AA

BMM_LW1__1_

Chapter 18B: Managing Operations Module Management

Overview

  • Managing operations is crucial for organizations to convert resources into goods and services.

  • Module focuses on theories and practical applications related to operations management.

Programme Details

  • Clock Hour Structure:

    • 1st Hour: Course Programme introduction.

    • 2nd/3rd Hour: Theoretical overview and workshop on Management Operations, involving group activities.

The Role of Operations Management (OM)

  • Definition: The transformation process that converts resources into finished goods and services.

Services and Manufacturing

Organizations Defined

  • Manufacturing Organizations: Produce physical goods.

  • Service Organizations: Produce intangible services.

Differences Between Services and Manufacturing

  • Services:

    • Intangible products

    • Cannot be inventoried

    • High customer interaction

    • Labor-intensive

  • Manufacturers:

    • Tangible products

    • Can be inventoried

    • Lower customer interaction

    • Capital-intensive

Similarities Between Services and Manufacturing

  • Quality, productivity, and responsiveness remain key issues in both sectors.

  • Both require demand forecasting and address capacity, scheduling, layout, and location issues.

  • Both have to manage customer, supplier, and staffing issues.

Economic Context

  • Manufacturing Contribution to GDP:

    • Japan: 40%, Germany: 35%, USA: 30%, Netherlands and Finland: 25-20%. (Source: UN)

OM Decisions

Types of Decisions

  • Strategic Decisions:

    • Broad and long-term focus, addressing competitive features and investment in production.

  • Tactical Decisions:

    • Narrow scope, short-term focus, relating to specific operational issues.

Strategic Role of Operations Management

  • Recognizing operations management as a critical part of organizational strategy for maintaining global leadership.

Interactions with Other Business Functions

  • Operations, marketing, and finance functions must integrate to achieve organizational goals.

Value Chain Management

Definition and Goals

  • Value: Customer’s willingness to exchange resources for goods/services.

  • Value Chain: Series of activities that add value from raw materials to finished products.

  • Goal: Create value chain strategies that meet customer needs and ensure integration among chain members.

Organizational Processes

  • Definition: Methods and procedures for accomplishing organizational tasks.

Operations System

  • Inputs: People, goods, technology, services, capital, process, and information.

Process Performance

Definitions and Calculations

  • Effectiveness: Achieving objectives. Formula: (actual output / norm output) x 100.

  • Efficiency: Using resources economically. Formula: (norm input / actual input) x 100.

  • Productivity: Comparing output with input. Formula: Output / Input.

Visualizing Processes

  • Flowchart: Diagram representing process steps, aiding understanding, decision-making, and performance measurement.

Flowchart Shapes Examples

  • Start/End, Action/Process, Decision, Document, Manual Input, Delay.

Example Flowcharts

  • Basic Flowchart (Getting out of bed):

    • Start ➔ Alarm Rings ➔ Decision: Ready to face the world?

  • Swimming Lanes (Brewing coffee):

    • Separate lanes for different tasks in the coffee-making process, clarifying roles and actions.

Managing Productivity

  • Importance: High productivity contributes to economic growth at country levels and competitive pricing at organizational levels.

Benefits of Value Chain Management

  • Primary Benefits:

    • Enhanced procurement

    • Improved logistics

    • Better product development

    • Streamlined customer order management.

Value Chain Strategy Requirements

  • Key requirements include coordination, technology investment, effective processes, leadership, and a supportive organizational culture.

Obstacles to Value Chain Management

  • Barriers such as organizational structures, cultural attitudes, capability requirements, and personnel issues can hinder effective management of value chains.

Technology’s Role in OM

  • Organizations are increasingly using technology to streamline operations management processes.

Quality Initiatives

  • Quality: Defined as the ability of a product/service to meet customer expectations.

  • Quality Management Initiatives: Focus on planning, organizing, leading, and controlling quality.

Quality Goals

  • ISO 9001: Standards for ensuring conformity to product specifications.

  • Six Sigma: Program aimed at reducing defects and improving customer satisfaction.

Modern Approaches

  • Mass Customization: Tailoring products to customer specifications.

  • Lean Organization: Streamlining processes from customer perspective to maximize value.

Next Week's Program

  • Advanced study on Lean Six Sigma, Theory of Constraints, and Variability before the next class.

  • Focus on management theories and practices in modern production processes in subsequent classes.