Dr.
Sajed Abukhader
Production and Operations Management
(MBA course)
sajed@[Link]
sajedkhader@[Link]
Tel: 01 - 4948534
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Operations Management
Discipline
Quality management
Project management
Inventory management
Supply chain management
Waiting line management
Forecasting
Location planning and analysis
And more …
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Syllabus
The course will involve lectures, cases and
readings, homeworks and classworks
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Syllabus
Attendance 5
Class participation (readings discussions and classwork) 15
Case analysis and homework submissions 20
Project (Term paper) 15
Midterm Exam 15
Final Exam 30
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Syllabus
William [Link] .
“Operations Management,”
9th or 10th edition
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Syllabus – Term paper
Topics:
Write up a case on application of specific
concept/tool/technique (applied already in your
organisation)
Use a research method (like Delphi, Expert
panel, or interviews) to discuss applicability of a
new tool/concept/technique
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Syllabus – Term paper
Implement “Quality Circles” concept in your
organisation for one month and analyse results
after that
Research the efficiency and productivity of
two/three cases of call centers
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Syllabus – Term paper
Distribute SERVQUAL and analyse it
Pick up a topic to research it using a
questionnaire
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Syllabus – Term paper
Recommend that you start from today
Step 1: Pick up a topic of interest
Step 2: Think of a plan how to do it
Step 3: Put down an action plan for data collection
Step 4: Analyse and write your paper
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Syllabus – Term paper
Step 1: Pick up a topic of interest, either:
1. Personal interest in specific topic
2. Specific challenge in the company you work at:
That you find of importance
Or, your manager/ Org is interested in and talking
about it
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Syllabus – Term paper
Step 2: General plan
What/when/how/where/whom
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Syllabus – Term paper
Step 3: Put down an action plan for data
collection:
Determine research method
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Syllabus – Term paper
Step 4: Analyse and write your paper
Learn about how to write a paper (format)
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Calculator!
Bring in your calculator not only in Exams but
also in CLASS ….
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Introduction to OM
Material:
Chapter 1 – Stevenson
External material
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AGENDA
Topics for today:
[Link] view of operations
[Link] Goods with Services
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Definition
Operations Management is:
The management of systems or processes that
create goods and/or provide services
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Management involves: planning, coordination,
execution, and control of all activities
Operations function involves: the conversion of
inputs into outputs
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The Organization
The Three Basic Functions
Organization
Finance Operations Marketing
A 5-category classification exists – What do you think?
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Value-Added Process
Value added
Inputs
Transformation/ Outputs
Land
Conversion Goods
Labor
process Services
Capital
Feedback
Control
Feedback Feedback
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By the way….
A System is:
A group of components
which are inter-related to each other,
having a specific boundary and executing
together towards a specific purpose
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Value Added
Value added is the difference between the cost
of inputs and the value or price of outputs.
Is this REALLY correct?
2 marks BONUS -----------
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Value Added
Happening inside the organisation or across a
supply chain ….
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Simple Product Supply Chain
Suppliers’ Direct
Producer Distributor Consumer
Suppliers Suppliers
Supply Chain: A sequence of activities
and organizations involved in producing
and delivering a goods or service
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Example: A Supply Chain for Bread
Stage of Production Value Value of
Added Product
(SR) (SR)
Farmer produces and harvests wheat 0.60 0.60
Wheat transported to mill 0.30 0.90
Mill produces flour 0.60 1.50
Flour transported to baker 0.30 1.80
Baker produces bread 2.00 3.80
Bread transported to grocery store 0.50 4.30
Grocery store displays and sells bread 0.80 5.10
Total Value-Added 5.10 SR
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Back to
Input, output and processing...
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Food Processor
Inputs Processing Outputs
Raw Vegetables Cleaning Canned
Metal Sheets Making cans vegetables
Water Cutting
Energy Cooking
Labor Packing
Building Labeling
Equipment
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Hospital Process
Inputs Processing Outputs
Patient Examination Healthy
Doctors, nurses Surgery patients
Medical Supplies Monitoring
Equipment Medication
Laboratories Therapy
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Transformation/Conversion activities
Transformation means: Adding value to the
input
Four major ways to add value (make
transformation) ………………
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Transformation/Conversion activities
The four ways are:
[Link]
[Link]
[Link]
[Link]
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Alter:
Something can be changed structurally
(separate entity) materials are cut, formed,
assembled, welded, cooked, heated, mixed with
ingredients, etc.
(with us) hair cut, our report amended, etc.
Sensual or psychological alterations:
put Quran reciter when waiting in phone call
Provide social support
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Transport
Relocating products or people
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Store
Need to store materials for later time pick up
Need to store meat (maturisation stage)
Need to keep in cold store while shipping overseas
Need to unload to store item at a customs point
Is storing of finished items in the warehouse a value
adding activity?
