Marketing Manager Course - Chapter 17

McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.
17
Chapter
Operations Management
Operations Management
McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
After reading this chapter, you should be able to:
z
Define operations management and its three stages:
inputs, transformation and disposition.
z
Describe how operations management ensures supplies
of inputs and an efficient production system.
z
Use tools of operations management, including Gantt
charts, PERT networks, and statistical process tools.
z
Explain the role of quality management in the
operations management process.
z
Understand and apply the principles of quality
management, kaizen, just-in-time manufacturing, and
kanban to the production process.
© 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill
What is Operations Management?
z
Operations management is the process an
organization uses to:
¾
Obtain the materials or ideas for the product it provides.

¾
Transform the materials or ideas into the product.
¾
Provide the final product to a user.
z
Operations management is closely linked to:
¾
Strategic Management (Chapter 7)
¾
Planning (Chapter 5)
¾
Information Systems Management (Chapter 18)
© 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill
Skills for Operations Management
Organization Skills
Analytical Problem
Solving Skills
Communication
Skills
© 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill
The Operations Management
Process
Inputs C onversion O utputs
Raw materials
Labor
Energy
Knowledge
Facility
Capacity
Process

Control
Goods
Services
Information
© 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill
Planning in Operations
Management
z
Planning is the foundation of operations
management.
z
Planning – the management function that assesses
the management environment to set future
objectives and map out activities necessary to
achieve those objectives.
© 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill
Strategic Planning
z
Strategic management decisions involved in
operations management:
¾
Make-buy analysis: whether to produce an item or
to purchase it.
¾
Capacity: firm’s ability to produce the product
during a given period.
¾
Facilities: design and location of an operations
facility.
¾

Process: how a product or a service will be
produced.
¾
Facilities layout design: physical arrangement that
allows for efficient production.
© 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill
Acquiring Inputs
z
Inputs are the supplies needed to create a product.
z
Materials requirements planning: analyzing a design to
determine the materials and parts required in the
production process.
z
Inventory: the stock of raw materials, inputs, and
component parts that the firm keeps on hand.
¾
Reordering systems: the process used to help keep inventory
levels more or less consistent.
9
Fixed point reordering system
9
Fixed interval reordering system
© 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill
The Conversion Process
z
Conversion process: the stage in which the
product’s inputs are converted to the final product.
z
An effective conversion process:

¾
Works to lower the cost of creating the product; or to
¾
Create a better product for the same cost.
z
Key decision areas:
¾
Designing the process
¾
Monitoring the process
© 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill
Designing the Process
z
Process design begins with analyzing the general
operation and identifying:
¾
Every major step that needs to be done.
¾
The order that the steps must take.
¾
The flow of the steps from start to finish (including their
relationship to each other).
¾
The amount of time each individual step requires.
© 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill
Example of Process Analysis Information
1 weekFollowing F6G. Test equipment
1 weekFollowing B, E5F. Install equipment
1 weekFollowing C4E. Install floors
1 weekFollowing C3D. Install electrical

fixtures
2 weeksNone2C. Paint interior
1 weekNone1B. Order equipment
4 weeksNone1A. Get permit
TimeRelation to Other Steps OrderStep
© 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill
Process Design Tools
z
Gantt Charts: provide a visual sequence of
the process steps.
z
Load Charts: type of Gantt chart based on
departments or specific resources that are
used in the process.
z
Program Evaluation and Review Technique
(PERT) Network: tool for analyzing the
conversion process.
© 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill