer participation in conversion 6. Measurement of performance. 6/ 2/ 2015 pr.by H. D 45

46. Manufacturing is characterized by tangible outputs (products), outputs that customers consumeOvertime , jobs that use less labor and more equipment, little customer contact, no customer participation in the conversion process (in production), and sophisticated methods for measuringProduction activities and resource consumption as product are made. Service is characterized by intangible outputs, outputs that customers consumes immediately, jobs that use more labor and less equipment, direct consumer contact, frequent customer participation in the conversion process, and elementary methods for measuring conversion activities and resource consumption. Some services are equipment based namely rail-road services, telephone services and some are people based namely tax consultant services, hair styling.   6/ 2/ 2015 pr.by H. D 46

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51. A Framework for Managing Operations PLANNING Activities that establishes a course of action and guide future decision-making is planning . ORGANIZING Activities that establishes a structure of tasks and authority CONTROLLING Activities that assure the actual performance in accordance with planned performance . BEHAVIOUR Operation managers are concerned with how their efforts to plan, organize, and control affect human behavior . MODELS As operation managers plan, organize, and control the conversion process, they encounter many problems and must make many decisions 6/ 2/ 2015 pr.by H. D 51

52. SCOPE OF PRODUCTION AND OPERATIONS MANAGEMENT Operations management functions: 1. Location of facilities 2. Plant layouts and material handling 3. Product design 4. Process design 5. Production and planning control 6. Quality control 7. Materials management 8. Maintenance management. 6/ 2/ 2015 pr.by H. D 52

53. LOCATION OF FACILITIES Location of facilities for operations is a long-term capacity decision which involves a long term commitment about the geographically static factors that affect a business organization. It is an important strategic level decision-making for an organization. PLANT LAYOUT AND MATERIAL HANDLING Plant layout refers to the physical arrangement of facilities. PRODUCT DESIGN Product design deals with conversion of ideas into reality PROCESS DESIGN Process design is a macroscopic decision-making of an overall process route for converting the raw material into finished goods 6/ 2/ 2015 pr.by H. D 53

54. PRODUCTION PLANNING AND CONTROL Main functions of production planning and control includes planning, routing, scheduling, dispatching and follow-up. Planning is deciding in advance what to do, how to do it, when to do it and who is to do it. Planning bridges the gap from where we are, to where we want to go. It makes it possible for things to occur which would not otherwise happen. Routing may be defined as the selection of path which each part of the product will follow, which being transformed from raw material to finished products. Routing determines the most advantageous path to be followed from department to department and machine to machine till raw material gets its final shape. Scheduling determines the programme for the operations. Scheduling may be defined as ‘the fixation of time and date for each operation’ as well as it determines the sequence of operations to be followed. 6/ 2/ 2015 pr.by H. D 54

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56. QUALITY CONTROL Quality Control (QC) may be defined as ‘a system that is used to maintain a desired level of quality in a product or service ’ The main objectives of quality control are: To improve the companies income by making the production more acceptable to the customers i.e. , by providing long life, greater usefulness, maintainability, etc. To reduce companies cost through reduction of losses due to defects. To achieve interchangeability of manufacture in large scale production. To produce optimal quality at reduced price. To ensure satisfaction of customers with productions or services or high quality level, tobuild customer goodwill, confidence and reputation of manufacturer. To make inspection prompt to ensure quality control. To check the variation during manufacturing. 6/ 2/ 2015 pr.by H. D 56

57. MATERIALS MANAGEMENT Materials management is that aspect of management function which is primarily concerned with the acquisition, control and use of materials needed and flow of goods and services connected with the production process having some predetermined objectives in view 6/ 2/ 2015 pr.by H. D 57

58. con The main objectives of materials management are: To minimize material cost. To purchase, receive, transport and store materials efficiently and to reduce the related cost. To cut down costs through simplification, standardization, value analysis, import substitution, etc. To trace new sources of supply and to develop cordial relations with them in order to ensure continuous supply at reasonable rates. To reduce investment tied in the inventories for use in other productive purposes and to develop high inventory turnover ratios. 6/ 2/ 2015 pr.by H. D 58

