Production and Operations Management

• [time per unit]

• Cycle Time is the length of time, on average, that it takes to complete a step or set of steps within an operation

• Generally, the step with the longest cycle time will be the bottleneck

•  

  • [minutes, hours, etc.]

  • the average length of time it will take a new set of inputs to move all the way through the operation, assuming no unusual measures are taken.

  • Work in Progress / Throughput

• 5S

  • Sort: eliminate unnecessary item from the workspace

  • Set in Order: arrange items so that they are easy to use, find and put away

  • Shine: keep the items and work area neat and clean

  • Standardize: create a consistent approach to tasks and procedures

  • Sustain: make a habit of maintaining the correct procedures

• Muri-Mura-Muda

  • Muri: overburden

  • Mura: unevenness

  • Muda: Where to reduce waste? TIM WOODS

    • Transport, Inventory, Motion

    • Waiting, overproduction, over-processing, defects, skills (not-use of brainpower)

1. Process flow diagram
2. Check sheet
3. Histogram
4. Pareto diagram
5. Cause and effect diagram (fishbone / Ishikawa diagram)
6. Scatter diagram
7. Control charts

Problem solving method:

• Plan-Do-Check-Act

• Plan-Do-Study-Act

Problem solving method from six sigma?

Define, Measure, Analyze, Improve, Control

• Problem solving method

  • 1. Build a team.

  • 2. Define the problem.

  • 3. Containment action.

  • 4. Determine the root cause.

  • 5. Verify the root cause.

  • 6. Corrective action.

  • 7. Prevention.

  • 8. Congratulate the team

• Intangibility

  • You cannot hold or touch a service

  • Experiences are not physical products ⇒ less traded

• Inseparability

  • Simultaneity of production and consumption

  • Services cannot be separated from service providers

  • Presence of the customer in the conversion process

• Heterogeneity

  • Very difficult to make each service experience identical ⇒ consumer involvement!

• Perishability

  • Services last a specific time

  • Cannot be stored for later use

• Business-to-business B2B [Consulting, Banking]

• Business-to-consumer B2C [Restaurants, Hairdresse]

• Internal services (in organizations, eg. HR, R&D, IT)

• Public services (G2C) [Military]

• Not-for-profit services [Red Cross]

• (Consumer-to-consumer services) [Ratings on tripadvisor, wiki]

Yes => Front office / back office => line visibility

⇒ chaos curve: Variation affects performance exponentially, not linearly! Overburden (muri) starts before maximal capacity usage

⇒ Increasing variability always degrades the performance of a system

⇒ overburden (muri) starts before max- capacity usage

⇒ Overall equipment effectiveness: good value is around 80%!

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