Introduction to operations and logistics management

The competent and adept management of complex systems in the service, non- profit, manufacturing, and government sectors via the effective and efficient utilization of time, labor, money and materials in the generation of goods and / or services.

Introduction to operations and logistics management :
Introduction
Importance
Scope
Trends
Careers
Course Overview

1. OPERATIONS and LOGISTICS OPERATIONS and LOGISTICS
MANAGEMENTMANAGEMENT
IntroductionIntroduction
ImportanceImportance
ScopeScope
TrendsTrends
CareersCareers
Course OverviewCourse Overview
Applied Management Science for Decision Making, 1e © 2012 Pearson Prentice-Hall, Inc. Philip A. Vaccaro, PhD

2. Operations ManagementOperations Management
The competent and adept management
of complex systems in the service, non-
profit, manufacturing, and government
sectors via the effective and efficient
utilization of time, labor, money, and
materials in the generation of goods
and/or services.

DEFINITION

3. OverviewOverview
Operations Management plans for, and creates the
competitive advantagescompetitive advantages that all businesses need
for fueling profitable growth. As a result, OM is
the most critical of the business functions.
Studying OM means studying modern planning,
decision-making and management methods in all
functional areas of an organization, including
strategic and tactical planning, products and services
development, product and project management,
process and supply chain management, and more.

4. Why Study OM?Why Study OM?
MARKETINGMARKETING
FINANCEFINANCE
All firms market (sell) , finance (account), and produce (operate)
The
Strategic
Triad
I.Operations Management is one of the three
major functions of any organization……and
they are integrally related.
THE
STRATEGIC
TRIAD
PRODUCTIONPRODUCTION

5. Why Study OM?Why Study OM?
II. Operations Management shows
us how goods and services are
generated. Consequently, it is
the………
foundation of all business!foundation of all business!

6. Why Study OM?Why Study OM?


III. Operations Management shows us what
OM managers do. This enables us to learn
the skills, techniques, and models needed
to practice 21
st
century management, and
to also explore the lucrative career oppor-
tunities in OM.

7. Why Study OM?Why Study OM?
 Manufacturing activity
 Warehousing
 Distribution
 Inventories
 Research and Development
 Maintenance
 Facilities and Equipment
 Worker training
 Cost and Quality Control
 Planning and Scheduling
IV. Operations Management represents as
much as 70% of the operating budget
of most firms due to:

8. Why Study OM?Why Study OM?
V. Operations Management, by virtue of its
huge collective budget, provides a major
opportunity for the firm to improve its
profitability.
In fact, OM has become the last resort
for most firms that have exhausted the
potential of marketing, finance, and
general management.

9. Why Study OM?Why Study OM?
VI. About 40% of allAbout 40% of all jobs in the United States jobs in the United States
are in are in Operations ManagementOperations Management. .
Exposure to the following disciplines will Exposure to the following disciplines will
enhance one’s job prospects:enhance one’s job prospects:
 Operations research
 Statistics
 Information systems
 Economics
 Logistics / Transportation
 Mathematics
 Accounting / Finance
 Computer science
 Engineering
 Manufacturing

10. What OM Managers DoWhat OM Managers Do
 Supervise skilled trade
workers & technicians.
 Manage the production
and technical operations.
 Integrate new technology
into manufacturing and
service processes.

11. What OM Managers DoWhat OM Managers Do
 Develop, monitor, and
update measures of
efficiency.
 Develop, monitor, and
change operating plans
and schedules.
 Control costs and quality.

12. What OM Managers DoWhat OM Managers Do
 Evaluate and improve the
existing operating system
in terms of productivity and
customer responsiveness.
 Translate improved operating
systems into competitive ad-
vantage in the marketplace.

13. OM Necessary SkillsOM Necessary Skills
 Keen understanding of people and processes.
 Ability to solve problems in multi-disciplinary
teams.
 Strong leadership/coordinating ability.
 Strong analytical and problem-solving skills.
 Strong interpersonal communication skills.
 Strong background in mathematics.
 Strong background in computer programming.
 Proficiency in one or more foreign languages.
 Graduate degree in the field or a related field.