59. MAINTENANCE MANAGEMENT In modern industry, equipment and machinery are a very important part of the total productive effort. Therefore, their idleness or downtime becomes are very expensive. Hence, it is very important that the plant machinery should be properly maintained. The main objectives of maintenance management are: 1. To achieve minimum breakdown and to keep the plant in good working condition at the lowest possible cost. 2. To keep the machines and other facilities in such a condition that permits them to be usedat their optimal capacity without interruption. 3. To ensure the availability of the machines, buildings and services required by other section of the factory for the performance of their functions at optimal return on investment. 6/ 2/ 2015 pr.by H. D 59

60. Factory Level Production management 1. Planning 2. Production Management 3. Manufacturing production scheduling (MPS) 4. Material requirement planning (MRP) 5. Just in time (JIT) 6. Bill of Materials 7. Capacity Planning 8. Inventory Control 6/ 2/ 2015 pr.by H. D 60

61. Operational Plans Specify the details of how the overall goals are to be achieved. Cover short time period.  Planning is not just forecasting – it should aim to change the future  Planning is an art not a science - there is no one right way to plan  Plans should not be set in stone  Plans are not just the paper they are written on – they must influence peoples’ behavior 6/ 2/ 2015 pr.by H. D 61

62. There are three types of plan used at different levels within an organization: Thestrategic plan; is developed for long-term planning and covers a period of about five years . The strategic plan specifies the missions and goals of the organization including decisions on how resources, both capital and human, will be allocated to meetorganizational goals. Business plans; sit between the highest-level plan (the strategic plan) and the operationa lplan . A business plan is a formal statement of a set of business goals and objectives thatare to be achieved to meet the strategic objectives of the organization. The business planincludes the reasons why the goals and objectives are believed to be attainable, the planfor reaching those goals inclusive of relevant information about the organization. 3 An operational plan ; focuses on the short-term objectives : what needs to be accomplishedin the near future in order that the company can progress towards achieving its strategic objectives. Operational plans generally have a focus of less than one year and are quite detailed in terms of what needs to be implemented and how 6/ 2/ 2015 pr.by H. D 62

63. LO2: Plan and manage resource acquisition The Look up pattern can be used with both reusable and non-reusable resources Resource Acquisition (gaining) •Specify the plan for acquiring the resources and assets, in addition to personnel, needed to successfully complete the project. • Describe the resource acquisition process. • Specify the assignment of responsibility for all aspects of resource acquisition. • Specify acquisition plans for equipment, computer hardware and software, training, service contracts, transportation, facilities, and administrative and janitorial services. • Specify when in the project schedule the various acquisition activities will be required. •Specify any constraints on acquiring the necessary resources. 6/ 2/ 2015 pr.by H. D 63

64. The Look up pattern describes how to find and access resources , whether local or distributed 6/ 2/ 2015 pr.by H. D 64

65. Resource Acquisition (gaining) • Specify the plan for acquiring the resources and assets, in addition to personnel, needed to successfully complete the project. • Describe the resource acquisition process. • Specify the assignment of responsibility for all aspects of resource acquisition. • Specify acquisition plans for equipment, computer hardware and software, training, service contracts, transportation, facilities, and administrative and janitorial services. • Specify when in the project schedule the various acquisition activities will be required. • Specify any constraints on acquiring the necessary resources. 6/ 2/ 2015 pr.by H. D 65

66. Resource Acquisition (gaining) • Specify the plan for acquiring the resources and assets, in addition to personnel, needed to successfully complete the project. • Describe the resource acquisition process. • Specify the assignment of responsibility for all aspects of resource acquisition. • Specify acquisition plans for equipment, computer hardware and software, training, service contracts, transportation, facilities, and administrative and janitorial services. • Specify when in the project schedule the various acquisition activities will be required. • Specify any constraints on acquiring the necessary resources. 6/ 2/ 2015 pr.by H. D 66

