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GMS 401 Lecture #1 Chapter 1  3 criteria to management Marketing, Finance and Operations  Supply Chain Management- the management of the chains of supply, managing the chain that involves the movement of the product from production to the hands of the consumer  Operations Management- is the management of processes or systems that create goods and/or provide services, this improves efficiency and effectiveness  Efficiency- Minimize cost and time  Effectiveness- Achieving intended goals  Forecasting- to plan ahead and anticipate  Large percentage of company’s expenses occur in operations management  Operations- create goods and services  Finance- provide funds and the economic analysis of investments proposals, securing resources at favorable prices  Budgeting- Plan financial requirements, including adjustments and evaluations  Marketing- assess customer wants and needs and communicate them to other, selling, promoting, advertising, pricing, assessing wants and needs  Accounting- Preparing financial statements  Purchasing- Procurement or acquiring of materials, supplies and equipment  Personnel- Recruitment and training of personnel  Good Producing- Farming, mining, construction, manufacturing  Storage/Transportation- Warehousing, trucking, mail service  Exchange- Retailing, wholesaling, banking  Entertainment- Films, radio, television  Communication- Newspapers, newscasts, telephone  Value Added- difference between cost of input s and value or price of outputs, may be used for research and dvlpt, investment and profits, production is increased  Designing Decision- Capacity, location and equipment  Operating Decision- Planning, execution and controlling  An operations manager Plans organizes controls and directs in everyday situations  Service sector accounts for >70% of jobs in Canada  Pareto Phenomenon- a few factors account for a high percentage of occurrence of some events  80/20 Rule- 80% of problems occur from 20% of its activities  The Historical Evolution of Operations Management: Earliest Days (Craft Production) -> Industrial Revolution -> Human Relations Movement -> Decision Models and Computer -> Japanese Manufacturers (TQM revolution)  Today’s Trends in Business: Internet/E-Commerce, Management Technology, Globalization and Management of Supply Chain  Supply Chain- A sequence of activities and organizations involved in producing and delivering a good or service Lecture #2 Chapter 2  Order Qualifier- Minimum standards of acceptability for purchase, allow product to be considered  Competitiveness- the ability and performance of an organization in the marketplace compared to other organizations that offer similar goods or services  Order Winners- Create perception of being better than the competition, allow product to be purchased  Cost/Price- All other factos being equal, a customer will choose the lowest price, firms that compete on price alone may settle for lower profit margins  Quality- Materials, workmanship and design  Flexibility- The ability to respond to changes, the better the response the greater the competitive advantage  Timeliness- How quickly is a product or service delivered to the customer, how quickly new products are developed  Mission- where the organization is going now  Vision- Where the organization desires to be in the future  Values- Shared beliefs of the organizations stakeholders  Goals and Objective- Provide detail and scope of mission  Strategies- Plans that determine direction for achieving organizational goals  Tactics and Action Plans- The methods and actions taken to accomplish strategies  Operations Strategy- The approach that is used to guide the operations function, consistent with organization strategy, support competitive priorities Formulation of Operations Strategy 1. Determine operations requirements- linked to organization gaols 2. Categorize customers into types and choose competitive priority emphasis 3. Group product lines into types 4. Assess strengths and weaknesses and competitive position 5. Asses degree of plant focus develop 6. Develop and deploy strategy for each decision category objectives, policies and action plans  Time Based Competition- Focuses on reduction of time needed to accomplish tasks  Outsourcing- Buying a part of a good/service or a segment of production/service process from an outside supplier  Productivity- A measure of the effective use of resources, usually expressed as the ratio of output to input, Productivity= Outputs/Inputs  Measurement of service productivity is problematic because services are intangible, involve intellectual activities and have output with a high degree of variability  Factors affecting Productivity- Methods, Management, Technology and Labour  New technology- will frequently result in a temporary decline in productivity due to employees learning how to use the new equipment  Current problem is the use of technology such as computers for non work related activities  Factors Affecting Productivity- standardization, new workers, cuts in health benefits, safety, shortage of IT workers and design of workspace  Improving Productivity- establish reasonable goals, develop productivity measures and don’t confuse productivity with efficiency  Standardization- the condition in which a standard has been established Lecture #3 Chapter 4 Product and Service Design  Product Approval Committee- Authorize, Review and allocate resources  Core Teams- Cross Functional, Plan and Lead Project and Expands as needed  Phase Review- happens at milestones and approve/cancel/revise the project  Structured Development Process- project management technique, schedule, execute and control Product Design Process: Phases 1. Idea Generation 2. Build a business case: market and competitor analysis 3. Development translate the voice of the customer 4. Testing and validation 5. Launch  Product Development Process- Once the decision to develop a new product is made the actual product development process begins  Reverse Engineering- dismantling and inspecting of a competitor’s product to discover product improvements Searching for New Product Ideas 1. Listening to the Market Complaints 2. Gaps in the Market 3. Exploring Niche Markets 4. Using New Technology 5. Creating New Market Space  Product Life Cycles- stages in the life of a product or service relative to demand for it Product Life Cycles 1. Incubation/Introduction- Low demand-item not known to potential buyers 