14. Exciting New Trends in OMExciting New Trends in OM
CAUSESCAUSES FUTUREFUTURE
Global FocusGlobal Focus
Just-in-TimeJust-in-Time
ShipmentsShipments
Low cost, reliable
global
communication
and transport
networks
Cost of capital
puts pressure
on the reduction
of inventory
investment

15. Exciting New Trends in OMExciting New Trends in OM
CAUSESCAUSES FUTUREFUTURE
Quality emphasis
requires that
suppliers be
engaged in
product
improvement
Shorter product life
cycles, computer-aided
design, international
collaboration and
rapid communication
Supply ChainSupply Chain
PartnersPartners
Rapid ProductRapid Product
DevelopmentDevelopment

16. Exciting New Trends in OMExciting New Trends in OM
CAUSESCAUSES FUTUREFUTURE
Affluence and worldwide
markets.
Increasingly flexible
production processes.
Changing socio-culture
milieu.
An increasingly
knowledge and
information based
society.
MassMass
CustomizationCustomization
EmpoweredEmpowered
Employees,Employees,
Teams, and LeanTeams, and Lean
ProductionProduction

17. Career PossibilitiesCareer Possibilities
 Business Executive
 Blue-Collar Supervisor
 Construction Manager
 Production Manager
 Operations Manager
 Information System
Manager
 Materials Manager
 Project Manager
 Customer Service Mgr
 Defense Analyst
 Purchasing Agent
 Inventory Analyst
 Cost Estimator
 Systems Analyst
 Industrial Engineer
 Quality Control Mgr
 Time & Motion Analyst
 Operations Scheduler
 Operations Planner
 Process Improvement
Manager

18. Career Possibilities
In corporations, OM managers are responsible for developing
new products and services, the strategic and tactical plans,
and the execution of, and realization of the plans.
Demand for OM concentrators is particularly high in
financial services, IT, manufacturing, non-profit,
government, education, and health care.
Entrepreneurs will find OM knowledge pivotal.
The advancement opportunities are superior and may lead
all the way to the organization’s senior leadership.

19. The Ten Critical DecisionsThe Ten Critical Decisions
OPERATIONS MANAGEMENTOPERATIONS MANAGEMENT
1. SERVICE AND PRODUCT DESIGN
 What goods or services should we offer?
 How should we design these products?

20. The Ten Critical DecisionsThe Ten Critical Decisions
OPERATIONS MANAGEMENTOPERATIONS MANAGEMENT
2. QUALITY MANAGEMENT
 Who is responsible for quality?
 How do we define the quality we want
in our services and products?

21. The Ten Critical DecisionsThe Ten Critical Decisions
OPERATIONS MANAGEMENTOPERATIONS MANAGEMENT
3. PROCESS AND CAPACITY DESIGN
 What processes will these products require
and in what order?
 What equipment and technology is necessary
for these processes?

22. The Ten Critical DecisionsThe Ten Critical Decisions
OPERATIONS MANAGEMENTOPERATIONS MANAGEMENT
4. LOCATION
 Where should we put the facility?
 On what criteria should we base the
location decision?

23. The Ten Critical DecisionsThe Ten Critical Decisions
OPERATIONS MANAGEMENTOPERATIONS MANAGEMENT
5. LAYOUT DESIGN
 How should we arrange the facility?
 How large must the facility be to meet
our plan?

24. The Ten Critical DecisionsThe Ten Critical Decisions
OPERATIONS MANAGEMENTOPERATIONS MANAGEMENT
6. HUMAN RESOURCES & JOB DESIGN
 How do we provide a reasonable work
environment?
 How much can we expect our employees
to produce?

25. The Ten Critical DecisionsThe Ten Critical Decisions
OPERATIONS MANAGEMENTOPERATIONS MANAGEMENT
7. SUPPLY CHAIN MANAGEMENT
 Should we manufacture or buy a particular
component or product?
 Who are our good suppliers and how many
should we have?

26. The Ten Critical DecisionsThe Ten Critical Decisions
OPERATIONS MANAGEMENTOPERATIONS MANAGEMENT
8. INVENTORY CONTROL AND
JUST-in-TIME ( JIT )
 How much inventory of each item should
we have?
 When do we reorder or manufacture?

27. The Ten Critical DecisionsThe Ten Critical Decisions
OPERATIONS MANAGEMENTOPERATIONS MANAGEMENT
9. INTERMEDIATE, SHORT-TERM, AND
PROJECT SCHEDULING
 Is subcontracting or outsourcing production
a good idea?
 Are we better off keeping people on the payroll
during slowdowns?
 Which job do we perform next?

28. The Ten Critical DecisionsThe Ten Critical Decisions
OPERATIONS MANAGEMENTOPERATIONS MANAGEMENT
10. MAINTENANCE
 Who is responsible for maintenance?
 When do we perform maintenance?
 What are the effects of a maintenance
program on productivity and efficiency?

29. WHY AACSB ACCREDITORS WHY AACSB ACCREDITORS
STRENGTHENED OM STRENGTHENED OM
GUIDELINESGUIDELINES
“ To sustain a career in business for
many years, a business graduate
needs an understanding of the
analytical foundations and tools
that are important for managerial
decision-making.”