67. The following participants form the structure of the Lookup pattern:  A resource user uses a resource.  A resource is an entity such as a service that provides some type of functionality.  A resource provider offers resources and advertises them via the lookup service.  A lookup service provides the capability for resource providers to advertise resources via references to themselves, and for resource users to find these references 6/ 2/ 2015 pr.by H. D 67

68. The following class diagram illustrates the structure of the Look up pattern. 6/ 2/ 2015 pr.by H. D 68

69. Strategic HRM is developed through three steps: 1. Decide on the strategic goals 2. Identify employee skills and behaviors necessary for success 3. Formulate HR management policies and practices that will produce these required skills 6/ 2/ 2015 pr.by H. D 69

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71. Step 1: Define the current business Begin by asking these questions: – What products do we sell? – Where do we sell these products? – How do our products or services differ from our competitors? Step 2: Perform External and Internal Situational Audits • The key to success is adaptation • Situational audits require SWOT (strengths, weaknesses, opportunities, and threats) analysis 6/ 2/ 2015 pr.by H. D 71

72. Step 3: Formulate a New Business Direction • What should our new business be in terms of product, placement and competitive advantage? • The vision statement describes the following: What do we want to become? • The mission statement explains the following: Where are we now? Step 4: Translate the Mission into Strategic Goals • Operationalize the mission for managers • What does the mission mean to each department? • What goals follow implementation? 6/ 2/ 2015 pr.by H. D 72

73. Step 5: Formulate Strategies to Achieve the Strategic Goals • What is the game plan? • Decide on a course of action – Best strategies are concise –Easily communicated Step 6: Implement the Strategies • Get the game plan going • Do what needs to be done – Hire or fire people – Build or close plants –Adding or eliminating products and product lines Step 7: Evaluate Performance • Evaluate , evaluate, evaluate • Ongoing process vis-à-vis strategic control •Addresses the following questions: –Are resources being utilized as planned? –Are inconsistency explained? – Do changes in our situation suggest change? 6/ 2/ 2015 pr.by H. D 73

74. Contents Map Operation Management as Process Value Chain Management What is operation management? Scope of responsibility of operation manager Trends and challenges in OM 6/ 2/ 2015 74 pr.by H. D

75. Value Chain Management What is value chain? Process must add value to their customers Activities that are necessary for adding values Therefore, It is about value chain management!!! See: Value Innovation 6/ 2/ 2015 75 pr.by H. D

76. Value Chain Management It is about management of “value added activities” in the whole supply chain (supply chain management) Processes are resource consumer , therefore its activities of converting input to output must be examine carefully. They should value added! A business is profitable if the value it creates exceeds the cost of performing the value activities (Porter, 2001) Core processes 6/ 2/ 2015 76 pr.by H. D

77. The Value Chain (Porter, M. 2001) A company’s value chain is a system of interdependent activities which are connected by linkages . Linkages exist when the way in which one activity is performed affects the cost or effectiveness of other activities. Therefore need to be trade-off & coordination! 6/ 2/ 2015 77 pr.by H. D

78. Contents Map Operation Management as Process Value Chain Management What is operation management? Scope of responsibility of operation manager Trends and challenges in OM 6/ 2/ 2015 78 pr.by H. D

79. Definition of Operation Management Systematic design, direction, and control of process that transforming input into product/service for external & internal customers In large organization, operation is usually responsible for the actual transformation of input into services & products. Therefore, it is consisted of series of small operation which work as function. Some firms do not own the function but “contracting” Most of senior level executive have their work experience in operation i.e. VP Operation or Production, Chief Operation Officer (COO) Typical report function to COO include Customer Service, Production, Logistic, QA, Inventory, Maintenance & Reliability etc. 6/ 2/ 2015 79 pr.by H. D

80. Contents Map Operation Management as Process Value Chain Management What is operation management? Scope of responsibility of operation manager Trends and challenges in OM 6/ 2/ 2015 80 pr.by H. D

81. Scope of responsibility of OM Decision COO makes both Strategic and Tactics Decision making process: 6/ 2/ 2015 81 pr.by H. D

