Om 6
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22 dec 07 • HMF
Operations Management versus (interface) Production Management •
Production management was traditionally associated with goods production.
•
Operations management was created for the management of production of services.
•
Operations Management is now used for both goods and services production.
Operations Function Operations • Marketing • Finance and Accounting • Human Resources • Outside Suppliers
Manufacturing Systems • Components of Manufacturing System • Production Machines • Material Handling System • Computer Control System • Human Resources
Production Machines • Manual Operations – Speed of Operator – Quality of Operator – Operator Skill Requirements • Semi-Automated Machine – Operator Assist Machine Operation – Limited Operator Skill Requirements • Automated Machines – Speed of Machine Operation – Capability of Automated Process – Expense of Materials Handling Systems
Production Machines •
In virtually all modern manufacturing systems, most of the actual processing or assembly work is accomplished by machines or with the aid of tools
• Classification of production machines: 1. Manually operated machines are controlled or supervised by a human worker 2. Semi-automated machines perform a portion of the work cycle under some form of program control, and a worker tends the machine the rest of the cycle 3. Fully automated machines operate for extended periods of time with no human attention
Manually Operated Machine
Manually operated machines are controlled or supervised by a human worker. The machine provides the power for the operation and the worker provides the control. The entire work cycle is operator controlled.
Semi-Automated Machine
A semi-automated machine performs a portion of the work cycle under some form of program control, and a worker tends to the machine for the remainder of the cycle. Typical worker tasks include loading and unloading parts
Fully-Automated Machine
Machine operates for extended periods (longer than one work cycle) without worker attention (periodic tending may be needed).
Material Handling System • In most manufacturing systems the process or assemble discrete parts and products, the following material handling functions must be provided: 1. 2. 3. 4.
Loading work units at each station Positioning work units at each station Unloading work units at each station Transporting work units between stations in multistation systems 5. Temporary storage of work units
Work Transport Between Stations • Two general categories of work transport in multi-station manufacturing systems: 1. Fixed routing (Assembly line) • •
Work units always flow through the same sequence of workstations Most production lines exemplify this category
2. Variable routing • •
Work units are moved through a variety of different station sequences Most job shops exemplify this category
(a) Fixed Routing and (b) Variable Routing
Computer Control System • Typical computer functions in a manufacturing system: – Communicate instructions to workers (receive processing or assembly instructions for the specific work unit) – Download part programs to computer-controlled machines – Control material handling system – Schedule production – Failure diagnosis when malfunctions occur and preventive maintenance – Safety monitoring (protect both the human worker and equipment) – Quality control (detect and reject defective work units produced by the system) – Operations management (manage overall operations)
Classification of Manufacturing Systems • Factors that define and distinguish manufacturing systems: 1. 2. 3. 4. 5.
Types of operations performed Number of workstations System layout Automation and manning level Part or product variety
Classification of Manufacturing Systems • Factors that define and distinguish manufacturing systems: 1. 2. 3. 4. 5.
Types of operations performed Number of workstations System layout Automation and manning level Part or product variety
Types of Operations Performed • Processing operations on work units versus assembly operations to combine individual parts into assembled entities • Type(s) of materials processed • Size and weight of work units • Part or product complexity – For assembled products, number of components per product – For individual parts, number of distinct operations to complete processing • Part geometry – For machined parts, rotational vs. non-rotational
Number of Workstations • Convenient measure of the size of the system – Let n = number of workstations – Individual workstations can be identified by subscript i, where i = 1, 2,...,n • Affects performance factors such as workload capacity, production rate, and reliability – As n increases, this usually means greater workload capacity and higher production rate – There must be a synergistic effect that derives from n multiple stations working together vs. n single stations
System Layout • Applies mainly to multi-station systems • Fixed routing vs. variable routing – In systems with fixed routing, workstations are usually arranged linearly – In systems with variable routing, a variety of layouts are possible
• System layout is an important factor in determining the most appropriate type of material handling system
Automation and Manning Levels • Level of workstation automation – Manually operated – Semi-automated – Fully automated • Manning level Mi = proportion of time worker is in attendance at station i – Mi = 1 means that one worker must be at the station continuously – Mi ≥ 1 indicates manual operations – Mi < 1 usually denotes some form of automation
Part or Product Variety: Flexibility •
“The degree to which the system is capable of dealing with variations in the parts or products it produces” Three cases: Single-model case - all parts or products are identical (sufficient demand/fixed automation) Batch-model case - different parts or products are produced by the system, but they are produced in batches because changeovers are required (hard product variety) Mixed-model case - different parts or products are produced by the system, but the system can handle the differences without the need for time-consuming changes in setup (soft product variety)
Services Operations Management A Mixture of Ideas
Services vs Production OM • Many services contain some aspects of production • All producers of goods have customers and so provide a service • The customer is present during the large parts of most services
• In services, operations, marketing and HRM are more obviously integrated. • Many production ideas - e.g. inventory management, JIT and MRP can be applied in a simple way. • Project planning, TQM, capacity planning, workforce scheduling, etc applies to everything.