30. WHY AACSB ACCREDITORS WHY AACSB ACCREDITORS
STRENGTHENED OM STRENGTHENED OM
GUIDELINESGUIDELINES
“ The explosive growth of information
technology applications is being driven by
management science-based models such as
decision analysis, scenario generation,
simulation, and optimization ”.*
* OPERATIONS MANAGEMENTOPERATIONS MANAGEMENT

31. WHY AACSB ACCREDITORS WHY AACSB ACCREDITORS
STRENGTHENED OM STRENGTHENED OM
GUIDELINESGUIDELINES
“Since management science techniques
are driving operations, supply chains,
and e-commerce, they constitute a
major driver of the entire economy.”

32. OPERATIONS OPERATIONS
MANAGEMENTMANAGEMENT
A Brief HistoryA Brief History
Applied Management Science for Decision Making, 1e © 2012 Pearson Prentice-Hall, Inc. Philip A. Vaccaro, PhD

33. 17761776
Adam Smith develops the concept Adam Smith develops the concept
of of specialization of laborspecialization of labor wherein wherein
the production process is broken the production process is broken
down into discrete stages allowing down into discrete stages allowing
specially-designed machines or specially-designed machines or
narrowly-trained workers to performnarrowly-trained workers to perform
each step with the least materialeach step with the least material
waste and the maximum productivity.waste and the maximum productivity.

34. 19001900
A Philadelphia engineer namedA Philadelphia engineer named
Frederick W. Taylor publishesFrederick W. Taylor publishes
The Principles of Scientific The Principles of Scientific
Management Management , a guide to , a guide to
increasing the efficiency of increasing the efficiency of
factory workers. factory workers.
His methods, known as His methods, known as
Taylorism, dominate industrialTaylorism, dominate industrial
work through much of the 20work through much of the 20
thth

century, from automobilecentury, from automobile
plants to McDonald’s.plants to McDonald’s.

35. 19001900
Frederick Taylor believed there were
natural laws governing production systems.
Once these laws were identified through
experimentation and observation, the best
way to perform any job or to produce any
product could be found.
He also called for separation of responsibilities
between floor workers and managers.
The latter would develop processes, jobs, work
methods, and select, train, plan, coordinate,
and control.

36. 19401940
Researchers in Britain and the Researchers in Britain and the
United States build mathematical United States build mathematical
models of North American shippingmodels of North American shipping
lanes. Their goal: to find an optimizedlanes. Their goal: to find an optimized
approach for getting convoys safely approach for getting convoys safely
past Nazi submarines.past Nazi submarines.
The result is operations research, a The result is operations research, a
mathematics discipline that now runsmathematics discipline that now runs
the logistics and operations of the the logistics and operations of the
modern world.modern world.

37. 1950s1950s
W. Edwards Deming begins teaching statistical
management in Japan. His thesis: Meticulous
Control of Quality also leads to lower costs.
His methods contribute to startling advances
in Japanese manufacturing which later spread
throughout the world.

38. 1980s1980s
W. Edward Deming and J.M. Juran stressed that..
 Everyone is responsible for quality… not just inspectors.
 Product should be made right the first time to avoid rework.
 Reliance on workers to make suggestions…not “experts”.
 Elimination of any activity or material that does not add
value to the product.

39. 1970s1970s
Manufacturing becomes Manufacturing becomes
the second major the second major
functional area of business functional area of business
to utilize the computer. to utilize the computer.
Applications includeApplications include
machine movementmachine movement
control, equipment & control, equipment &
material monitoring, material monitoring,
and the continuousand the continuous
adjustment of settings adjustment of settings
and flow rates.and flow rates.

40. Early 21Early 21
stst
Century Century
Database systems and all manufacturing equipment
and subsystems are integrated into a single system.
In theory, this computer-integrated manufacturing
system (CIM) would control and coordinate every
phase of production from initial customer order, to
custom-product design, inventory purchase orders,
tooling requirements, production schedules, tracking,
quality control monitoring, assembly of information
on productivity, profitability, and tool wear, as well
as shipping and billing.

41. Mission / Strategy RelationshipMission / Strategy Relationship
Corporate Mission and GoalsCorporate Mission and Goals
Product and Service SelectionsProduct and Service Selections
Market Segment SelectionsMarket Segment Selections
Competitive Advantage FactorsCompetitive Advantage Factors
Policy ConstraintsPolicy Constraints
Functional StrategiesFunctional Strategies
Operations,Operations,
Marketing, FinanceMarketing, Finance
Strategy ImplementationStrategy Implementation
andand
Performance MeasurementPerformance Measurement
Corporate StrategyCorporate Strategy
External FactorsExternal Factors
Internal FactorsInternal Factors
Data InputData Input
andand
FeedbackFeedback

42. Functional StrategiesFunctional Strategies
Corporate strategy dictates the individual
strategies of the firm’s three functional
units: marketing, finance, and operations.
The operations functional strategyoperations functional strategy should
identify tasks related to the planning, de-
sign, and operation of the production con-
version system.

