Fundamentals Of Management
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Fundamentals of Management Sixth Edition
Robbins and DeCenzo with contributions from Henry Moon CHAPTER
14
Part V: Controlling
Operations Management
© 2008 Prentice Hall, Inc. All rights reserved.
PowerPoint Presentation by Charlie Cook The University of West Alabama
LEARNING OUTCOMES After reading this chapter, you will be 1. able Defineto: operations management and the transformation process. 2. Describe three reasons operations management is important to all managers. 3. Differentiate between a service and a manufacturing organization. 4. Define value chain management. 5. Explain the organizational and managerial requirements for value chain management. 6. Identify the benefits and obstacles to value chain management. © 2008 Prentice Hall, Inc. All rights reserved.
14–2
L E A R N I N G O U T C O M E S (cont’d) After reading this chapter, you will be to:technology’s role in operations management. 1. able Discuss 2. Explain what is meant by the term just-in-time management. 3. Describe what is meant by the term quality control. 4. Explain the concept of project management.
© 2008 Prentice Hall, Inc. All rights reserved.
14–3
The Importance Of Operations Management • Operations Management The study and application of the transformation
process
• OM Is Important Because It: Encompasses processes in all organizations—
services as well as manufacturing. Is important in effectively and efficiently managing productivity. Plays a strategic role in an organization’s competitive success.
© 2008 Prentice Hall, Inc. All rights reserved.
14–4
Transformation and Organizations • Transformation Process The process through which an organization creates
value by turning inputs (people, capital, equipment, materials) into outputs (goods or services).
• Manufacturing Organization Produces physical goods.
• Service Organization Produces nonphysical outputs such as educational,
medical or transportation services.
© 2008 Prentice Hall, Inc. All rights reserved.
14–5
EXHIBIT 14–1
The Transformation Process
© 2008 Prentice Hall, Inc. All rights reserved.
14–6
Productivity • Productivity Defined The overall output of goods and services produced
divided by the inputs needed to generate that output.
Outputs Inputs • Benefits of High Productivity Fosters economic growth and development Increases individual wages without inflation Lowers costs and makes firms more competitive © 2008 Prentice Hall, Inc. All rights reserved.
14–7
What Is Value Chain Management? • Value The performance characteristics, features and
attributes, or any other aspects of goods and services for which customers are willing to give up resources.
• Value Chain The entire series of organizational work activities that
add value at each step beginning with the processing or raw materials and ending with a finished product in the hands of end users.
© 2008 Prentice Hall, Inc. All rights reserved.
14–8
Value Chain Management versus Supply Chain Management • Value Chain Management Improves the process of creating and transferring
documents by automating the flow of information.
• Supply Chain Management Is the management of facilities, functions, and
activities involved in producing and delivering a product or service, from suppliers to customers.
© 2008 Prentice Hall, Inc. All rights reserved.
14–9
The Goals Of Value Chain Management • Creating customer-defined value by: Providing a unique combination that meets customer
needs and at a price that can’t be matched by competitors. Having a sequence of participants work together as a team, each adding a component of value to the overall process.
It’s all about providing value, not bargains, to the customer
© 2008 Prentice Hall, Inc. All rights reserved.
14–10
Value Chain Management Requirements • Business Model A strategic design for how a company intends to
profit from its broad array of strategies, processes, and activities.
• Value Chain Management Requirements Coordination and collaboration Technology investment Organizational processes Leadership Employees/human resources management Strong culture and attitudes © 2008 Prentice Hall, Inc. All rights reserved.
14–11
EXHIBIT 14–2 Six Requirements for Successful Value Chain Management
© 2008 Prentice Hall, Inc. All rights reserved.
14–12
Steps in Collaboration
1. Look for common points of interest. 2. Listen to others. 3. Check for understanding. 4. Accept diversity. 5. Seek additional information. 6. Don’t become defensive.
© 2008 Prentice Hall, Inc. All rights reserved.
