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 complete questions 1.1, 1.2, 1.7, and 1.8 from Chapter 1 and 2.1, 2.7, 2.8, and 2.10 from Chapter 2).  Most of these are math-based problems, for which I would like you to show your work, which entails writing out the formula(s) and the process you took to get to the answer. 

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Operations Management: Sustainability and Supply Chain Management

Twelfth Edition

Chapter 2

Operations Strategy in a Global Environment

Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved

If this PowerPoint presentation contains mathematical equations, you may need to check that your computer has the following installed:

1) MathType Plugin

2) Math Player (free versions available)

3) NVDA Reader (free versions available)

Outline (1 of 2)

Global Company Profile: Boeing

A Global View of Operations and Supply Chains

Developing Missions and Strategies

Achieving Competitive Advantage Through Operations

Issues in Operations Strategy

Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved

Outline (2 of 2)

Strategy Development and Implementation

Strategic Planning, Core Competencies, and Outsourcing

Global Operations Strategy Options

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Boeing’s Global Supply-Chain Strategy (1 of 3)

Some of the International Suppliers of Boeing 787 Components

Supplier Headquarters Country Component
Latecoere France Passenger doors
Labinel France Wiring
Dassault France Design and P L M software
Messier-Bugatti France Electric brakes
Thales France Electrical power conversion system
Messier-Dowty France Landing gear structure
Diehl Germany Interior lighting

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Boeing’s Global Supply-Chain Strategy (2 of 3)

Supplier Headquarters Country Component
Cobham UK Fuel pumps and valves
Rolls-Royce UK Engines
Smiths Aerospace UK Central computer systems
B A E Systems UK Electronics
Alenia Aeronautica Italy Upper center fuselage
Toray Industries Japan Carbon fiber for wing and tail units
Fuji Heavy Industries Japan Center wing box

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Boeing’s Global Supply-Chain Strategy (3 of 3)

Supplier Headquarters Country Component
Kawasaki Heavy Industries Japan Forward fuselage, fixed sections of wing
Teijin Seiki Japan Hydraulic actuators
Mitsubishi Heavy Industries Japan Wing box
Chengdu Aircraft China Rudder
Hafei Aviation China Parts
Korean Airlines South Korea Wingtips
Saab Sweden Cargo and access doors

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Learning Objectives (1 of 2)

2.1 Define mission and strategy

2.2 Identify and explain three strategic approaches to competitive advantage

2.3 Understand the significant key success factors and core competencies

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Learning Objectives (2 of 2)

When you complete this chapter you should be able to:

2.4 Use factor rating to evaluate both country and provider outsources

2.5 Identify and explain four global operations strategy options

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Global Strategies (1 of 2)

Boeing – sales and supply chain are worldwide

Benetton – moves inventory to stores around the world faster than its competition by building flexibility into design, production, and distribution

Sony – purchases components from suppliers in Thailand, Malaysia, and around the world

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Global Strategies (2 of 2)

Volvo – considered a Swedish company, purchased by a Chinese company, Geely. The current Volvo S40 is assembled in Belgium, South Africa, Malaysia and China on a platform shared with the Mazda 3 (built in Japan) and the Ford Focus (built in Europe).

Haier – A Chinese company, produces compact refrigerators (it has one-third of the U . S. market) and wine cabinets (it has half of the U . S. market) in South Carolina

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Growth of World Trade

Figure 2.1 Growth of World Trade as a Percent of World G D P

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Reasons to Globalize

Improve the supply chain

Reduce costs and exchange rate risks

Improve operations

Understand markets

Improve products

Attract and retain global talent

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Improve the Supply Chain

Locating facilities closer to unique resources

Auto design to California

Athletic shoe production to China

Perfume manufacturing in France

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Reduce Costs

Risks associated with currency exchange rates

Reduce direct and indirect costs

Trade agreements can lower tariffs

Maquiladoras

World Trade Organization (W T O)

North American Free Trade Agreement (N A F T A)

