intro to business final managing operations

guarding assets

every business owns valuable assets and companies need systems to keep track of all of them

• physical assets

  • what they own, where it is, who is using it, how much it costs, how much it has depreciated

• knowledge assets

  • patents, trade secrets, customer databases, software, research

• compliance system

  • compliance = following rules, laws, and company procedure

  • good companies create systems that make following the rules easy

• why records matter

  • if a customer sues the company, good documentation can be good proof

The “efficiency dividend”

• efficient organizations save money and improve quality

• benefits: lower costs, better quality, fewer mistakes, easier problem-solving

  • improve competitiveness

precision

mass manufacturing + reliable products depend on standardized, precise components

mass manufacturing revolution

During the late 1800s and early 1900s, factories changed dramatically… instead of handmade products, companies began producing huge numbers of identical products

• Mass production

  • Making many identical products

• Economies of scale

  • Producing more lowers the average cost

• Economies of scope

  • Using the same factory to produce several related products efficiently

Taylorism

• Frederick Taylor

  • believed work should be scientifically organized

  • managers decide the one best way (the most efficient way) to do every task

  • workers simply follow instructions

  • believed that this system will make workers not avoid work, slow down, or taking short cuts

• problem: workers became bored, less motivated, and less creative. quality suffered

human relations approach

elton mayo

• Studied workers at the Hawthorne factory

• Managers treated the workers better because they were being watched

• Increased productivity of workers because they felt more cared by the managers which increased motivation

• Good management requires understanding psychology, motivation, and teamwork

japanese manufacturing success

imported american manufacturing/managing techniques and refined them into their own management philosophy

• Genba: the actual workplace. Managers regulary visit the factory floor. Problems are solved where they happen

• Kaizen: continuous improvement. Everyone contributes ideas, not just managers

• Muda: waste. Japanese companies constantly try to eliminates wasted time, materials, unnecessary movement and inventory

• Zero defects: produce products with almost no mistakes

• Quality control circles: small group of employees meet regularly and discuss quality problems and efficiency improvements

  • Workers actively help improve the company

War’s influence

-   Modern manufacturing developed partly because of war

-   During World War I and II, governments needed enormous amounts of weapons, vehicles, uniforms, and supplies  factories had to become extremely efficient

-   Many management techniques developed during wartime later spread into civilian businesses

-   Women

o   Because men were fighting, they entered factories

o   After war, they remained in the workforce

o   Permanently changed manufacturing

japan’s economic miracle

-   After World War II, Japan became famous for high-quality, efficient factories and reliable products

-   Produced rapid economic growth, rising incomes, and prosperity

-   Companies like Toyota became world leaders

-   BUT, mass production caused pollution and environmental damage

america learns from japan

-   Japan originally learned from America but then they improved those methods, so American companies adopted Japanese management ideas

globalization

-   Manufacturing became international

-   Today, one product may involve many countries

o   Ex. Phone could be designed in America, components can be made in Korea or Taiwan, and the assembly can be done in China. Then, the product is sold worldwide.

-   China as the factory of the world

o   Beginning in the 1980s, many companies moved manufacturing there because lower labor costs, improving infrastructure, and huge workforce

modern manufacturing

-   Today’s factories combine automation, robotics, information technology, quality management, laser inspection, and standardization

-   Goal is fast, cheap, and high quality production

-   Ex. Uniqlo  good quality, low prices, consistent products

conclusion

-   Efficient manufacturing alone isn’t enough because almost every major company can manufacture well

-   Competitive advantage now comes from creativity, innovation, product design, and understanding customers

inventory risk

-   Inventory = everything waiting to be used or sold

o   Including raw materials, unfinished products, and finished products

-   Large inventory

o   Advantages: protection from shortages, disasters, and strikes

o   Disadvantages: expensive (for storage), inventory ties up money (cash is king, and money sitting in inventory can’t be used elsewhere)

Just in time (JIT)

-   One of Japan’s biggest innovations was developed by Toyota

-   Idea: only receive materials when needed. Don’t store large inventories

-   Advantages: lower storage cost, better quality

o   Without JIT, three months of defective parts may already be stored. The problem continues for months.