14–13
Effect of Value Chain Management on Organizational Processes • Better demand forecasting is necessary and possible because of closer ties with customers and suppliers. • Selected functions may need to be done collaboratively with partners in the value chain. • New measures are needed for evaluating the performance of activities along the value chain.
© 2008 Prentice Hall, Inc. All rights reserved.
14–14
Implementing Value Chain Management • Benefits Improved customer
service Cost savings Accelerated delivery times
• Obstacles Organizational barriers Cultural attitudes Required capabilities People
Improved quality Inventory reduction Improved logistics
management Increased sales Increased market share
© 2008 Prentice Hall, Inc. All rights reserved.
14–15
EXHIBIT 14–3 Value Chain Benefits
Source: G. Taninecz, “Forging the Chain,” Industry Week (May 15, 2000), p. 44. © 2008 Prentice Hall, Inc. All rights reserved.
14–16
EXHIBIT 14–4 Obstacles to Successful Value Chain Management
© 2008 Prentice Hall, Inc. All rights reserved.
14–17
Contemporary Operations Management Issues • Technology Role in E-Manufacturing How an organization will transform its inputs into
outputs.
• Just-in-time (JIT) Inventory Systems How to develop systems in which inventory items
arrive when needed in the production process instead of being stored in stock.
Kanban
© 2008 Prentice Hall, Inc. All rights reserved.
14–18
Quality and Operations Management • Quality Control Monitoring quality—weight, strength, consistency,
color, taste, reliability, finish, or any one of myriad characteristics—to ensure that it meets some preestablished standard.
• Continuous Improvement A comprehensive, customer-focused program to
continuously improve the quality of the organization’s processes, products and services.
© 2008 Prentice Hall, Inc. All rights reserved.
14–19
Managing Projects • Project One-time-only set of activities with a definite
beginning and ending point in time.
• Project Management Task of getting the activities done on time, within
budget, and according to specifications.
© 2008 Prentice Hall, Inc. All rights reserved.
14–20
Popular Scheduling Tools • Gantt Chart Shows in bar graph form when tasks are supposed
to be done and compares that with the actual progress on each task.
• Load Chart Is a modified version of a Gantt Chart; it lists either
whole departments or specific resources.
This information allows managers to plan and control for capacity utilization in the scheduling of individual work stations.
© 2008 Prentice Hall, Inc. All rights reserved.
14–21
EXHIBIT 14–5
A Sample Gantt Chart
© 2008 Prentice Hall, Inc. All rights reserved.
14–22
EXHIBIT 14–6
A Sample Load Chart
© 2008 Prentice Hall, Inc. All rights reserved.
14–23
PERT Network Analysis • Program Evaluation and Review Technique (PERT) Network Analysis A flowchart-like diagram that depicts the sequence of
activities needed to complete a project and the time or costs associated with each activity.
© 2008 Prentice Hall, Inc. All rights reserved.
14–24
PERT Components • Events End points represent the completion of activities
• Activities Actions that take place
• Slack Time The time difference between the critical path and all
other paths
• Critical Path The longest or most time-consuming sequence of
events and activities required to complete a project in the shortest amount of time © 2008 Prentice Hall, Inc. All rights reserved.
14–25
EXHIBIT 14–7
Developing PERT charts
1. Identify every significant activity that must be achieved for a project to be completed. 2. Ascertain the precedence order in which these events must be completed and create a diagram reflecting the ordering of activities. 3. Compute a weighted average time estimate (expected time) for completing each activity. 4. Insert start and finish times into the diagram and inspect to determine the critical path.
© 2008 Prentice Hall, Inc. All rights reserved.
14–26
EXHIBIT 14–8 Major Activities in Building a Custom Home
© 2008 Prentice Hall, Inc. All rights reserved.
14–27
EXHIBIT 14–9
A PERT Network for Building a Custom Home
Critical Path
© 2008 Prentice Hall, Inc. All rights reserved.
