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Operations Lecture (march 18th).doc

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Roopa Reddy

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Operations (sustainability) Wednesday, March 13, 2013 2:02 PM Critical Success Factor • Providing quality products and services • Logistics, distribution, employee commitment and R&D - how everything links together 3 Decisions at 3 Stages • Planning- starts with product design • Production types and processes (mass production vs. mass customization) • Choice of location and facility layout (link between type of production, process used, and layout) • Resource planning and supply chain management (product birth to disposal)  Make or buy? - outsourcing  Inventory management- liquidity • Controlling • Routing and scheduling (logistics) • Quality and cost control  Harley-Davidson- productivity- quality connection • Improving • Application of technology Trends Service vs. Manufacturing • Both transform "raw material" into finished good, but service: • Raw material is person with unsatisfied need or possession that requires care • Service is performed NOT produced (not tangible) • Focus on process as well as outcome-> judged on quality of work AND service • Characteristics are different  Intangible- experience is key, customized, can't be stored • Customer is part of process  Extent of contact contact affects operations • Impacts capacity • Integration of marketing and operations (demand/capacity tradeoff)  Think about demand forecast and set up operations capacity to meet demand- capacity limit vs. demand (the two affect each other) • Manufacturing  General rule: set capacity slightly ahead of demand • Expensive to add/ sit idle (in inventory) • In short term, turn away customers or outsource at lower margins  Seasonality- shift demand and capacity requirements by pricing, price incentives (tell retailers if you buy now it'll be cheaper) • Service  Low contact- set capacity to average demand • Ex. accounting service- they don't have to be there to watch you work so set it at average  High contact- set capacity at peak demand • Ex. restaurant- having enough tables/servers to meet demand for peak hours even though at other times, tables might be empty (planning for peak demand) Mass Production vs. Mass Customization Mass Production technology: • Norm of doing business from industrial revolution, but becoming less prevalent today • Stable market conditions- doing the same thing over and over again in large quantities • If market conditions were changing, couldn't produce in mass quantities because you can't sell it • Efficiency vs. effectiveness- focus on being as efficient as possible (quantity) Not effective about how you're producing it • • Repetition- simplified way to squeeze efficiency out of it New Economic Reality • Constant change • Customer-driven- customer oriented now (effectiveness) • Customization and innovation- customer is requiring exactly what they want, want it to suit them (must find way to customize what they're looking for) • Have
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