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Inspect
Extra things for guaranteeing items, like:
Elevator certification
Medical exams for MDs
Jewelry appraisals
Is the inspection in the factory a value adding
activity?
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So, we mentioned several important
terms up till now …
- Systems
- Input, output, processing
- Value chain
- Functions
- Supply chain
- Management
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Think of value adding examples in
your company!
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Result of any operations is
either …
SERVICE or GOODS or
BOTH
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By the way, organisations are
either..
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Manufacturing or Service?
Tangible Act
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Goods vs. Services
Production of goods – tangible output
Delivery of services – an act
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In reality
Goods-service Continuum
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Production of Goods
vs. Delivery of Services
Sometimes, it can be difficult to distinguish
whether the operation performed is a service
or manufacturing………(Ex.?)
However….
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Production of Goods
vs. Delivery of Services
….some rules can help a bit:
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Whether the raw material is transformed into a
new category of materials of different utility:
Ex: Chips (here we manufacture raw potato into chips)
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Whether the work done is originally something
the individuals of the society were doing by
themselves ---
Ex. Cooking is a quick example
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Whether the material is owned by the customer
……..Keep in mind that the service is an act on
either:
Customer’s body
Customer’s mind
Customer’s possession
Customer’s information
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Whether the customer influences the processes
(interferes)
Work follows wishes of the customer
Interferes in the process
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So, in brief
To know, ask yourself:
Does the process happen away from the
customers’ location and regardless of their
wishes?
Does it produce a tangible output?
(transformation into different material)
Was the raw material something not specifically
owned by the customer (i.e.
mind/body/possession/information)?
Is the output something not usually produced at
people’s homes?
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If YES, then we can say it is a manufacturing
operation (in major), otherwise it is rather a service
(in major)
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But again….
It is rather a continuum …
(“pure service” and “pure manufacturing” at the extremes)
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Exercise
Are the following industries/operations
Manufacturing or Service (and why)?
(Classwork in groups)
Cement
Oil and Gas industry
Restaurants
Slaughterhouse (end product: carcass)
Bakery
Dentistry
Schools
Software development
Construction
Power generation
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Industry Operations type
Cement ------------------------------Manufacturing
Oil and gas -------------------------Manufacturing
Restaurants ------------------------ Service with a manufacturing facility
Service with a “manufacturing” lab
Software development ----------
Service with a manufacturing facility
Bakery -------------------------------
Service, or
Dentistry -----------------------------
Service bundled with manufacturing
Service
Schools ------------------------------ THIS and THAT!
Slaughterhouse (carcass) ------ If it is a far away facility producing mass amounts
regardless of customers’ existence and
requirements then Manufacturing
If slaughterer came to your home to slaughter your
sheep, then a service
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Industry Operations type
Construction ----------------------- Service with a manufacturing work
Power generation Manufacturing bundled with service
-----------------
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Anyway, in general
Service job categories
Government
Wholesale/retail
Financial services
Healthcare
Education
Transport services
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Do we really need to:
Decide whether it is a service operation or
manufacturing?
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Yes, we need
Because:
[Link] are key differences (next slide) to be
discussed that have an impact on the way
we manage manufacturing or service…
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[Link] help decide which is the core
competence. Accordingly, you should focus
and spend more on your core competences
(ex. Milk & Distribution)
(note)
Core competence: the thing that you are really
good at
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Product Packages
[Link] packages can make a company
more competitive. …Ex?
(Product packages are a combination of goods and
services)
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Key Differences
What shall be main differences between goods and services?
1. Customer contact
2. Uniformity of input
3. Uniformity of output
4. Labor/capital content of jobs
5. Measurement of productivity
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Key Differences
6. Production and delivery
7. Quality assurance
8. Amount of inventory
9. Evaluation of work
10. Ability to patent the design
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Summary: Goods vs Service
Characteristic Goods Service
Customer contact Low High
Uniformity of input High Low
Labor content Low High
Uniformity of output High Low
Output Tangible Intangible
Measurement of productivity Easy Difficult
Opportunity to correct problems High Low
Inventory Much Little
Evaluation Easier Difficult
Patentable Usually Not usual1-61
Special Issue:
Challenges of Managing Service Operations
Service jobs are often less structured than manufacturing jobs
Worker skill levels are lower
Services hire many low-skill, entry-level workers
Employee turnover is higher
Input variability is higher
Service performance can be affected by worker’s personal factors
Customer contact is higher
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Let’s take one point …..
Customer contact is higher
…SO WHAT? (discuss)
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Customer contact is higher means to you:
Customer can influence the quality and delivery
of the service process
Customer would always need to have a “view
into the kitchen”
Customer compares expectations with
perception (SERVQUAL tool)
Customer can play an active role in the process
(remove waitress)
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Further understanding for managing service
(concepts, tools, etc.) can be found in a
course like: Service Management.
However, we shall come to talk a bit about
some concepts soon ..…
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