A P E C, S E A T O, M E R C O S U R, C A F T A

European Union (E U)

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Improve Operations

Understand differences between how business is handled in other countries

Japanese – inventory management

Germans – robots

Scandinavians – ergonomics

International operations can improve response time and customer service

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Understand Markets

Interacting with foreign customers, suppliers, competition can lead to new opportunities

Cell phone design moved from Europe to Japan

Extend the product life cycle

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Improve Products

Remain open to free flow of ideas

Toyota and B M W manage joint research and development

Reduced risk, state-of-the-art design, lower costs

Samsung and Bosch jointly produce batteries

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Attract and Retain Global Talent

Offer better employment opportunities

Better growth opportunities and insulation against unemployment

Relocate unneeded personnel to more prosperous locations

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Cultural and Ethical Issues

Social and cultural behavior differs

International laws, agreements, codes of conduct for ethical behaviors

Mobility of capital, information, goods, and people

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Companies Want To Consider

National literacy rate

Rate of innovation

Rate of technology change

Number of skilled workers

Political stability

Product liability laws

Export restrictions

Variations in language

Work ethic

Tax rates

Inflation

Availability of raw materials

Interest rates

Population

Transportation infrastructure

Communication system

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Match Product and Parent

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Match Product and Country

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Developing Missions and Strategies

Mission statements tell an organization where it is going

The Strategy tells the organization how to get there

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Mission

Mission - where is the organization going?

Organization’s purpose for being

Answers “What do we contribute to society?”

Provides boundaries and focus

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Figure 2.2 Mission Statements for Three Organizations (1 of 3)

Merck

The mission of Merck is to provide society with superior products and services—innovations and solutions that improve the quality of life and satisfy customer needs—to provide employees with meaningful work and advancement opportunities and investors with a superior rate of return.

Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved

Figure 2.2 Mission Statements for Three Organizations (2 of 3)

PepsiCo

Our mission is to be the world's premier consumer products company focused on convenient foods and beverages. We seek to produce financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity.

Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved

Figure 2.2 Mission Statements for Three Organizations (3 of 3)

Arnold Palmer Hospital

Arnold Palmer Hospital for Children provides state of the art, family-centered healthcare focused on restoring the joy of childhood in an environment of compassion, healing, and hope.

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Factors Affecting Mission

Mission

Philosophy and Values

Profitability and Growth

Environment

Customers

Public Image

Benefit to Society

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Strategic Process

Organization’s Mission

Functional Area Missions

Marketing

Operations

Finance/Accounting

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Figure 2.3 Sample Missions for a Company, the Operations Function, and Major O M Departments (1 of 4)

Sample Company Mission

To manufacture and service an innovative, growing, and profitable worldwide microwave communications business that exceeds our customers’ expectations.

Sample Operations Management Mission

To produce products consistent with the company’s mission as the worldwide low-cost manufacturer.

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Figure 2.3 Sample Missions for a Company, the Operations Function, and Major O M Departments (2 of 4)

Sample O M Department Missions

Product design To design and produce products and services with outstanding quality and inherent customer value.
Quality management To attain the exceptional value that is consistent with our company mission and marketing objectives by close attention to design, procurement, production, and field service operations
Process design To determine, design, and produce the production process and equipment that will be compatible with low-cost product, high quality, and good quality of work life at economical cost.

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Figure 2.3 Sample Missions for a Company, the Operations Function, and Major O M Departments (3 of 4)

Location To locate, design, and build efficient and economical facilities that will yield high value to the company, its employees, and the community.
Layout design To achieve, through skill, imagination, and resourcefulness in layout and work methods, production effectiveness and efficiency while supporting a high quality of work life.
Human resources To provide a good quality of work life, with well-designed, safe, rewarding jobs, stable employment, and equitable pay, in exchange for outstanding individual contribution from employees at all levels.