82. Scope of responsibility of OM Strategic vs. Tactics decision Strategic decision include: Development of new capabilities Maintaining of existing ones Process design Value chain linkage development KPIs development (finance and non finance matrices) Tactics decision include: Process improvement Performance measurement & management (see: Kaplan & Norton, Davenport-analytical performance management) Managing projects Planning Inventory Supplement docs: The three level of decision making 6/ 2/ 2015 82 pr.by H. D

83. Scope of responsibility of OM 2 Principles must be kept in mind as COO: Must design and operate processes deal with Quality, Technologies, and staffing issues Each part of organization has its own identity 6/ 2/ 2015 83 pr.by H. D

84. Contents Map Operation Management as Process Value Chain Management What is operation management? Scope of responsibility of operation manager Trends and challenges in OM 6/ 2/ 2015 84 pr.by H. D

85. Trends & Challenges in managing operation Productivity Global competition Technologies changes Environmental issues Ethical Diversity 6/ 2/ 2015 85 pr.by H. D

86. Trends & Challenges in managing operation Productivity Four strategies to consider: 6/ 2/ 2015 86 pr.by H. D

87. Trends & Challenges in managing operation Global competition It is agreed that to “prosper & survive” business have to view customers, suppliers, facilities location, and competitor in global terms Feature articles: “What it take to compete in flat world” “Global competition for resources” 6/ 2/ 2015 87 pr.by H. D

88. Trends & Challenges in managing operation Technological changes: Thus, the first and critical point about why we fail to see the need for change stems from the fact that we stand blinded by the light of successful past mental maps (Black & Gregerson,2008). Feature articles: “strategy & the internet” “It is all start with ones” “How information gives you competitive advantages” LFC vs KFC 6/ 2/ 2015 88 pr.by H. D

89. Trends & Challenges in managing operation Environmental issues: Companies that persist in treating climate change solely as a corporate social responsibility issue, rather than a business problem, will risk the greatest consequences (Porter & Reinhardt, 2007). Feature articles: “business climate and climate business” “Impact of Climate Changes on future business strategy adoption” “Virtual Matrix of Corporate Social Responsibility” 6/ 2/ 2015 89 pr.by H. D

90. Trends & Challenges in managing operation Business ethic: Raising the bar of rules or standards governing the conduct of doing business Feature articles: http://en.wikipedia.org/wiki/Business_ethics http://www.scu.edu/ethics/ 6/ 2/ 2015 90 pr.by H. D

91. Trends & Challenges in managing operation Workplace diversity: Managing diversity is comprehensive process for creating work environment that includes everyone There is single recipe for success! Feature articles: Harvard Business Review on “Managing Diversity” Harvard Business Review on “Culture Changes” Diversity as strategy – Harvard Business Review Diversity at workplace: benefits , challenges, and required material tools 6/ 2/ 2015 91 pr.by H. D

92. Trends & Challenges in managing operation Feature articles: “5 Competitive Forces that Shape Strategy” 6/ 2/ 2015 92 pr.by H. D

93. Question… ? 6/ 2/ 2015 93 pr.by H. D

94. Class activities Objectives: To get deeper understand of business present & future trends & challenges Increase level of competences in business research Team work in practices Business presentation skill Topics: Productivity improvement challenges Globalization – The competition for resources. Try to answer “why companies are competing with everyone from everywhere for everything? Climate changes – threats and opportunities for business in the future (to include case studies) Management of workplace diversity Using Service Management Model developed by Norman, compare service offer by The Pizza Company, Lucky Burger, KFC, Pizza World, and Soksabby . 6/ 2/ 2015 94 pr.by H. D

95. Class activities Team A – Lead by: Member: B – Lead by: Member: C – Lead by: Member: D – Lead by: Member: E – Lead by: Member: Requirements: Paper works > 14 pages Presentation 20 – 30 min Q&A < 15 min Each team member must present To be effective Deadline must Be set 6/ 2/ 2015 95 pr.by H. D