The Service Package - 1 • Core services – What the customer really wants • Hotel - the provision of a bed for the night
• Facilitating services – Services that are needed for the core service to take place • Hotel - reception service, room cleaning
– Those which facilitate the sale of the products they support • technical advice, kitchen
• Augmenting services – Those, whilst not strictly necessary, enhance the core services • Hotel - bar, restaurant, gym
The Service Package - 2 • A bundle of goods and services provided in some environment – Supporting facility • the necessary physical resources – (golf course, hospital)
– Facilitating goods • Material bought or consumed by customer – (medical supplies, car spares)
The Service Package – 2 ctd. – Explicit services • Benefits readily observable by the senses and consist of the essential features of the service – (absence of pain after being fixed by dentist, the response time of the fire brigade)
– Implicit services • Psychological benefits customer senses vaguely – (status of degree from good university, privacy of consultation)
Service Process Matrix (Schmenner)
Low
Degree of Labour Intensity
H igh
Degree of Interaction / customisation Low
High
ervice Factory
ervice shop
Airlines
Hospitals
Trucking
Car repair
ass service Hotels
rofessional service
Retailing
Doctors
Lawyers
Accountants
Schools
Retail Banking Labour intensity = labour cost / capital cost
The Service Encounter (Schmenner) • The intersection of three attributes of service management: – Service task (voice of customer) • states why service exists • what customer values about service
– Service standards • define effective service - measurable
– Service delivery system • specifies how service is delivered • controls for cost, quality, customer satisfaction
The Service Encounter (Fitzsimmons’s) • The service encounter triad – Customer - Contact personnel - Service organisation
• Each attempts to exert control over the encounter – Service organisation dominant (McDonalds) – Contact personnel dominant (doctors) – Customer dominant (self service petrol station)
Ideally there should be balance between participants
Improving the service encounter Ways to improve productivity – Substitution • capital for labour • cheap labour for expensive labour • customer labour for service provider labour
– Waste removal • • • •
methods improvement (e.g. in parcel delivery ) quality improvement Business Process Re-engineering Modularity (many tasks per worker)
– Reducing variance and variety • Standardisation • Less interaction
Training Contact Personnel • not just about procedures: how to handle difficult interactions between customers and contact personnel
– Unrealistic customer expectations • Unreasonable demands • • • • •
Demands against policies Unacceptable treatment of employees Drunkenness Breaking societal norms Special needs
Training Contact Personnel ctd.. – Unexpected service failure • Unavailable service • Slow performance • Unacceptable service
– Customer • Expectation and attitudes • Customer as co-producer
High Contact Service Encounters (Lovelock)
• • • •
Recruiting the right people for the job Who does the hiring Who must be hired v what can be taught Training in elocution and voice control, eye contact, smiling - theatrical analogy • Emotional labour - expressing socially desired emotions during service transactions • Monitoring non-verbal cues • Adjusting one’s behaviour in the context of social conditions
Designing Service Processes • Blueprinting (Shostack) separate diagram – a picture of the service system – shows processes and decisions – front stage and backstage
• Helpful for – – – – –
definition understanding of critical success factors failure points waiting discussion
Managing queues and waiting areas • Queues are endemic – – – –
Fast food outlet Doctors’ surgery Tele sales Orders in a factory
• Complex arrival patterns of customers – Individual / Bulk – Random / scheduled – Vary with time of day /year
Managing queues and waiting areas ctd..
• Customer behaviour – Baulking - not joining queue – Reneging - leaving the queue – Jockeying - switching queues
• Queue discipline - order of service – FIFO, LIFO, Random, Priority – Parallel or single queues
• Variable service times
Managing queues and waiting areas ctd..