o   With JIT, only a few days of inventory exist, and problems are discovered almost immediately. Suppliers can fix the problem quickly

-   Worked especially well in Japan because Japan has reliable transport, short delivery distances, and limited land

tokyo trains

-   Excellent example of good operation management

-   . The trains succeed because of engineering, maintenance, employee training, and organization. Not just technology

-   , preventative maintenance

o   Instead of waiting for breakdowns, inspection and repair of equipment before problems occur

o   benefits: fewer failures, greater safety, and lower repair costs

-   investing in people

o   Technology isn’t enough

o   Employees must also receive training, skill development, and support

o   People keep the system running

-   beyond railways

o   The same operational excellence appears in services like 宅急便

japan’s strengths

• excellent manufacturing

• reliable delivery systems

• precise transportation

• high product quality

• strong implementation

japan’s weaknesses

• IT systems developed more slowly than in some other countries

• Domestic transport can be expensive

• Japan if often said to be “strong at execution, weak at creating entirely new concepts)

japan dominated pro photography

-   Professionals around the world preferred japanse camera brands because they offered excellent quality, durability, and reasonable prices

-   Ex. Nikon

monozukuri

-   “the art/spirit of making things well”

-   It’s not just manufacturing, it implies craftmanship, pride, and continuous improvement

japan’s current challenge

-   Japan excels at

o   Components

o   Precision engineering

o   Manufacturing technology

o   Incremental improvements

-   But struggles more with

o   Creating new product categories

o   Disruptive consumer products

o   Platform-based innovation

o   Ex. Drones, electric scooters, camera gimbals, new mobility devices

§  Ironically, Japan often makes the motors, sensors, and components used in those products

Incremental vs radical innovation

-   Incremental innovation

o   Imrove exsisting products

o   Make products more reliable

o   Refinement

o   Ex. Nikon

-   Radical innovation

o   Create a new market

o   Chage how people live

o   Disruption

o   Ex. Apple

-   Japan s very strong at incremental innovation

Operations research

-   Science of making systems work efficiently

-   Studies: supply chains, logistics, inventory, scheduling, transportation, and production systems

finding bottlenecks

-   Bottleneck = slowest part of a process

o   Ex. One slow machine in a factory

o   A crowded checkout line

o   A traffic intersection

-   Improving the bottleneck often improves the whole system

key tools

-   Gantt charts

o   Visual scheduling showing tasks, start dates, duration, and dependencies

-   Critical path method (CPM)

o   Finds the minimum time needed to finish a project

o   Tasks on the critical path cannot be delayed

-   Queueing theory

o   Studies waiting lines

o   Ex. Is one common line faster than many separate lines?

psychology matters too

-   Operations management isn’t only math

-   Human behavior creates effects like

o   Traffic jam caused by small braking actions

o   Hesitation

o   Crowd behavior

Tokyo as a case study

-   Perfect operations management laboratory because millions of people move through the system every day.

-   Small improvements can affect millions of users

digital transformation

-   Modern IT allows companies to

o   Track inventors’ in real time

o   Coordinate suppliers

o   Schedule deliveries

o   Manage remote teams

o   Share information instantly

-   Atlassian and other collaborations tools

o   Companies like Atlassian help teams coordinate complex projects using digital task-management systems

o   Many productivity apps are based on industrial management ideas such as Kanban

automation and warehousing

-   Modern warehouses combine robots, AI< inventory software, conveyor systems, and logistics optimization

COVID and ukraine lessons

-   Companies with string IT systems adapted better to COVID

o   Crisis revealed:

§  Which firms had resilient systems, which had good continuity planning, and how fragile global supply chains can be

-              BUT many unexpected supply chain disruptions: firstly, limited air freight, the shortages of shipping containers as consumers spent more money on imported goods (eg. Home furnishings) rather than services like travel or dining.

-              China’s ongoing zero covid policy has brought lockdowns and supply disruptions

-              Russia’s invasion of Ukraine has also resulted in shortages of various resources and inflation pressures. Firms must face such pressures after 2 decades of global growth.