14–28
Robbins and DeCenzo with contributions from Henry Moon CHAPTER
14
Part V: Controlling
Operations Management
© 2008 Prentice Hall, Inc. All rights reserved.
PowerPoint Presentation by Charlie Cook The University of West Alabama
LEARNING OUTCOMES After reading this chapter, you will be 1. able Defineto: operations management and the transformation process. 2. Describe three reasons operations management is important to all managers. 3. Differentiate between a service and a manufacturing organization. 4. Define value chain management. 5. Explain the organizational and managerial requirements for value chain management. 6. Identify the benefits and obstacles to value chain management. © 2008 Prentice Hall, Inc. All rights reserved.
14–2
L E A R N I N G O U T C O M E S (cont’d) After reading this chapter, you will be to:technology’s role in operations management. 1. able Discuss 2. Explain what is meant by the term just-in-time management. 3. Describe what is meant by the term quality control. 4. Explain the concept of project management.
© 2008 Prentice Hall, Inc. All rights reserved.
14–3
The Importance Of Operations Management • Operations Management The study and application of the transformation
process
• OM Is Important Because It: Encompasses processes in all organizations—
services as well as manufacturing. Is important in effectively and efficiently managing productivity. Plays a strategic role in an organization’s competitive success.
© 2008 Prentice Hall, Inc. All rights reserved.
14–4
Transformation and Organizations • Transformation Process The process through which an organization creates
value by turning inputs (people, capital, equipment, materials) into outputs (goods or services).
• Manufacturing Organization Produces physical goods.
• Service Organization Produces nonphysical outputs such as educational,
medical or transportation services.
© 2008 Prentice Hall, Inc. All rights reserved.
14–5
EXHIBIT 14–1
The Transformation Process
© 2008 Prentice Hall, Inc. All rights reserved.
14–6
Productivity • Productivity Defined The overall output of goods and services produced
divided by the inputs needed to generate that output.
Outputs Inputs • Benefits of High Productivity Fosters economic growth and development Increases individual wages without inflation Lowers costs and makes firms more competitive © 2008 Prentice Hall, Inc. All rights reserved.
14–7
What Is Value Chain Management? • Value The performance characteristics, features and
attributes, or any other aspects of goods and services for which customers are willing to give up resources.
• Value Chain The entire series of organizational work activities that
add value at each step beginning with the processing or raw materials and ending with a finished product in the hands of end users.
© 2008 Prentice Hall, Inc. All rights reserved.
14–8
Value Chain Management versus Supply Chain Management • Value Chain Management Improves the process of creating and transferring
documents by automating the flow of information.
• Supply Chain Management Is the management of facilities, functions, and
activities involved in producing and delivering a product or service, from suppliers to customers.
© 2008 Prentice Hall, Inc. All rights reserved.
14–9
The Goals Of Value Chain Management • Creating customer-defined value by: Providing a unique combination that meets customer
needs and at a price that can’t be matched by competitors. Having a sequence of participants work together as a team, each adding a component of value to the overall process.
It’s all about providing value, not bargains, to the customer
© 2008 Prentice Hall, Inc. All rights reserved.
14–10
Value Chain Management Requirements • Business Model A strategic design for how a company intends to
profit from its broad array of strategies, processes, and activities.
• Value Chain Management Requirements Coordination and collaboration Technology investment Organizational processes Leadership Employees/human resources management Strong culture and attitudes © 2008 Prentice Hall, Inc. All rights reserved.
14–11
EXHIBIT 14–2 Six Requirements for Successful Value Chain Management
© 2008 Prentice Hall, Inc. All rights reserved.
14–12
Steps in Collaboration
1. Look for common points of interest. 2. Listen to others. 3. Check for understanding. 4. Accept diversity. 5. Seek additional information. 6. Don’t become defensive.
© 2008 Prentice Hall, Inc. All rights reserved.