• Problem - decide on – number of service stations – staffing schedule – queue management
• to produce acceptable waiting – ‘Acceptable’ queuing time is complex issue
• Two analytical approaches – Simulation by computer – Queuing theory • very restrictive assumptions • for very simple cases only
Waiting time and how to manage it 1. 2. 3. 4. 5. 6. 7.
Unoccupied time feels longer than waiting time Pre-process waits feel longer than in-process waits Anxiety makes waits seem longer Uncertain waits are longer than known waits Unexplained waits are longer than explained waits Unfair waits are longer than equitable waits The more valuable the service the longer the customer will wait Solo waits feel longer than group waits
Measuring Service Quality (PZB) • Service quality ‘is the degree and direction of discrepancy between customers’ service perceptions and expectations’
Ten Dimensions of Service Quality 1. Tangibles - appearance of physical facilities, equipment, personnel 2. Reliability - ability to perform the promised service dependably and accurately 3. Responsiveness - willingness to help customers, provide prompt service 4. Competence - has required skills and knowledge 5. Courtesy - politeness, respect, consideration, friendliness
Ten Dimensions of Service Quality ctd. 1.
Credibility - trustworthiness, believability, honesty
2.
Security - freedom from danger, risk, doubt
3.
Access - approachability, ease of contact
4.
Communication - keeping the customer informed, listening to them
5.
Understanding the customer - making an effort to know customers and their needs Some dimensions interrelated. Based on qualitative studies.
Operationalising the Service Quality Gap • Expectations statements – Physical facilities at banks should be visually appealing – Lecturers should be smartly dressed when giving lectures
• Perceptions statements – The physical facilities at NatWest Bank (Broomhill) are physically attractive – Lecturers in the Management School are smartly dressed when giving lectures Each rated on a seven point (agree/disagree) scale Weight perceptions by expectations to obtain ‘score’
Reduced set of Service Quality Dimensions
• • • •
Tangibles Reliability Responsiveness Assurance – knowledge and courtesy of employees and their ability to inspire trust and confidence
• Empathy – caring, individualised attention the firm provides for its customers
Operations Management versus (interface) Production Management •
Production management was traditionally associated with goods production.
•
Operations management was created for the management of production of services.
•
Operations Management is now used for both goods and services production.
Operations Function Operations • Marketing • Finance and Accounting • Human Resources • Outside Suppliers
Manufacturing Systems • Components of Manufacturing System • Production Machines • Material Handling System • Computer Control System • Human Resources
Production Machines • Manual Operations – Speed of Operator – Quality of Operator – Operator Skill Requirements • Semi-Automated Machine – Operator Assist Machine Operation – Limited Operator Skill Requirements • Automated Machines – Speed of Machine Operation – Capability of Automated Process – Expense of Materials Handling Systems
Production Machines •
In virtually all modern manufacturing systems, most of the actual processing or assembly work is accomplished by machines or with the aid of tools
• Classification of production machines: 1. Manually operated machines are controlled or supervised by a human worker 2. Semi-automated machines perform a portion of the work cycle under some form of program control, and a worker tends the machine the rest of the cycle 3. Fully automated machines operate for extended periods of time with no human attention
Manually Operated Machine
Manually operated machines are controlled or supervised by a human worker. The machine provides the power for the operation and the worker provides the control. The entire work cycle is operator controlled.
Semi-Automated Machine
A semi-automated machine performs a portion of the work cycle under some form of program control, and a worker tends to the machine for the remainder of the cycle. Typical worker tasks include loading and unloading parts
Fully-Automated Machine
Machine operates for extended periods (longer than one work cycle) without worker attention (periodic tending may be needed).
Material Handling System • In most manufacturing systems the process or assemble discrete parts and products, the following material handling functions must be provided: 1. 2. 3. 4.
