UPO Operations management slides for Sec 2 E

2. BEFORE STRATEGIZING
Preconditions to Know:
1. Strengths and weakness of competition
2. Environmental, technological, legal and economic
issues – current as well as future
3. Resources available
4. Integration of OM strategy with company strategy
5. Product lifecycle

3. 10 STRATEGIC DECISIONS OF O.M.
Goods & Service
Design
Layout Design
Process and
Capacity Design
HR & Job Design
Location Selection
Supply Chain
Management:
Cost vs. Service
Inventory
Production
Schedule
Quality
Delivery
Speed &
Reliability

4. Successful designs come
down to these basic
principles:
• translate customers' wants and
needs
• develop new products and
services
• formulate quality goals
• formulate cost targets
• construct and test prototypes

5. P R O D U C T D E S I G N
What is needed?
How will we produce
what is needed?
S E R V I C E D E S I G N
What is needed?
How will we
provide that
service?
Concept
Manufacturing
Testing
Product Launch
Organizing
Planning
People
Communications

6. LAYOUT, PROCESS AND
CAPACITY DESIGN
The way a facility is arranged
in order to maximize
processes that are efficient
and effective
The way goods or services are
made or provided
How well a system can be
adjusted to meet changes in
processing requirements

7. Quality of
work life
Talent and
skills of
employees
Cost of
employees
and benefits

8. Determining
country, region,
or site
alternatives.
Where should
we be located?

9. LOCATION SELECTION
P R O D U C T S S E R V I C E S
Traffic patterns
Proximity to markets
Location of competitors
Availability of
energy and water
Proximity to raw
materials
Transportation
cost
Cost-profit-volume Analysis
Center of Gravity Method
Factor Rating

10. SUPPLY CHAIN MANAGEMENT DECISIONS
C O S T
Low cost
Q U A L I T Y
High quality
products

11. SUPPLY CHAIN MANAGEMENT DECISIONS
C O S T
Low cost
S E R V I C E
High quality service

12. SUPPLY CHAIN MANAGEMENT DECISIONS
Inventory Management
• Stock and storage of goods
• Track existing inventory
• Know what quantity will be needed
• Know when quantity will be needed
• Know how much items will cost

13. TYPES OF INVENTORY MANAGEMENT
Perpetual
Continual updating of
inventory with every
sale. Products have
barcodes. Alerts
when amounts are
low.
Periodic
Periodic and manual
updating of inventory.
What you had minus
What you sold=What
you have left

14. SUPPLY CHAIN MANAGEMENT DECISIONS
Production Schedule
• Efficient and feasible schedule of
production
• Demands of facility and resources
must be determined

15. SUPPLY CHAIN MANAGEMENT DECISIONS
D E L I V E R Y S P E E D D E L I V E R Y R E L I A B I L I T Y
If you say you can
be reliable, can
you really?
Delivering quickly or
providing high
quality

16. HIGH RETURN ON INVESTMENT THROUGH
OPERATIONS
1. High product quality (relatively)
2. High capacity utilization
3. High operating efficiency (employee
productivity)
4. Low investment intensity (amount of capital to
produce $1 of sales)
5. Low direct cost per unit (relatively)

17. RECAP: TO KNOW
1. Strengths and weakness of competition
2. Environmental, technological, legal and economic issues – current as
well as future
3. Resources available
4. Integration of OM strategy with company strategy
5. Product lifecycle

18. RECAP: 10 O.M. DECISIONS
• Goods & Service Design
• Layout Design
• Process and Capacity Design
• HR & Job Design
• Location Selection
• Supply Chain Management:
 Cost vs. Service
 Quality
 Inventory
 Production Schedule
 Delivery
 Speed & Reliability

19. END