Joanna Mae P.

Bersabal ● Core of all business

OPERATION MANAGEMENT (TQM) ● Many areas are interrelated with OM
activities.
Operation Management (OM) – Management ● Management of operation is critical to
of ANY activities/process that create goods create and maintain competitive
and provide services. advantage.
⮚ Exemplary Activities: Forecasting, Organization of Business
Scheduling, Quality management - Three basic functions
Why study OM? – At a typical manufacturing ⮚ Goods oriented (manufacturing and
company assembly)
⮚ Profit 5% ⮚ Service oriented (healthcare, transpo,
⮚ OM Cost 21% retail)
⮚ Marketing Cost 26% ⮚ Value-added (essence of the oper
⮚ Manufacturing Cost 48% functions)
Management of systems or processes that - Finance-Accounting
create goods and/or provide services ⮚ Budgets (plan financial req.)
The distinct- active- role of operations; ⮚ Economic analysis of investment
● Inputs become Outputs after some proposal
Equipment Medication ⮚ Provision of funds (necessary funding of
Laboratories Therapy the ope)
Types of Operations - Marketing
1. Good Producing – Farming, minig, ⮚ Selling
construction ⮚ Promoting
2. Storage/transpo – Warehousing, ⮚ Assessing customer wants and needs
trucking, mail, taxes, buses, hotel, ⮚ Communication those needs to
location operation
3. Exchange – Trade, retailing,
wholesaling, renting, leasing, loans The need for working closely; operations,
4. Entertainment – Radio, movies, TV, marketing, finance.
concerts, recording
5. Communication – Newspaper, journals,
magazine, radio, TV, telephones,
satellite.
Why OM
 ⮚ Production of goods (goods oriented)-
Tangible products (ex. automobile,
refrigerator)
OPERATION MANAGEMENT Chapter 1 ⮚ Services (TV and auto repair, lawn care)
Systems (HOLISTIC) Approach – (ex. Gov, Regulatory body, FAA,
⮚ Emphasize interrelations among FDA, Wholesale/retail, financial
subsystems. services, Education.)
⮚ Essential whenever something is being Goods vs. Service operations
designed, redesigned, implemented or ⮚ Difference
improved. 1. Customer contact
⮚ Ex. A new feature is added to a product 2. Uniformity of input
Systems Approach- “The whole is greater than 3. Labor content of jobs
the sum of the parts.” 4. Uniformity of output
5. Measurement of productivity
6. Production and delivery
Value Added- difference between cost of inputs 7. Quality assurance
and the (market fair value) or price of outputs. 8. Amount of inventory

Degree of Standardization Goods-service Continuum

⮚ Standardized output- take advantage of High percentage cost 🡨 Low percentage goods
standardizes method, less skilled Low percentage service 🡪 High percentage
workers, material (ex. Iron, Wheat, most service
of commodities) Responsibilities of Operation Management
⮚ Customize output- Each job is different; ⮚ Planning- (ex. capacity, utilization,
workers must be skilled. (ex. hair cut) location, choosing products or service,
Manufacturing (Goods) vs. Service operation make or by, layout, projects, scheduling,
market share)
Operation Managers - Quantitative approaches
⮚ Controlling- (inventory, quality, costs) - Analysis of trade-oofs
⮚ Organization- (Degree of - Systems approach
standardization, subcontracting, process Models are beneficial
selection) - Easy to use, less expensive
⮚ Staffing- (Hiring/lay off, use of overtime, - Require users to organize (increase
incentive plans, job assignments) understanding of the problem,
consistent tool, standardize format,
Scope of operations Management specific objectives.
⮚ OM includes; forecasting, capacity - Systematic approach to prob solving
planning, scheduling, managing (analysis of trade-oofs, enable what if
inventories, assuring quality, motivating questions.)
employees. - Power of mathematics
Help come from Models- A structure which has -
been built purposefully to exhibit features and Pareto Phenomenon
characteristics of some other object. - Few factors account for a high % of the
Modeling occurrence of some events.
⮚ Use models - 80/20 rule – 805 of problems are caused
- Physical models (prototypes) by 20% of the activities.
- Schematic models (graphic, charts, Historical Evolution of OM
pics) - Industrial revolution (1770’s)
- Mathematical model (statistical, - Scientific management (1911)
inventory model, linear programming, - Human relations movement (1920-60)
queuing techniques, project - Decisions models (1915- 1960-70’s)
management models.) - Influence of Japanese manufacturer
Types of Models (1970-90)
- Simulation – to test proposed idea Trend in Business
(monte carlo simulation) - Major trends (internet, e-commerce, e-
- Optimizing models – create an optimal business, management tech,
idea (Linear programming) globalization, management of supp
- Pattern recognition – recognize pattern chains, agility)
(statistics, forecasting, data mining) Recent Trends
Decision making - Worker involvement
- Models - Environmental issues
 - Service economy in US foreign Supply Chain- Sequence of activities and
production organizations involved in producing and
- E-business- info tech delivering a good or service
- Supply chain management Other important Trends
- TQM - Ethical behavior
Production system classified - Operations strategy
● Craft Production – system which highly - Working with fewer resources
skilled workers use simple, flexible tools - Cost control and productivity
to produce small quantities of custom - Quality and process improvement
goods (ex. carpenter) - Increased regulation and product liability
● Lean Production- uses minimal amount - Lean production
of resources to produce high volume of
high quality goos with some variety (ex.
dell)
● Mass Production – which lower-skilled
workers use specialized machinery to OPERATION MANAGEMENT Chapter 2

produce high vol of standardized goods.