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Figure 2.3 Sample Missions for a Company, the Operations Function, and Major O M Departments (4 of 4)

Supply-chain management To collaborate with suppliers to develop innovative products from stable, effective, and efficient sources of supply.
Inventory To achieve low investment in inventory consistent with high customer service levels and high facility utilization.
Scheduling To achieve high levels of throughput and timely customer delivery through effective scheduling.
Maintenance To achieve high utilization of facilities and equipment by effective preventive maintenance and prompt repair of facilities and equipment.

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Strategy

Action plan to achieve mission

Functional areas have strategies

Strategies exploit opportunities and strengths, neutralize threats, and avoid weaknesses

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Strategies for Competitive Advantage

Differentiation – better, or at least different

Cost leadership – cheaper

Response – more responsive

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Competing on Differentiation

Uniqueness can go beyond both the physical characteristics and service attributes to encompass everything that impacts customer's perception of value

Safeskin gloves – leading edge products

Walt Disney Magic Kingdom – experience differentiation

Hard Rock Cafe – dining experience

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Experience Differentiation

Engaging a customer with a product through imaginative use of the five senses, so the customer “experiences” the product

Theme parks use sight, sound, smell, and participation

Movie theatres use sight, sound, moving seats, smells, and mists of rain

Restaurants use music, smell, and open kitchens

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Competing on Cost

Provide the maximum value as perceived by customer. Does not imply low quality.

Southwest Airlines – secondary airports, no frills service, efficient utilization of equipment

Walmart – small overhead, shrinkage, and distribution costs

Franz Colruyt – no bags, no bright lights, no music, and doors on freezers

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Competing on Response

Flexibility is matching market changes in design innovation and volumes

A way of life at Hewlett-Packard

Reliability is meeting schedules

German machine industry

Quickness in design, production, and delivery

Johnson Electric, Pizza Hut

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O M’s Contribution to Strategy

Figure 2.4 Achieving Competitive Advantage Through Operations

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Issues in Operations Strategy

Resources view

Value-chain analysis

Porter’s Five Forces model

Operating in a system with many external factors

Constant change

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Figure 2.5 Product Life Cycle (1 of 2)

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Figure 2.5 Product Life Cycle (2 of 2)

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S W O T Analysis

Analysis

Internal Weaknesses

Internal Strengths

Mission

External Opportunities

External Threats

Strategy

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Figure 2.6 Strategy Development Process

Analyze the Environment

Identify the strengths, weaknesses, opportunities, and threats. Understand the environment, customers, industry, and competitors.

Determine the Corporate Mission

State the reason for the firm’s existence and identify the value it wishes to create.

Form a Strategy

Build a competitive advantage, such as low price, design, or volume flexibility, quality, quick delivery, dependability, after-sale service, broad product lines.

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Strategy Development and Implementation

Identify key success factors

Integrate O M with other activities

Build and staff the organization

The operations manager’s job is to implement an O M strategy, provide competitive advantage, and increase productivity

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Key Success Factors

Figure 2.7 Implement Strategy by Identifying and Executing Key Success Factors That Support Core Competencies

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Activity Mapping at Southwest Airlines (1 of 7)

Figure 2.8 Activity Mapping at Southwest Airlines’ Low-Cost Competitive Advantage

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Activity Mapping at Southwest Airlines (2 of 7)

Figure 2.8 [continued]

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Activity Mapping at Southwest Airlines (3 of 7)

Figure 2.8 [continued]

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Activity Mapping at Southwest Airlines (4 of 7)

Figure 2.8 [continued]

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Activity Mapping at Southwest Airlines (5 of 7)

Figure 2.8 [continued]

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Activity Mapping at Southwest Airlines (6 of 7)

Figure 2.8 [continued]

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Activity Mapping at Southwest Airlines (7 of 7)

Figure 2.8 [continued]

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Implementing Strategic Decisions (1 of 2)

Table 2.1 Operations Strategies of Two Drug Companies

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Implementing Strategic Decisions (2 of 2)

Table 2.1 [continued]

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Strategic Planning, Core Competencies, and Outsourcing (1 of 2)

