OPERATION AND OPERATIONS MANAGEMENT All organizations have operations. A manufacturing company may conduct operations in a foundry, mill, or factory. Our interest is in the management of operations, or operations management (OM), including the usual management cycle of planning, implementing, and monitoring/controlling. The driving force for OM must be an overriding goal of continually improving service to customers, where customer means the next process as well as the final, external user. Since there is an operation element in every function of the enterprise, all people in all jobs in every department of the organization should team up for improvement of there own operations management elements. Teaming Up with Customers What happens when suppliers and customer are disconnected? Consider design work, for example. Whether we speak of goods or services, time- and distance separation in the supplier-customer connection invites trouble. Question: What s your Job? Question: But isn t your job to serve the customer? In grocery stores, where the supplier-relationship is immediate, the operations manager system is hard pressed to maintain a customer focus. The customer is the next process, or where the work goes next. A buyer s customer is the associate in the department to whom the purchased item goes; a cost accountant s customer is the manager who uses the accounting operations-where the design will be produced or the service provided. It is also clear that throughout the organization, people not only have customers, they are customers. Let s turn our attention to what customers want. A Short List of Basic Customer Wants The requirement is a recipient s or customer s view of a good or service. A close partnership with the customer s actual requirements. A close partnership with the customer helps create good specifications, increasing the supplier s ability to fulfill the customer s needs. What else do customers want? Customers have six requirements of their providers: High levels of quality. High levels of service. Low costs. OPERATIONS STRATEGY An organizational commitment with wide ranging effects, such as continuing improvement in meeting customer needs, is called a strategy. Strategy itself is necessary because of competition, and successful strategy ensures that company strengths match customer requirements. Integrated Business Strategy To accomplish its aims, the business team must plan strategy in all four-line functions. A comprehensive strategic business plan deals with issues affecting the whole organization: employees, markets, location, line of products and services, customers, capital and financing, profitability, competition, public image and so forth. OM strategies should be consistent with the business plan, but with a narrower focus: Capacity (operating resources): front-line and support people, information, equipment and tools, materials, location (space). Products, processes, methods, and systems: Strategies might include level of investment in product and process development, standardization, and manual versus automated information processes. Outputs: Quality, cost, lead-time, flexibility, variation, and service. Operations Managers translate that business strategy into an operation strategy of developing two new fitness-related services, which will maintain high utilization of staff and space, as substitutes for two other services that are declining in popularity. 1. Companies A and B. Two companies, both manufactures of shoelace extender, have the same dominant business strategy: rapid customer service. Although the business strategy is the same at both companies, Company B s operations strategy will provide superior customer service and overall success. Distinctive competencies might be obvious to customers; fast service, very clean premises, and superior quality are examples. All have dependably high quality. Disney offers customer service unparalleled in its industry. Developing distinctive competencies helps retain customers and invites new business. The strategic factors that best describe competitive success for any company quality, efficiency, continuous improvement go to the heart of operations management. It needs customer- and quality centered operations management. Principle of Operations Management As Strategy Many diverse organizations, in both goods and services, are adopting operations management strategies. Listed is a 16-point set of the principles of OM, that is the principles of employee- and team-driven, customers-centered continuous improvement in operations management. Operations strategy in the firm is comparable to a sports team s game plan. The first group, formulation of operations strategy, must account for customers, the company, and competitors. Operations Strategy-Formulation Customers: Become dedicated to continual, rapid improvement in quality, but cost, lead-time, flexibility, variability, and service. Company: Company: Operations Strategy-Implementation 5. Cut the number of product or service components or operations and the number of suppliers to a few good ones. 6. Organize resources into multiple chains of customers, each focused on a product, service, or customer family; create cells, flow lines, and plants-in-a-plant. Capacity: Maintain and improve present equipment and human work before thinking about new equipment automates incrementally when process variability cannot otherwise be reduced. Processing: Cut flow time (wait time), distance, and inventory all along the chain of customers. Cut setup, changeover, get ready, and startup times. Problem solving and control: Record and own quality, process, and problem data at the workplace. Ensure that front-line improvement teams get first chance at problem solving-before staff experts. Teaming up can mean moving associates by how the work flows. This facilitates quick, easy communication, associate to associate, when the customer has a problem, or when Globe people have questions about customer needs. Become Dedicated to Continual, Rapid Improvement in Quality, Cost, Lead Time, Flexibility, Variability, and Service. This principle aims squarely at resolving that crisis prescribing a customer-oriented agenda suitable for any business. Operations management associates cannot be effective without competitive information. They need to learn about competitors design, capacities, skill base, and supplier/customer linkages as well as costs, quality, flexibility, and lead times. Cut the Number of Product or Service Components or Operations and Number of 6. Organize Resources into Multiple Chains of Customers, each Focused on a Product, Service, or Customer Family, Create Cells, Flow Lines, and Plants-in-a-Plant. Multiple Skills), Education, Job and Career-Path Rotation, and Improved Health, Safety, and Security. Continuous improvement: Each associate continually master more job and job supports skills, problems-solving techniques, and self (team) management. People are variable, and variability stands in the way of serving the customer. Automation causes major work force changes and potentially even greater labor problems. Planning in multiple-capacity units allows growth to occur at the same time as the firm is becoming product/customer focused. Moreover, focusing equipment and operating teams on narrow families of products/customers helps large and growing companies act like small, customer-service-minded ones. It enlists concepts and practices stretching from designing for time. It enlists concepts and practices stretching from designing for quality, to partnering up with suppliers and customers for quality, to controlling processes for quality, to collecting and analyzing data for removal of the sources of poor quality. Cut