MGMT 90032

OPERATIONS & PROCESS MANAGEMENT

Review & Synthesis

 Objectives

• To review the main issues in “operations and process

management”

• To synthesize the important aspects of operations and process

management into an integrated whole subject
 Syllabus

Topic

Part I: Operations within Organisations – Building Blocks

Topic 1: What is Operations Management & why is it important?
Key decisions in Operations Management
Topic 2: Operating model – ‘Planned’ system

Topic 3: Operating model – Just-in-time/Lean system

Part II: Analysing and Designing the Operating Model

Topic 4: Strategic perspective – Operations strategy

Topic 5: Process perspective – Design and analysis of processes

Topic 6: Supply chain and network perspective

Part III: Creating Competitive Advantage through Operations

Topic 7: Quality management principles

Topic 8: Operations improvement tools and frameworks

Topic 9: Outsourcing
 Our focus…

• Develop understanding of O&PM ‘issues’

• Learn how to apply some basic quantitative tools and techniques to

improve quality of O&PM decisions

• Aim for balance between well-established ideas and contemporary

developments
 What is Operations Management?

Transformation process...

...end-to-end supply
...within organisation
chain
 What is Operations Management?

One way to understand operations is to analyse how some companies have used it to become
successful....
 Sales & Marketing (Forecasts) Operating •Planned
•MRP system
Planners (AP, MS, MRP, scheduling, loading) System Models •‘Push’
System •American’
•Philosophy:
Process1 Minimize total cost
•Large MNCs
Input A1 A2 A3 An Output

RAW FINISHED
P2 PRODUCTS
MATERIALS
EOQ X EOQ
P3

MRP quantities
Inspection
STORES Transformation – How?
•QM (Six sigma, TQM)
•SCM
•Process Reengineering
Planners
System
Cn Cell1 Sales & Marketing

A3 An Customers
•Lean
•JIT
Raw •‘Pull’
A2 A1 •Japanese
Materials
EOQ = 1 •Philosophy:
Bins Minimize inventory &
total cost 7
Component suppliers •Small/medium firms
 Generic competitive dimensions

• Cost leadership:
– Cost efficiency
• Differentiation:
– Quality
– Flexibility
– Delivery
• “Trade-Off” v. “Cumulative” v. “Threshold” models of
competitive strategies
 Inventory in a ‘Planned’ system
Which items? How much? When?

Independent demand items Dependent demand items

Bulk raw materials Discrete finished products
Non-critical components Critical components

M0 M4 M12
Aggregate Product line P
Planning

EOQ model M0 M1 M2
w1 w2 w3 w4
M3 M4 M5 M6 M12
Master Model P1
scheduling Model P2

M0 M1 M2
w1 w2 w3 w4
M3 M4 M5 M6 M12
Component P1.1
MRP Component P1.2
Component P1.3
Lean/JIT Operating Systems in Services

Example:
Sushi train restaurant

Other examples:
Car race pit stop
Budget airlines
Supermarket checkout
Hospital emergency ward
 Process Layouts

Process Layout Trade-offs

Fixed Position Layout ‘Process’ Layout Cellular Layout ‘Product’ Layout

Projects Job shop Combination of Production/ Assembly/
Departments/Divisions Process & Product Operating line
layouts

High variety High variety Medium variety Low variety

Low volume Low volume Medium volume High volume
 Product Layout Design

Operating (production/assembly) line

Assume that you are the “boss”. Given the processing times at each of the
workstations, what will you see:
• at the start of work?
• after a few minutes?
• after one hour?
• at the end of the day?
What could you do to alleviate the ‘problems’ that you have identified?

Work
stations
2min 3min 1min 2min

Workers

Boss!
 Supply Chain Management - Representational models

Supply chain

SS SS SS SS SS
SS SS SS SS SS
S S S FC C C

Exploded chain Encapsulated network

C S S C
C
S C
S
S S C C
S C C S
S S
S
C S
FC C C C
C
S S C
FC
S
S
C C
C S S S
S S C
C S C
S S S
S C S
S C C S
S
 Bullwhip Effect

Occurs when slight demand variability is magnified as information moves back upstream
Seven Basic QM Tools
and Techniques
 Operationalising Quality

Hierarchy….
• Inspection/checking
• Quality control
• Quality assurance
• Total Quality Management

Approaches….
• Standards-based (e.g. ISO 9000)
• Prize-criteria (e.g. ABE, MBNQA)
• Elemental (e.g. six sigma)
 Some important O&PM topics not covered in the
subject to any great extent…

• Project management
• Scheduling
• Quantitative methods, Decision science
• Risk/Crisis management
Emerging Issues in OSCM

https://www.cips.org/PageFiles/138071/CIPS_Digitalisatio
n_of_Procurement_WEB.pdf
Emerging Issues in OSCM
Emerging Issues in OSCM
INTEGRATED OPERATIONS MANAGEMENT FRAMEWORK
FRAGMENTATION EVOLVING TOTAL
INTEGRATION INTEGRATION
1960s 1980s 2000s

Demand forecasting
Purchasing
Production planning Inbound logistics
Resource planning
Manufacturing inventory JIT
Warehousing & facilities ERP Supply Chain Management
Materials handling Quality
Packaging
Finished goods inventory
Distribution planning Outbound logistics
Order processing
Transportation
Customer service
Past and future trends in operations and supply chain management
 The End!

Questions or comments welcome…

© Copyright The University of Melbourne 2008