Outsourcing – transferring activities that traditionally been internal to external suppliers

Accelerating due to

Increased technological expertise

More reliable and cheaper transportation

Rapid development and deployment of advancements in telecommunications and computers

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Strategic Planning, Core Competencies, and Outsourcing (2 of 2)

Subcontracting - contract manufacturing

Outsourced activities

Legal services

I T services

Travel services

Payroll

Production

Surgery

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Theory of Comparative Advantage

If an external provider can perform activities more productively than the purchasing firm, then the external provider should do the work

Purchasing firm focuses on core competencies

Drives outsourcing

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Risks of Outsourcing

Table 2.2 Potential Advantages and Disadvantages of Outsourcing

Advantages Disadvantages
Cost savings Increased logistics and inventory costs
Gaining outside expertise that comes with specialization Loss of control (quality, delivery, etc.)
Improving operations and service Potential creation of future competition
Maintaining a focus on core competencies Negative impact on employees
Accessing outside technology Risks may not manifest themselves for years

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Rating Outsourcing Providers

Insufficient analysis most common reason for failure

Factor-rating method

Points and weights assigned for each factor to each

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Rating Provider Selection Criteria

Table 2.3 Factor Ratings Applied to National Architects’s Potential I T Outsourcing Providers

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Global Operations Strategy Options (1 of 8)

Figure 2.9 Four International Operations Strategies

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Global Operations Strategy Options (2 of 8)

Figure 2.9 [continued]

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Global Operations Strategy Options (3 of 8)

Figure 2.9 [continued]

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Global Operations Strategy Options (4 of 8)

Figure 2.9 [continued]

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Global Operations Strategy Options (5 of 8)

Figure 2.9 [continued]

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Global Operations Strategy Options (6 of 8)

Figure 2.9 [continued]

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Global Operations Strategy Options (7 of 8)

Figure 2.9 [continued]

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Global Operations Strategy Options (8 of 8)

Figure 2.9 [continued]

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Ranking Corruption

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Copyright

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Operations Management: Sustainability and Supply Chain Management

Twelfth Edition

Chapter 1

Operations and Productivity

Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved

If this PowerPoint presentation contains mathematical equations, you may need to check that your computer has the following installed:

1) MathType Plugin

2) Math Player (free versions available)

3) NVDA Reader (free versions available)

Outline (1 of 2)

Global Company Profile: Hard Rock Café

What Is Operations Management?

Organizing to Produce Goods and Services

The Supply Chain

Why Study O M?

What Operations Managers Do

Outline (2 of 2)

The Heritage of Operations Management

Operations for Goods and Services

The Productivity Challenge

Current Challenges in Operations Management

Ethics, Social Responsibility, and Sustainability

Operations Management at Hard Rock Cafe

First opened in 1971

Now – 150 restaurants in over 53 countries

Rock music memorabilia

Creates value in the form of good food and entertainment

3,500+ custom meals per day in Orlando

How does an item get on the menu?

Role of the Operations Manager

Learning Objectives (1 of 2)

1.1 Define operations management

1.2 Explain the distinction between goods and services

1.3 Explain the difference between production and productivity

Learning Objectives (2 of 2)

1.4 Compute single-factor productivity

1.5 Compute multifactor productivity

1.6 Identify the critical variables in enhancing productivity

What Is Operations Management?

Production is the creation of goods and services

Operations management (O M) is the set of activities that create value in the form of goods and services by transforming inputs into outputs

Organizing to Produce Goods and Services

Essential functions:

Marketing – generates demand

Production/operations – creates the product

Finance/accounting – tracks how well the organization is doing, pays bills, collects the money

Organizational Charts (1 of 3)

Figure 1.1 Organization Charts for Two Service Organizations and One Manufacturing Organization

Organizational Charts (2 of 3)

Figure 1.1 [continued]

Organizational Charts (3 of 3)

Figure 1.1 [continued]

The Supply Chain

A global network of organizations and activities that supply a firm with goods and services

Members of the supply chain collaborate to achieve high levels of customer satisfaction, efficiency and competitive advantage

Figure 1.2 Soft Drink Supply Chain

Why Study O M?

O M is one of three major functions of any organization; we want to study how people organize themselves for productive enterprise

We want (and need) to know how goods and services are produced

We want to understand what operations managers do

O M is such a costly part of an organization

Table 1.1 Options for Increasing Contribution

What Operations Managers Do

Basic Management Functions

Planning

Organizing

Staffing

Leading

Controlling

Ten Strategic Decisions

Table 1.2 Ten Strategic Operations Management Decisions

Decision Chapter(s)
1. Design of goods and services 5, Supplement 5
2. Managing quality 6, Supplement 6
3. Process and capacity strategy 7, Supplement 7
4. Location strategy 8
5. Layout strategy 9
6. Human resources and job design 10
7. Supply-chain management 11, Supplement 11
8. Inventory management 12, 14, 16
9. Scheduling 13, 15
10. Maintenance 17

The Strategic Decisions (1 of 5)

Design of goods and services

Defines what is required of operations

Product design determines quality, sustainability and human resources

Managing quality

Determine the customer’s quality expectations

Establish policies and procedures to identify and achieve that quality

The Strategic Decisions (2 of 5)

Process and capacity design

How is a good or service produced?

Commits management to specific technology, quality, resources, and investment

Location strategy

Nearness to customers, suppliers, and talent

Considering costs, infrastructure, logistics, and government

The Strategic Decisions (3 of 5)

Layout strategy

Integrate capacity needs, personnel levels, technology, and inventory

Determine the efficient flow of materials, people, and information

Human resources and job design

Recruit, motivate, and retain personnel with the required talent and skills

Integral and expensive part of the total system design

Using this and subsequent slides, you might go through in more detail the decisions of Operations Management. While greater detail is provided by these slides than the earlier one, you may still decide to have the students contribute examples from their own experience.

The Strategic Decisions (4 of 5)

Supply chain management

Integrate supply chain into the firm’s strategy

Determine what is to be purchased, from whom, and under what conditions

Inventory management

Inventory ordering and holding decisions

Optimize considering customer satisfaction, supplier capability, and production schedules

The Strategic Decisions (5 of 5)

Scheduling

Determine and implement intermediate- and short-term schedules

Utilize personnel and facilities while meeting customer demands

Maintenance

Consider facility capacity, production demands, and personnel

Maintain a reliable and stable process

Where Are the O M Jobs?

Technology/methods

Facilities/space utilization

Strategic issues

Response time

People/team development

Customer service

Quality

Cost reduction

Inventory reduction

Productivity improvement

Opportunities

Figure 1.3 Many Opportunities Exist for Operations Managers

Certifications

A P I C S, the Association for Operations Management

American Society for Quality (A S Q)

Institute for Supply Management (I S M)

Project Management Institute (P M I)

Council of Supply Chain Management Professionals

Charter Institute of Procurement and Supply (C I P S)

Significant Events in O M

Figure 1.4 Significant Events in Operations Management

The Heritage of O M (1 of 2)

Division of labor (Adam Smith 1776; Charles Babbage 1852)

Standardized parts (Whitney 1800)

Scientific Management (Taylor 1881)

Coordinated assembly line (Ford/ Sorenson 1913)

Gantt charts (Gantt 1916)

Motion study (Frank and Lillian Gilbreth 1922)

Quality control (Shewhart 1924; Deming 1950)

The Heritage of O M (2 of 2)

Computer (Atanasoff 1938)

C P M/P E R T (DuPont 1957, Navy 1958)

Material requirements planning (Orlicky 1960)

Computer aided design (C A D 1970)

Flexible manufacturing system (F M S 1975)

Baldrige Quality Awards (1980)

Computer integrated manufacturing (1990)

Globalization (1992)

Internet (1995)

