Operational Management: Decisions and Processes
Operational Decisions
– Market
– Corporate Strategies
– Strategic Operations
– Operations Management
– Planning and control
OM is the study of decision-making in the operations function.
Types of Decisions in Operations Management
– Wide-range strategic decisions (long-term)
Sets out the conditions under which the company must operate.
– Medium-term tactical decisions
Schedule of materials and labor.
– Short-term operational decisions
Programming work in a short time scale.
The trading strategy is a functional strategy that should guide business strategy and result in a consistent pattern of decision-making.
Strategic Operations Management Decisions
– Product and service design
– Quality management
– Process design and capacity planning
– Location
– Organizational design
– Human resources and job design
– Supply management
– Inventory material requirements planning and JIT
– Short-term and intermediate planning, and project planning
– Maintenance
Process
Decisions determining the physical process or installation used to produce the product or service.
Capacity
Decisions aimed at providing the right amount of capacity at the exact time and place.
Inventories
These decisions determine what to order, how much, and when.
Workforce
Human resource management (HRM) is the most important decision area of operations, because nothing is done without the people who make the product or provide the service.
Quality
Operations is almost always responsible for the quality of goods and services produced.
Three fundamental issues in modern Operations Management are:
– Total Quality Management (TQM): Understand how you define quality.
– Application of scientific methods: Learning to lead the organization as a system.
– A fully integrated team: Believe in people; treat everyone with respect, trust, and dignity.
Value lies in problem-solving and requires dedication.
– Define the problem
– Collect data
– Define alternative solutions
– Evaluate alternative solutions
– Select the best alternative
– Implement the alternative
– Evaluate the results
Transformations
– Physical – Manufacturing
– Locational – Transportation
– Exchange – Retail
– Storage – Warehousing
– Physiological – Healthcare
– Informational – Telecommunications
Examples of Transformation Processes
– Inputs: Logs
– Transformation: Sawing wood
– Outputs: Sawn timber
Basic services of the manufacturing function:
– Quality
– Rate
– Flexibility
– Price (or production costs)
Value-added services of the manufacturing function:
– Information
– Troubleshooting
– Sales support
– Field support
Prof. Dr. Kaoru Ishikawa was born in Japan in 1915 and died in 1989. He graduated from the Engineering Department of Tokyo University, earned a Ph.D. in Engineering, and was promoted to Professor in 1960. He won the Deming Prize and received recognition from the American Society for Quality.
Cause-and-Effect Diagram
When a problem is complicated, it is very difficult to solve without understanding its structure, which consists of a series of causes and effects.
Objectives:
– Visually represent the likely causes of a problem in specific categories.
– Systematically organize the causes of a problem and recognize its impact on the organization.
– Help a group look at a problem using convergent thinking and practice.
How to prepare:
– Accurately define the problem to be studied.
– Identify all possible causes (brainstorming).
– Rationally group the reasons and produce a first cause-and-effect diagram.
– Assign weight to each cause according to its impact on the problem.
– Construct the final diagram.
Tips:
– Identify the causes of the problem by interacting with multiple users in your organization.
– Express the problem’s causes clearly and specifically to avoid abstract and general ideas.
– Identify causes for which action is possible.
– Focus on continuous improvement.
Common Errors in Developing Cause-and-Effect Diagrams
– Lack of clarity: Wording should be clear; simply adding the word “because…” should clarify the relationship.
– Element names (problems or causes) may not define a cause or issue.
– For example, “order record” does not clearly state the problem, while “order information not always recorded” could be a cause of problems in the organization.
– Building the global analysis diagram before addressing symptoms may limit proposed theories, inadvertently masking the root cause, or create errors in the causal relationship and order of theories, resulting in significant time expenditure.