Production and Operations Management

1. Financial perspective
2. Internal business perspective
3. Innovation & Learning perspective
4. Customer perspective

1. Measurement provides status ⇒ “You cannot manage what you cannot measure”

2. Measurement encourage certain behaviors ⇒ “You get what you measure”

3. Measurement is needed for improvement ⇒ “If you cannot measure it, you cannot tell if you have improved

• Velocity

  • Exponential (not linear) development (eg. costs)

• Breadth and depth

  • Multiple technologies

  • Effect on economy, business, society, individuals

• System impact

  • Interdependent system change

  • Connectivity and speed (e.g. social media)

→  The ‘combinatorial’ effects of technologies, such as mobile, cloud, sensors, analytics and the Internet of Things, are accelerating progress exponentially.

SMARTER, LEANER, FASTER

• Data driven real-time response

  • On-demand production

  • Inventory reduction

  • Waste reduction

• More customization

  • More mass customization

• More MTO, less MTS

• More effective use of

  • underutilized assets

  • Incl. sharing economy

• More servitization

  • “As a service“ subscription models

• More connectivity

• More transparency

  • Consumer power, customer orientation, democratization

• A shift towards more knowledge

  • intensive white collar work

  • Need new training
    
    
    
     

• Emergence of “nanofactories”

  • 3D printing

  • Sustainable local production

• People

• Planet

• Profit

Corporate Social Responsibility

CSR in operations management means having an operations strategy that will meet the requirements of current needs without compromising the ability of future generations to meet their own needs

Lowest:

CSR as philosophy

CSR as risk management

CSR as value creation

Highest

Why CSR?

• It is the right thing to do

• Competitiveness reasons:

  • Improved business reputation

  • Ability to attract customers

  • Ability to recruit quality employees

  • Easier to attract ‘ethical’ investors

  • Improved employee motivation

1. No poverty

2. No hunger

3. Good health and well-being

4. Quality education

5. Gender equality

6. Clean water and sanitation

7. Affordable and clean energy

8. Decent work and economic growth

9. Industry, Innovation and Infrastructure

10. Reduced inequalities

11. Sustainable cities and communities

12. Responsible consumption and production

13. Climate action

14. Life below water

15. Life on land

16. Peace, justice and strong institutions

17. Partnerships for the goals

• Human Rights

  • Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights; and

  • Principle 2: make sure that they are not complicit in human rights abuses.

• Labour

  • Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;

  • Principle 4: the elimination of all forms of forced and compulsory labour;

  • Principle 5: the effective abolition of child labour; and

  • Principle 6: the elimination of discrimination in respect of employment and occupation

• Environment

  • Principle 7: Businesses should support a precautionary approach to environmental challenges;

  • Principle 8: undertake initiatives to promote greater environmental responsibility; and

  • Principle 9: encourage the development and diffusion of environmentally friendly technologies.

• Anti-Corruption

  • Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.

1. Reduce

2. Repair

3. Reuse

4. Recovery

5. Recycling

• Volume of output
• Variety of offering
• Variation in demand
• Visibility to customers

Capacitiy = time available / time needed for task

\(EOQ=\sqrt{\frac{2DC_s}{C_h}}\)

D=Demand (Units)

Cs=Set-up costs per order

Ch=Holding costs per unit

ABC classification is a ranking system for identifying and grouping items in terms of how useful they are for achieving business goals.

The system requires grouping things into three categories:

A - extremely important

B - moderately important

C - relatively unimportant

Supplier => Input => Process => Output => Customer

Man, Machine, Material, Method
 

(Money, Measurement, Milleau)

What does the customer want?

What can we offer to the customer?

SWOT: SW => internal, OT => external, environment

Strength, Weaknesses

Opportunities, Threats

Political, Economic, Social, Technological, Environmental, Legal

=> To study environment

- Threat of new entrants

- Threat of substitute

- Bargaining power of customers

- Bargaining power of suppliers

- Rivalery

• Cost

• Quality

• Delivery

• Flexibility

• Dependability

• Speed

• Service

• Innovation

• Personalization

• Safety

• Environment

• Responsibility

• Competitive priorities: strategic preferences or the ways in which an organization chooses to compete in the marketplace ⇒ what we want to do

• Competitive capabilities: provide the business with the ability to do something that provides competitive advantage ⇒ what we can do

• Order qualifier: a required capability (or product/ service characteristics) for selling, but will not win orders
  • Safety
  • Cost
  • Quality
  • Dependability
• Order winner: is a capability (or product/ service characteristics) that can win you orders
  • Service
  • Environment
  • Price
  • Quality

(VRIN):

• Valuable

• Rare

• Imperfectly imitable

• Non-substitutable

1. Understand what your business is – business definition model

2. From the MBV (market based view):

• Investigate your overall market environment (for ex. PESTEL)

• Define your immediate competitive position (for ex. Porter’s Five Forces)

• Understand what your customer wants → order qualifiers vs order winners, Define competitive priorities

3. From the RBV (resource based view):

• Leverage your competencies to create a competitive advantage → competitive capabilities

4. Analyze the nature of your competitive advantage to understand how
sustainable it is (for ex. SWOT)

• Match competitive capabilities with competitive priorities

• Analyze how your competence must change to maintain advantage → dynamic capabilities (ability to upgrade and reconstruct its capabilities in response to the changing environment, therefore attaining and sustaining its competitive advantage)

Structural Decision Areas

1. Facilities: location, size, focus, layout..

2. Capacity: ability to meet demand

3. Process technology

4. Supply network: make-or-buy, network config…

Infrastructural Decision Areas

1. Planning and control

2. Quality

3. Work organization

4. Human resources

5. New product development

6. Performance measurement