Loading work units at each station Positioning work units at each station Unloading work units at each station Transporting work units between stations in multistation systems 5. Temporary storage of work units
Work Transport Between Stations • Two general categories of work transport in multi-station manufacturing systems: 1. Fixed routing (Assembly line) • •
Work units always flow through the same sequence of workstations Most production lines exemplify this category
2. Variable routing • •
Work units are moved through a variety of different station sequences Most job shops exemplify this category
(a) Fixed Routing and (b) Variable Routing
Computer Control System • Typical computer functions in a manufacturing system: – Communicate instructions to workers (receive processing or assembly instructions for the specific work unit) – Download part programs to computer-controlled machines – Control material handling system – Schedule production – Failure diagnosis when malfunctions occur and preventive maintenance – Safety monitoring (protect both the human worker and equipment) – Quality control (detect and reject defective work units produced by the system) – Operations management (manage overall operations)
Classification of Manufacturing Systems • Factors that define and distinguish manufacturing systems: 1. 2. 3. 4. 5.
Types of operations performed Number of workstations System layout Automation and manning level Part or product variety
Classification of Manufacturing Systems • Factors that define and distinguish manufacturing systems: 1. 2. 3. 4. 5.
Types of operations performed Number of workstations System layout Automation and manning level Part or product variety
Types of Operations Performed • Processing operations on work units versus assembly operations to combine individual parts into assembled entities • Type(s) of materials processed • Size and weight of work units • Part or product complexity – For assembled products, number of components per product – For individual parts, number of distinct operations to complete processing • Part geometry – For machined parts, rotational vs. non-rotational
Number of Workstations • Convenient measure of the size of the system – Let n = number of workstations – Individual workstations can be identified by subscript i, where i = 1, 2,...,n • Affects performance factors such as workload capacity, production rate, and reliability – As n increases, this usually means greater workload capacity and higher production rate – There must be a synergistic effect that derives from n multiple stations working together vs. n single stations
System Layout • Applies mainly to multi-station systems • Fixed routing vs. variable routing – In systems with fixed routing, workstations are usually arranged linearly – In systems with variable routing, a variety of layouts are possible
• System layout is an important factor in determining the most appropriate type of material handling system
Automation and Manning Levels • Level of workstation automation – Manually operated – Semi-automated – Fully automated • Manning level Mi = proportion of time worker is in attendance at station i – Mi = 1 means that one worker must be at the station continuously – Mi ≥ 1 indicates manual operations – Mi < 1 usually denotes some form of automation
Part or Product Variety: Flexibility •
“The degree to which the system is capable of dealing with variations in the parts or products it produces” Three cases: Single-model case - all parts or products are identical (sufficient demand/fixed automation) Batch-model case - different parts or products are produced by the system, but they are produced in batches because changeovers are required (hard product variety) Mixed-model case - different parts or products are produced by the system, but the system can handle the differences without the need for time-consuming changes in setup (soft product variety)
Services Operations Management A Mixture of Ideas
Services vs Production OM • Many services contain some aspects of production • All producers of goods have customers and so provide a service • The customer is present during the large parts of most services
• In services, operations, marketing and HRM are more obviously integrated. • Many production ideas - e.g. inventory management, JIT and MRP can be applied in a simple way. • Project planning, TQM, capacity planning, workforce scheduling, etc applies to everything.
The Service Package - 1 • Core services – What the customer really wants • Hotel - the provision of a bed for the night
• Facilitating services – Services that are needed for the core service to take place • Hotel - reception service, room cleaning
– Those which facilitate the sale of the products they support • technical advice, kitchen
• Augmenting services – Those, whilst not strictly necessary, enhance the core services • Hotel - bar, restaurant, gym
The Service Package - 2 • A bundle of goods and services provided in some environment – Supporting facility • the necessary physical resources – (golf course, hospital)
– Facilitating goods • Material bought or consumed by customer – (medical supplies, car spares)
The Service Package – 2 ctd. – Explicit services • Benefits readily observable by the senses and consist of the essential features of the service – (absence of pain after being fixed by dentist, the response time of the fire brigade)
– Implicit services • Psychological benefits customer senses vaguely – (status of degree from good university, privacy of consultation)
Service Process Matrix (Schmenner)