14–13
Effect of Value Chain Management on Organizational Processes • Better demand forecasting is necessary and possible because of closer ties with customers and suppliers. • Selected functions may need to be done collaboratively with partners in the value chain. • New measures are needed for evaluating the performance of activities along the value chain.
© 2008 Prentice Hall, Inc. All rights reserved.
14–14
Implementing Value Chain Management • Benefits Improved customer
service Cost savings Accelerated delivery times
• Obstacles Organizational barriers Cultural attitudes Required capabilities People
Improved quality Inventory reduction Improved logistics
management Increased sales Increased market share
© 2008 Prentice Hall, Inc. All rights reserved.
14–15
EXHIBIT 14–3 Value Chain Benefits
Source: G. Taninecz, “Forging the Chain,” Industry Week (May 15, 2000), p. 44. © 2008 Prentice Hall, Inc. All rights reserved.
14–16
EXHIBIT 14–4 Obstacles to Successful Value Chain Management
© 2008 Prentice Hall, Inc. All rights reserved.
14–17
Contemporary Operations Management Issues • Technology Role in E-Manufacturing How an organization will transform its inputs into
outputs.
• Just-in-time (JIT) Inventory Systems How to develop systems in which inventory items
arrive when needed in the production process instead of being stored in stock.
Kanban
© 2008 Prentice Hall, Inc. All rights reserved.
14–18
Quality and Operations Management • Quality Control Monitoring quality—weight, strength, consistency,
color, taste, reliability, finish, or any one of myriad characteristics—to ensure that it meets some preestablished standard.
• Continuous Improvement A comprehensive, customer-focused program to
continuously improve the quality of the organization’s processes, products and services.
© 2008 Prentice Hall, Inc. All rights reserved.
14–19
Managing Projects • Project One-time-only set of activities with a definite
beginning and ending point in time.
• Project Management Task of getting the activities done on time, within
budget, and according to specifications.
© 2008 Prentice Hall, Inc. All rights reserved.
14–20
Popular Scheduling Tools • Gantt Chart Shows in bar graph form when tasks are supposed
to be done and compares that with the actual progress on each task.
• Load Chart Is a modified version of a Gantt Chart; it lists either
whole departments or specific resources.
This information allows managers to plan and control for capacity utilization in the scheduling of individual work stations.
© 2008 Prentice Hall, Inc. All rights reserved.
14–21
EXHIBIT 14–5
A Sample Gantt Chart
© 2008 Prentice Hall, Inc. All rights reserved.
14–22
EXHIBIT 14–6
A Sample Load Chart
© 2008 Prentice Hall, Inc. All rights reserved.
14–23
PERT Network Analysis • Program Evaluation and Review Technique (PERT) Network Analysis A flowchart-like diagram that depicts the sequence of
activities needed to complete a project and the time or costs associated with each activity.
© 2008 Prentice Hall, Inc. All rights reserved.
14–24
PERT Components • Events End points represent the completion of activities
• Activities Actions that take place
• Slack Time The time difference between the critical path and all
other paths
• Critical Path The longest or most time-consuming sequence of
events and activities required to complete a project in the shortest amount of time © 2008 Prentice Hall, Inc. All rights reserved.
14–25
EXHIBIT 14–7
Developing PERT charts
1. Identify every significant activity that must be achieved for a project to be completed. 2. Ascertain the precedence order in which these events must be completed and create a diagram reflecting the ordering of activities. 3. Compute a weighted average time estimate (expected time) for completing each activity. 4. Insert start and finish times into the diagram and inspect to determine the critical path.
© 2008 Prentice Hall, Inc. All rights reserved.
14–26
EXHIBIT 14–8 Major Activities in Building a Custom Home
© 2008 Prentice Hall, Inc. All rights reserved.
14–27
EXHIBIT 14–9
A PERT Network for Building a Custom Home
Critical Path
© 2008 Prentice Hall, Inc. All rights reserved.
14–28
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