43. Operations Functional Operations Functional
StrategyStrategy
 It must delineate the tasks that the operations
function must do well in order to support and
achieve the corporate strategy.
 Almost any operations task can be used to sup-
port a firm’s strategy but most firms can compete
very effectively by emphasizing one or two.
 The operations functional strategy should be con-
sistent with the marketing and finance strategies,
as well.

44. Operations Functional Operations Functional
StrategyStrategy
The ten critical decisionsten critical decisions of operations management
developed in chapter one provide an excellent check-
list for identifying the particular tasks that an opera-
tions functional strategy must perform in supporting
and achieving the firm’s corporate strategy.

45. Operations Functional Operations Functional
Strategy ChecklistStrategy Checklist
1. QUALITY QUALITY
- customer expectations- customer expectations
- quality systems design- quality systems design
- quality measures and standards- quality measures and standards
2.2. PRODUCTPRODUCT
- customized- customized
- standardized- standardized

46. Operations Functional Operations Functional
Strategy ChecklistStrategy Checklist
3. SUPPLY CHAINSUPPLY CHAIN
- sole or multiple vendors- sole or multiple vendors
- type of distribution system- type of distribution system

4.4. LABORLABOR
- specialized skills- specialized skills
- multiple skills- multiple skills

47. Operations Functional Operations Functional
Strategy ChecklistStrategy Checklist
5. MAINTENANCEMAINTENANCE
- “as needed”- “as needed”
- preventitive- preventitive
6.6. LAYOUTLAYOUT
- assembly line- assembly line
- work cells- work cells
- project- project

48. Operations Functional Operations Functional
Strategy ChecklistStrategy Checklist
7. INVENTORYINVENTORY
- ordering policy- ordering policy
- stockage levels- stockage levels
- type of system- type of system
8.8. PROCESSPROCESS
- scale of operation- scale of operation
- choice of technology- choice of technology
- in-house production- in-house production
- outsourcing- outsourcing

49. Operations Functional Operations Functional
Strategy ChecklistStrategy Checklist
9. SCHEDULINGSCHEDULING
- stable- stable
- variable- variable

10.10. LOCATIONLOCATION
- near supplier- near supplier
- near customer- near customer

50. The Dynamics of The Dynamics of
StrategyStrategy
Strategies change over time due to two reasons:

1. changes within the organization.
2. changes in the environment.
FOR EXAMPLE, CHANGES IN TECHNOLOGY, PRODUCT, OR PROCESS AFFECT FOR EXAMPLE, CHANGES IN TECHNOLOGY, PRODUCT, OR PROCESS AFFECT
A FIRM’S STRENGTHS AND WEAKNESSES, AND THEREFORE ITS STRATEGY.A FIRM’S STRENGTHS AND WEAKNESSES, AND THEREFORE ITS STRATEGY.

51. The Dynamics of The Dynamics of
StrategyStrategy
Birth Growth Maturity DeclineBirth Growth Maturity Decline
Sales + RevenuesSales + Revenues
THE PRODUCT LIFE CYCLETHE PRODUCT LIFE CYCLE

52. Change in Corporate & OM Change in Corporate & OM
Functional StrategiesFunctional Strategies
CORPORATECORPORATE
STRATEGYSTRATEGY
OPERATIONSOPERATIONS
STRATEGYSTRATEGY
STAGE
Birth
Growth
Maturity
Decline
INCREASE MARKET
SHARE, R+D, ENGRG
FREQUENT PRODUCT
AND PROCESS DESIGN
CHANGES, QUALITY
FOCUS, SHORT
PRODUCTION RUNS
STRENGTHEN HOLD ON
MARKET SEGMENT VIA
PRICING AND QUALITY
IMAGE
MORE PRODUCT OPTIONS
PRODUCT AND PROCESS
RELIABILITY
ENHANCE DISTRIBUTION
INCREASE CAPACITY
DEFEND MARKET SHARE
CUT COSTS
PRODUCT STANDARDIZATION
MINOR PRODUCT CHANGES
LONG PRODUCTION RUNS
INCREASE PROCESS STABILITY
COST CONTROL EVEN
MORE CRITICAL
REDUCE CAPACITY
ELIMINAT E POOR PROFIT M AKES + MODE LS
COST M INIMIZA TION
LIT TLE PRODUCT DIFF ERENTIAT ION

53. INTRODUCTION TO INTRODUCTION TO
OPERATIONS OPERATIONS
MANAGEMENTMANAGEMENT

Applied Management Science for Decision Making, 1e © 2012 Pearson Prentice-Hall, Inc. Philip A. Vaccaro , PhDApplied Management Science for Decision Making, 1e © 2012 Pearson Prentice-Hall, Inc. Philip A. Vaccaro , PhD

54. OPERATIONS and LOGISTICS OPERATIONS and LOGISTICS
MANAGEMENTMANAGEMENT
EPILOGUEEPILOGUE
Applied Management Science for Decision Making, 1e © 2012 Pearson Prentice-Hall, Inc. Philip A. Vaccaro , PhD

55. What You Have SeenWhat You Have Seen
• Decision Theory
• Basic Simulation
• Queuing Theory
• Manufacturing Processes

56. What You Have SeenWhat You Have Seen
• Service Processes
• Transportation Algorithm
• Line Balancing
• Work Measurement
• Time Standards

57. What You Have SeenWhat You Have Seen
• Learning Curve
• Just-in-Time Systems
• Inventory Control
• Short-term Scheduling

58. What You Have SeenWhat You Have Seen
• Assignment Algorithm
• Project Management
• Linear Programming

59. What You Have Not What You Have Not
SeenSeen
• Decoupling Theory
• Outsourcing / Offshoring
• Telecommunications
• Yield Management

60. What You Have Not What You Have Not
SeenSeen
• Data Envelopment Analysis
• Data Mining
• Internet Service Design
• Environmental Management

61. What You Have Not What You Have Not
SeenSeen
• Process Opportunities
• Experiential Blueprinting
• Sensitivity Analysis

62. What You Have Not What You Have Not
SeenSeen
• Minimal Spanning Trees
• Maximal Flow Technique
• Shortest Route Technique
• Stochastic Inventory Control

63. What You Have Not What You Have Not
SeenSeen
• Advanced Transportation Theory
• Reliability Theory
• Product Development / Design
• Artificial Intelligence
• Agile Manufacturing

64. What You Have Not What You Have Not
SeenSeen
• Data Base Management
• Quality Control
• Game Theory
• Markov Processes
• Project Budgeting

65. What You Have Not What You Have Not
SeenSeen
• Project Crashing
• Resource Leveling
• Duality
• Goal Programming
• Integer Programming

66. What You Have Not What You Have Not
SeenSeen
• Dynamic Programming
• Optimization Theory
• Quantitative EXCEL programming

67. What You Have Not What You Have Not
SeenSeen
• Survey Information
• Utility Theory
• Complex Simulation
• Service Systems Theory

68. What You Have Not What You Have Not
SeenSeen
• Global Operations
• Logistics
• Supply Chain Management
• E-commerce

69. What You Have Not What You Have Not
SeenSeen
• Maintenance & Reliability Theory
• Mathematical Modeling
• Materials Requirements Planning

70. What You Have Not What You Have Not
SeenSeen
• Decision Support Systems ( DSS )
• Forecasting Methods and Models
• Capacitated Transhipment Models

71. What You Have Not What You Have Not
SeenSeen
• Traveling Salesman Network
• Enterprise Resource Systems
• Ergonomics
…….and so on, and so on !

72. Solutions to the DilemmaSolutions to the Dilemma
APPLY YOUR
DEGREE CREDITS
TOWARD A
2
nd
DEGREE
IN
ODS or MIS

73. Solutions to the DilemmaSolutions to the Dilemma
Earn an MBA or MS Earn an MBA or MS
in: in:
- Decision Sciences- Decision Sciences

- Operations Research- Operations Research

- Operations - Operations
ManagementManagement

- Logistics - Logistics

- Materials ManagementMaterials Management
- TransportationTransportation
- Management ScienceManagement Science
- Decision Support SystemsDecision Support Systems
- Industrial engineering- Industrial engineering

74. Solutions to the DilemmaSolutions to the Dilemma
 Earn a certificate or certification in:

• Supply chain management
• Quality control
• Integrated resource management
• Manufacturing management
…..and many more !

75. Operations and Logistics Operations and Logistics
ManagementManagement
Thank you !
Come again !
Applied Management Science for Decision Making, 1e © 2012 Pearson Prentice-Hall, Inc. Philip A. Vaccaro , PhDApplied Management Science for Decision Making, 1e © 2012 Pearson Prentice-Hall, Inc. Philip A. Vaccaro , PhD