Eli Whitney

Born 1765; died 1825

In 1798, received government contract to make 10,000 muskets

Showed that machine tools could make standardized parts to exact specifications

Musket parts could be used in any musket

Frederick W. Taylor

Born 1856; died 1915

Known as ‘father of scientific management’

In 1881, as chief engineer for Midvale Steel, studied how tasks were done

Began first motion and time studies

Created efficiency principles

Taylor’s Principles

Management Should Take More Responsibility for:

Matching employees to right job

Providing the proper training

Providing proper work methods and tools

Establishing legitimate incentives for work to be accomplished

Frank and Lillian Gilbreth

Frank (1868-1924); Lillian (1878-1972)

Husband and wife engineering team

Further developed work measurement methods

Applied efficiency methods to their home and 12 children!

Book and Movie: “Cheaper by the Dozen,” “Bells on Their Toes”

Henry Ford

Born 1863; died 1947

In 1903, created Ford Motor Company

In 1913, first used moving assembly line to make Model T

Unfinished product moved by conveyor past work station

Paid workers very well for 1911 ($5/day!)

W. Edwards Deming

Born 1900; died 1993

Engineer and physicist

Credited with teaching Japan quality control methods in post-W W2

Used statistics to analyze process

His methods involve workers in decisions

Contributions from

Industrial engineering

Statistics

Management

Economics

Physical sciences

Information technology

Operations for Goods and Services (1 of 2)

Services – Economic activities that typically produce an intangible product (such as education, entertainment, lodging, government, financial, and health services)

Operations for Goods and Services (2 of 2)

Manufacturers produce tangible product, services often intangible

Operations activities often very similar

Distinction not always clear

Few pure services

Table 1.3 Differences between Goods and Services

Characteristics of Services Characteristics of Goods
Intangible: Ride in an airline seat Tangible: The seat itself
Produced and consumed simultaneously: Beauty salon produces a haircut that is consumed as it is produced Product can usually be kept in inventory (beauty care products)
Unique: Your investments and medical care are unique Similar products produced (iPods)
High customer interaction: Often what the customer is paying for (consulting, education) Limited customer involvement in production
Inconsistent product definition: Auto Insurance changes with age and type of car Product standardized (iPhone)
Often knowledge based: Legal, education, and medical services are hard to automate Standard tangible product tends to make automation feasible
Services dispersed: Service may occur at retail store, local office, house call, or via internet. Product typically produced at a fixed facility
Quality may be hard to evaluate: Consulting, education, and medical services Many aspects of quality for tangible products are easy to evaluate (strength of a bolt)
Reselling is unusual: Musical concert or medical care Product often has some residual value

U.S. Agriculture, Manufacturing, and Service Employment

Figure 1.5 U.S. Agriculture, Manufacturing, and Service Employment

Table 1.4 Organizations in Each Sector

Service Pay

Perception that services are low-paying

42% of service workers receive above average wages

14 of 33 service industries pay below average

Retail trade pays only 61% of national average

Overall average wage is 96% of the average

Productivity Challenge

Productivity is the ratio of outputs (goods and services) divided by the inputs (resources such as labor and capital)

The objective is to improve productivity!

Important Note!

Production is a measure of output only and not a measure of efficiency

The Economic System

Figure 1.6 The Economic System Adds Value by Transforming Inputs to Outputs

Improving Productivity at Starbucks (1 of 2)

A team of 10 analysts continually look for ways to shave time. Some improvements:

Stop requiring signatures on credit card purchases under $25

Saved 8 seconds per transaction

Change the size of the ice scoop

Saved 14 seconds per drink

New espresso machines

Saved 12 seconds per shot

Improving Productivity at Starbucks (2 of 2)

Operations improvements have helped Starbucks increase yearly revenue per outlet by $250,000 to $1,000,000.

Productivity has improved by 27%, or about 4.5% per year.