2. Growth- Passage of time, allows product to be improved thus creating less costly more reliable product 3. Maturity- Few, if any, design changes 4. Saturation- Competition exists, competitors may have a superior product, firm will attempt to prolong the life of the product by improving reliability and reducing costs  Standardization- Extent to which there is an absence of variety in a product, service or process  Design for mass customization- a strategy of producing standardized goods or services but incorporating some degree of customization: Delayed Differentiation and Modular Design  Delayed Differentiation- Producing, but not quite completing a product or service until customer preferences are known a postponing tactic  Modular Design- a form of standardization, parts are subdivided into module easily replaced or interchanged  Reliability- the ability of a product, part or system to perform its intended function under a prescribed set of conditions  Failure- Situation in which a product, part or system does not perform as intended  Robust Design- Design that can function over a broad range of conditions  Taguchi Approach- Easier to create robust/healthy design than to control environmental factors  Remanufacturing- Refurbishing used products by replacing worn out or defective components  Design for disassembly- Design so that used products can easily be taken apart  Recycling-Recovering materials for future use  Concurrent Engineering- Bringing engineering design, manufacturing, marketing and purchasing staff together early in the design phase  CAD- Product design using computer graphics  Design for Manufacturing- Designers take into account the organizations manufacturing capabilities when designing a product  Design for Assembly- Design focus on reducing the number of parts in a product and on assembly methods and sequence  Component Commonality- Use the same internal component for a variety of products  CAD- Computer Aided Design, product design using computer graphics  Design for Manufacturing (DFM)- considering organizations manufacturing capabilities when designing a product  Design for Assembly (DFA)- focuses on reducing the number of parts in a product and on assembly methods and sequence Design Guideline 1. Have a single unifying theme such as convenience or speed 2. Make sure system has capability to handle variability in service requirements 3. Include design features and checks for reliable and consistent quality 4. Design the system to be user friendly  Services- Intangible, created and delivered at the same time, customized, have low barriers to entry and exit and location is important for service design  Quality Function Deployment- An approach that integrates the voice of the customer into product design, translate customer requirements to measurable technical specifications Chapter 4 Supplementary  Improving Reliability- component design, testing, system design, user education and redundancy Lecture #4 - Chapter #6: Process Design and Facility Layout  Production System includes- Product and Service choices, Process Selection, Capacity Planning, Location and Layout  The decision of buying an already made product or producing one depends on: Available capacity, Expertise, Quality consideration, The nature of demand, Technology secrecy and Cost  Available Capacity- does the firm have the available equipment skills and time  Expertise- if the firm lacks the necessary expertise, it may make sense to buy  Quality Considerations- Who can do the best job of quality  Nature of Demand- If demand is high and steady, wide fluctuations in demand or small orders  Cost- perhaps the fixed costs of the item cannot be reallocated  Process Design- Determining the form and function of how goods or services are produced  Process Types- Job Shop, Batch, Repetitive/Assembly Line and Continuous  Job Shop- Small scale, customized and equipment flexibility is high  Batch- Moderate Volume, semi standardized variety and moderate equipment flexibility  Repetitive/Assembly Line- High volumes of standardized goods or services and low equipment flexibility  Continuous- Very high volumes of non discrete goods and very low equipment flexibility  Hybrid Processes- Some processes have elements of other process types,  Focused Factory- specialized in a high quantity, standardized product  Mass Customization- producing high quantity and high variety efficiently  Automation- Machinery with sensing and control devices that enable it to operate automatically  Fixed Automation- very rigid, high cost and specialized equipment for a fixed sequence of operations  Programmable Automation- high-cost, general purpose equipment controlled by a computer program and Numerically Controlled Machines  Flexible Automation- Customized equipment, computer aided design and manufacturing systems, flexible manufacturing systems and computer integrated manufacturing  Process Design- identifying the activities, resources and controls needed in the production process  Production Process- make or buy decision, set objectives and determine nature of process in general  Production Process Development- Conceptualize the design, make an embodiment of the design and create a detailed design  Implement- Buy machines and equipment, Recruit Workers and Start trial runs  Hierarchical top- down approach- Decompose process into linked components step by step until the level of detail desired is reach, Integrated Definition Method (IDEF)  Conceptual Approach- Brainstorming rather than recollection of past actual processes  Customer Perception in Service Process Design: Don’t raise customer expectations too high at the beginning, End the service positively, If the service is pleasurable divide it into segments, Let customers control part of the process and Communicate evidence of quality to customers  Layout- the arrangement of departments, work center, equipment, etc. Want to have a smooth movement through the system  Product Layout- arranged production resources linearly according to the progressive steps by which the product is made  Process Layout- arranged production resources together according to similarly of function Assembly Line:  Standardized product/service- allows continuous processing and specialization of labour and equipment  Product Demand is stable- enough to justify high investment in specialized equipment  Divide work in series of tasks- by technological processing requirements  Fixed Path Material Handling- conveyors Product Li