Low
Degree of Labour Intensity
H igh
Degree of Interaction / customisation Low
High
ervice Factory
ervice shop
Airlines
Hospitals
Trucking
Car repair
ass service Hotels
rofessional service
Retailing
Doctors
Lawyers
Accountants
Schools
Retail Banking Labour intensity = labour cost / capital cost
The Service Encounter (Schmenner) • The intersection of three attributes of service management: – Service task (voice of customer) • states why service exists • what customer values about service
– Service standards • define effective service - measurable
– Service delivery system • specifies how service is delivered • controls for cost, quality, customer satisfaction
The Service Encounter (Fitzsimmons’s) • The service encounter triad – Customer - Contact personnel - Service organisation
• Each attempts to exert control over the encounter – Service organisation dominant (McDonalds) – Contact personnel dominant (doctors) – Customer dominant (self service petrol station)
Ideally there should be balance between participants
Improving the service encounter Ways to improve productivity – Substitution • capital for labour • cheap labour for expensive labour • customer labour for service provider labour
– Waste removal • • • •
methods improvement (e.g. in parcel delivery ) quality improvement Business Process Re-engineering Modularity (many tasks per worker)
– Reducing variance and variety • Standardisation • Less interaction
Training Contact Personnel • not just about procedures: how to handle difficult interactions between customers and contact personnel
– Unrealistic customer expectations • Unreasonable demands • • • • •
Demands against policies Unacceptable treatment of employees Drunkenness Breaking societal norms Special needs
Training Contact Personnel ctd.. – Unexpected service failure • Unavailable service • Slow performance • Unacceptable service
– Customer • Expectation and attitudes • Customer as co-producer
High Contact Service Encounters (Lovelock)
• • • •
Recruiting the right people for the job Who does the hiring Who must be hired v what can be taught Training in elocution and voice control, eye contact, smiling - theatrical analogy • Emotional labour - expressing socially desired emotions during service transactions • Monitoring non-verbal cues • Adjusting one’s behaviour in the context of social conditions
Designing Service Processes • Blueprinting (Shostack) separate diagram – a picture of the service system – shows processes and decisions – front stage and backstage
• Helpful for – – – – –
definition understanding of critical success factors failure points waiting discussion
Managing queues and waiting areas • Queues are endemic – – – –
Fast food outlet Doctors’ surgery Tele sales Orders in a factory
• Complex arrival patterns of customers – Individual / Bulk – Random / scheduled – Vary with time of day /year
Managing queues and waiting areas ctd..
• Customer behaviour – Baulking - not joining queue – Reneging - leaving the queue – Jockeying - switching queues
• Queue discipline - order of service – FIFO, LIFO, Random, Priority – Parallel or single queues
• Variable service times
Managing queues and waiting areas ctd..
• Problem - decide on – number of service stations – staffing schedule – queue management
• to produce acceptable waiting – ‘Acceptable’ queuing time is complex issue
• Two analytical approaches – Simulation by computer – Queuing theory • very restrictive assumptions • for very simple cases only
Waiting time and how to manage it 1. 2. 3. 4. 5. 6. 7.
Unoccupied time feels longer than waiting time Pre-process waits feel longer than in-process waits Anxiety makes waits seem longer Uncertain waits are longer than known waits Unexplained waits are longer than explained waits Unfair waits are longer than equitable waits The more valuable the service the longer the customer will wait Solo waits feel longer than group waits
Measuring Service Quality (PZB) • Service quality ‘is the degree and direction of discrepancy between customers’ service perceptions and expectations’
Ten Dimensions of Service Quality 1. Tangibles - appearance of physical facilities, equipment, personnel 2. Reliability - ability to perform the promised service dependably and accurately 3. Responsiveness - willingness to help customers, provide prompt service 4. Competence - has required skills and knowledge 5. Courtesy - politeness, respect, consideration, friendliness
Ten Dimensions of Service Quality ctd. 1.
Credibility - trustworthiness, believability, honesty
2.
Security - freedom from danger, risk, doubt
3.
Access - approachability, ease of contact
4.
Communication - keeping the customer informed, listening to them
5.
Understanding the customer - making an effort to know customers and their needs Some dimensions interrelated. Based on qualitative studies.
Operationalising the Service Quality Gap • Expectations statements – Physical facilities at banks should be visually appealing – Lecturers should be smartly dressed when giving lectures
• Perceptions statements – The physical facilities at NatWest Bank (Broomhill) are physically attractive – Lecturers in the Management School are smartly dressed when giving lectures Each rated on a seven point (agree/disagree) scale Weight perceptions by expectations to obtain ‘score’
Reduced set of Service Quality Dimensions
• • • •
Tangibles Reliability Responsiveness Assurance – knowledge and courtesy of employees and their ability to inspire trust and confidence
• Empathy – caring, individualised attention the firm provides for its customers