Productivity

Measure of process improvement

Represents output relative to input

Only through productivity increases can our standard of living improve

Productivity Calculations

Labor Productivity

One resource input  single-factor productivity

Multi-Factor Productivity

Also known as total factor productivity

Output and inputs are often expressed in dollars

Multiple resource inputs  multi-factor productivity

Collins Title Productivity (1 of 4)

Old System:

Staff of 4 works 8 hrs/day Payroll cost = $640/day

8 titles/day

Overhead = $400/day

Collins Title Productivity (2 of 4)

Old System:

Staff of 4 works 8 hrs/day Payroll cost = $640/day

8 titles/day

Overhead = $400/day

New System:

14 titles/day

Overhead = $800/day

Collins Title Productivity (3 of 4)

Old System:

Staff of 4 works 8 hrs/day Payroll cost = $640/day

8 titles/day

Overhead = $400/day

New System:

14 titles/day

Overhead = $800/day

Collins Title Productivity (4 of 4)

Old System:

Staff of 4 works 8 hrs/day Payroll cost = $640/day

8 titles/day

Overhead = $400/day

New System:

14 titles/day

Overhead = $800/day

Measurement Problems

Quality may change while the quantity of inputs and outputs remains constant

External elements may cause an increase or decrease in productivity

Precise units of measure may be lacking

Productivity Variables

Labor - contributes about 10% of the annual increase

Capital - contributes about 38% of the annual increase

Management - contributes about 52% of the annual increase

Key Variables for Improved Labor Productivity

Basic education appropriate for the labor force

Diet of the labor force

Social overhead that makes labor available

Challenge is in maintaining and enhancing skills in the midst of rapidly changing technology and knowledge

Labor Skills

Figure 1.7 About half of the 17-year-olds in the U.S. cannot correctly answer questions of this type

Capital

Management

Ensures labor and capital are effectively used to increase productivity

Use of knowledge

Application of technologies

Knowledge societies

Labor has migrated from manual work to technical and information-processing tasks

More effective use of technology, knowledge, and capital

Productivity in the Service Sector

Productivity improvement in services is difficult because:

Typically labor intensive

Frequently focused on unique individual attributes or desires

Often an intellectual task performed by professionals

Often difficult to mechanize and automate

Often difficult to evaluate for quality

Productivity at Taco Bell (1 of 2)

Improvements:

Revised the menu

Designed meals for easy preparation

Shifted some preparation to suppliers

Efficient layout and automation

Training and employee empowerment

New water and energy saving grills

Productivity at Taco Bell (2 of 2)

Results:

Preparation time cut to 8 seconds

Management span of control increased from 5 to 30

In-store labor cut by 15 hours/day

Floor space reduced by more than 50%

Stores average 164 seconds/customer from drive-up to pull-out

Water- and energy-savings grills conserve 300 million gallons of water and 200 million KwH of electricity each year

Green-inspired cooking method saves 5,800 restaurants $17 million per year

Current Challenges in O M

Globalization

Supply-chain partnering

Sustainability

Rapid product development

Mass customization

Lean operations

Ethics, Social Responsibility, and Sustainability (1 of 2)

Challenges facing operations managers:

Develop and produce safe, high-quality green products

Train, retrain, and motivate employees in a safe workplace

Honor stakeholder commitments

Ethics, Social Responsibility, and Sustainability (2 of 2)

Stakeholders

Those with a vested interest in an organization, including customers, distributors, suppliers, owners, lenders, employees, and community members.

Copyright

Units produced

Productivity=

Input used

Units produced

Productivity=

Labor-hours used

1,000

==4 units/labor-hour

250

Output

Multifactor =

Labor + Material + Energy + Capital + Mi

scellaneous

8 titles/day

Oldlaborproductivity==.25 titles/labor-h

r

32labor-hrs

14 titles/day

Newlaborproductivity==.4375 titles/labor

-hr

32labor-hrs

8 titles/day

Old multifactor productivity==.0077 titl

es/dollar

$640 + 400

14 titles/day

New multifactor productivity==.0097 titl

es/dollar

$640 + 800

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