Flow Time (Wait Time), Distance, and Inventory All along the Chain of Customers. This and the next two principles are closely associated with just-in-time operations, which shorten throughput time and improve responsiveness to customers. A change in the demand patterns takes considerable time to run through, and the customer often will not wait. This allows each job or customer to be processed without delay. Often it is possible to get the desired results by moving process stages closer together-shortening the flow path-which at the same time reduces in-process inventories and cuts flow time. Cut Setup. Changeover, Get-Ready, and startup Times. This principle deals with preparation-to-service delays of all kind. As just-in-time equipment setup times. Don t invest in equipment that runs many times faster than the work can be processed downstream. Customers may not be willing to wait. 14. Recur and Own Quality, Process, and Problems Data at the Workplace. That leaves front-line associates (the majority of company employees) out of the problem-solving, control, and process ownership loop. 15. Ensure that Front-Line Improvement Teams Get First Chance at Problem Sollving- Staff experts may have more problems-solving skills, but they have less understanding if the processes where problems occur. This leaves little time for solving ongoing process problems and on-the-spot emergencies, which are the natural responsibility of front-line associates. Operations Managers The 16 principles of operation management tell what to strive for and how to manage operations effectively. In the best companies, every employees Teamed up with others in work flow relationship and periodically joins a special project team. Their role-meeting current demanded exactly and managing and improving processes and products-involves data collection, problems solving, process control, and ever better service to the customer. Staff experts. The role of staff is to plan for change, respond expertly to problems, and serve on improvement teams. The job mode of operations covers nearly all human services, most office work, and industrial job shops. Jumbled Jobs If the schedule consists of a long succession of jobs that are identical, or nearly so, they aren t actually jobs; it s continuous or repetitive operations, which involve a small number of variables to manage. The trouble with job operations is the typically large number of variables: irregular and randomly changing colors, size, and styles; number of units, process steps, and routings through the processes; and specifications, components, and customer expectations. Job planning, scheduling, and control. Exhibit 1 shows the job processing sequence in manufacturing, processing documents, or serving clients. First, the master scheduling committee (or person) positions the work in a master schedule or appointment book, sometimes with other similar work. If all required inventories are on hand or due in, scheduling at a detailed job-by-job level may take place; for a multi operation job, this may involve a scheduler s putting start and completion dates on each operation. In the dispatching step, jobs in progress get positioned one more time; dispatching is what we call prioritizing jobs in queue at a given work center. Orders for component parts or services are often processed in several steps, called operations. An operation in a job, and each operation requires a new set-up, changeover, or get ready. A job (or batch or lot or jobs lot), on the other hand, is the whole work activity needed to fill a service order or a production order. There are several reasons why each operation might be separately planned, scheduled, and controlled. Example 13-1 further distinguishes between operations and jobs. Making a quantity of the shelf involves planning and controlling one job and several operations. Exhibit 13-2 shows a job consisting of 10 bookcase shelves. The shelf part number i 777, and the shop order is shown as a five operation job. Operation 10: Withdraw boards from the stockroom. Operation 20: Saw boards. Operation 30: Plane saw boards. Operations 40: Sand planed boards. Operation 50: Apply finish to sanded boards. Each operation, even stockroom activities, requires setup time. After each operation, work-in-process (WIP) inventories form and sit idle for a time. Scheduling Detailed scheduling, job by job, at the component level dose include starts times. Detailed scheduling, simply called scheduling in business and industry, is our concern here (Madter scheduling was discussed in Chapter 6).??? Scheduling a service or job order requires answers to three questions: When can the job be completed? (Based on standard times). When should the job be completed? (Based on date if customer or parent-items need). When will the job be completed? (Based on realities in operating work centers). A lab is a job shop, and in job shops queues of job orders from and jostle for priority. Lead-Time Elements In job operations, lead time to produce or deliver something or provide a service usually contains much more delay time than actual work; that is, the part, client, or document spends far more time idle than being processed. Queue time Run time (service time) Setup time Wait time (wait for instruction, transportation, tools, etc.) Inspection time Move time Other Run time may be precisely measured using standards time techniques (see Chapter 15). Accurate estimates of lead times, and therefore accurate schedules, are likely only when work centers are uncongested; only then can the typical job sail through without long and variable queue times at each work center. One of the scheduler s jobs is to keep things uncongested, that is, without too much work in process. The WIP problem is attacked directly with just-in-time techniques. Service. Low WIP means less queue time and quicker response to customers; also with less queue time is less uncertainly in the schedule and customers may be given better status information. Production control work force. In service we could add another benefit: Customers are happy when they don t have to wait in long lines (Note: the customers are the WIP). Each job in the work stream usually will require different operations times at each work center it visits. Lead-Time Accuracy Queue time for an average job is hard to predict, because the average varies with the changing job mix. Queue time for a particular job is even harder to predict, because the job may queue up at several work centers as it completes its routing. Here queue time includes an extra-time allowance for current or projected congestion. In closed-loop materials requirements planning, informed. Inaccurate lead times have a more severe effect on capacity control. Backward and Forward Scheduling Those issues-tasks, jobs, customer service effects, and the rewards system-are considered next. Tasks. Jobs. If all jobs were developed like the plate-scraping one, wouldn t work life be intolerable? A collection of concepts now job design attempts to avoid such a fate for working people. Best known among the job design ideas are job enlargement and job enrichment. Job enlargement means expanding the number of task included in a person s job, for example, cooking, serving, and scraping plates; it offers horizontal variety. Existence of job standards offers a guide path for avoiding problems, thereby offering more freedom for the associate to work on process improvements, which translate into still better job standards. Customers, Internal and External An obstacle in the way of learning more skills is the job classification systems, or work rules. Operations and Operating Environments

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