Operation Management
(ex. Ford)
-The business function responsible for
Agile=Lean manufacturing – provides flexibility
planning, coordinating, and controlling the
to switch quickly and economically from one
resources needed to produce products and
product design to another with little disruption.
services for a company.
Keys to being an agile manufacturer
· - A management function
- Reduction in inventories ·
- Reduction in turnaround times An organization’s core function
- Availability of automated flexible ·
machinery In every organization whether Service or
- Rapid collection and processing of info. Manufacturing, profit or non for profit
Simple Product Supply Chain Typical Organization Chart
1. Suppliers’ Supplier
· President or CEO
2. Direct Suppliers
3. Producer · Marketing
4. Distributor · Operation
5. Final Consumer
· Finance
Role of OM? · Short response time
· OM Transforms inputs to outputs · Labor intensive.
Inputs
Manufacturers
are resources such as · Tangible product
· People, Material, and Money · Product is inventories
· Outputs are goods and services · Low customer contact

· Longer response time

· Capital Intensive.

Similar between Service and Manufacturing

· Use technology

·Have quality, productivity and

OM transformation Role
response issues
· To add value
· ·Have customers, suppliers,
- Increase product value at each stage scheduling and staffing issues
· Service vs. Manufacturing
- Value added is the net increase
·Manufacturing often provides
between output product value and input
services
material value
· Services often provides tangible
goods
Provide an efficient transformation
OM Decisions
·
Efficiency · All organization make decisions
and follow a similar path
– means performing activities well
for least possible cost · Strategic Decisions- Broad in Scope
and Long-term in nature.
Manufacturers vs. Service Organization
· Tactical Decisions- Narrow in Scope,
Services
Short term in nature.
· Intangible product
OPERATION MANAGEMENT Chapter 3
· Product cannot be inventories
Operation Strategy
· High customer contact
Corporate Strategy
 - Mission/ Vision, Environment, Strategic Choices in Operations;
Distinct Competencies - Structural Components
Mission- Relation the Organization’s efforts to - Infra-structural Components
its long Team Future

Environment- Scanning the Environment for

Opportunities and Threats;(Competition,
Market, Economic trend, Social Political
Changes.) OPERATION MANAGEMENT Chapter 4

Distinct Competencies- Organization’s unique Man Power Planning

strengths- those that are difficult for others - Process by which an
duplicate. (Competent Workforce, organization ensures that is has
Advantageous Location, Innovative Capability, the right number and kind of
Tech.) people capable effectively and
· Product Plans efficiently completing those task

- Product Design, Life Cycle that are in direct support of the

Audits, Entrance/Exit Strategies company’s mission and strategic

goals.
Pressures to Introduce New Product

(Competition, Expired Patents, Technological Velter Eric W.- Manufacturing is an

Innovation) organization and the individual receiving
· A. Enter Early and Exit Late maximum long-range benefit.

From Introduction to Decline Objectives of manpower plans

· B. Enter Early and Exit Early - To have an accurate estimate
of the number of employees
From Introduction to Maturity
required with the matching skills
· C. Enter Late and Exit Late
required to meet the
From Maturity to Decline organizational objective.
· Competitive Priorities -Kind of skills required.

- Cost, Quality, Time, Flexibility Forecast Personnel Requirement

Quality- Performance, Conformance, Service - Man power planning is
Time- Introduction, Delivery essential to determine the future
man power needs in an
Flexibility- Volume, Product Mix
organization
 - Absence of such plan it 2. Estimating future
would be difficult to have the organizational structure
service of right kind of people at 3. Auditing human resources
the right time. 4. Planning job requirements
and description
Cope with Changes
5. Developing Human
- Man power planning is
resource plan
requiring to cope with change in
6. Analyzing the current
market conditions technology,
manpower inventory
products and government
7. Developing employment
regulations in an effective way.
programs
- These changes may often
8. Design training Programs
require the service of people
having requisite technical Gap Analysis of Manpower
knowledge and Training. - A tool that helps companies
compare actual performance with
Use existing man power productivity
potential performance.
- Keeping an inventory of
- Helps bridge that space by
existing personnel in an
highlighting which requirements
enterprise by skill, level, training,
are being met and which are not.
educational, qualification.
- Work experience it will be Job design
possible to utilize the existing - Defined as the function of
resources. specifying the work activities of
an individual or group in an
Promote employees in systematic manner
organizational setting.
- Man power planning provides
useful information on basis of Purpose of Job design
which management decides on - Job description
the promotion of eligible - Job specification
personnel in the organization - Job evaluation
- Personnel Assessment
Process of Man power Plan
1. Deciding goals or
objectives
 - Will be the first introduction to
candidate. It is therefore crucial it
5 Steps in Job Design
is professional and portrays the

1. Collection of Background Information right image.

2. Selection of Representative Position to Cost Analysis

be Analyzed. - Identification of current and

anticipated costs associated with
3. Collection of Job Analysis Data. operation a Service Center with
an examination of the impact of
4. Job Description
those costs on setting center.
5. Developing Job Specification

Job description
- List that a person might use
for general tasks, or functions,
and responsibilities of a position.
- Usually narrative but some
may instead comprise a simple
list competency.

Purpose of Job description

- Sort of overview of the role.

Job Specification
- Definition of knowledge, skills
and abilities and the associated
education, training, and
experience required to
successfully perform a job.
- Also constitute the minimum
recruiting criteria or minimum
qualifications for the job.

Purpose of Job Specification