I. WHAT CONTEMPORARY ISSUES DO MANAGERS FACE IN MANAGING
OPERATIONS?
A. Introduction
1. Every aspect of the economy needs to be re-examined and many products must be
redesigned for greater efficiency.
B. What Role Does Technology Play in Operations Management?
1. Smart companies are looking at ways to harness technology to improve operations
management.
a) Example, McDonalds—boosted accuracy by 11%.
2. Managers still need to realize that the organization’s production activities must be
more responsive.
a) Operations managers need systems that can reveal available capacity, status of
orders, and product quality while products are in the process of being
manufactured—not just after the fact.
b) Operations across the enterprise, including manufacturing, must be
synchronized.
3. Technology is allowing manufacturing plants to control costs particularly in the areas
of predictive maintenance, remote diagnostics, and utility cost savings.
a) If a piece of equipment breaks or reaches certain preset parameters that it’s
about to break, it can ask for help.
b) Technology can initiate an e-mail or signal a pager at a supplier, the
maintenance department, or contractor describing the specific problem and
requesting parts and service.
Technology and the Manager’s Job – Welcome to the Factory of the Future
Summary
Experts at Georgia Tech’s Manufacturing Research Center say that three important trends are
driving what tomorrow’s factories will look like. One trend is globalization of the supply chain.
In the factories of the future, design and business processes will be performed where it’s most
efficient and effective to do so. The second trend is technology that simultaneously
dematerializes the product while vastly increasing complexity. The third trend is demographics
and the impact on demand patterns. Products will have shorter life cycles and more variety and
choices. “The challenge is for the future factory to be both adaptable over many different product
lifecycles and flexible with regard to the number of different products being produced in the
same time frame.”
Discuss This:
How will technology contribute to the operations management process? What are the
downsides to using technology in the operations management process?
In the factory of the future, what role does a manager play?
Teaching Tips:
It’s amazing how the technology we dream of today can be reality tomorrow. When I was a kid, I
grew up on Star Trek. What is cool is that many of the gadgets used in the show are available
now. Captain Kirk had his communicator, now we have smart phones. Crew members used
phasers to stun aliens, we have tasers. To get students to think about the technology of tomorrow,
have them think about the science fiction shows we are watching now and let their imagination
be their guide.
C. How do Managers Control Quality?
1. Many experts believe that organizations unable to produce high-quality products
won’t be able to compete successfully in the global marketplace.
2. What is quality? (See Exhibit 15-4).
3. Quality initiatives are achieved through the four management functions—planning,
organizing and leading, and controlling.
a) When planning for quality, managers must have quality improvement goals,
and strategies and plans to achieve those goals.
b) When organizing and leading for quality, it’s important for managers to look to
their employees.
(1) Organizations with extensive and successful quality improvement programs
tend to rely on two important people approaches: cross-functional work
teams and self-directed or empowered work teams.
c) When controlling for quality, quality improvement initiatives aren’t possible
without having some way to monitor and evaluate their progress.
D. What Quality Goals Might Organizations Pursue?
1. ISO 9000 is a series of international quality management standards established by
the International Organization for Standardization (www.iso.org), which sets
uniform guidelines for processes to ensure that products conform to customer
requirements.
2. Six Sigma is a quality standard that establishes a goal of no more than 3.4 defects
per million units or procedures.
a) Sigma is the Greek letter that statisticians use to define a standard deviation
from a bell curve. The higher the sigma, the fewer the deviations from the
norm, and the fewer the defects.
E. How Are Projects Managed?
1. A project is a one-time-only set of activities with a definite beginning and ending
point.
2. Project management is the task of getting the activities done on time, within
budget, and according to specifications.
3. Project management has expanded into almost every type of business.
a) It fits well with a dynamic environment and the need for flexibility and rapid
response.
b) Organizations are increasingly undertaking projects that are somewhat unusual
or unique, have specific deadlines, contain complex interrelated tasks requiring
specialized skills, and are temporary in nature.
4. The Gantt chart is a planning tool developed around the turn of the century by
Henry Gantt.
a) It is essentially a bar graph, with time on the horizontal axis and the activities
to be scheduled on the vertical axis.
b) The bars show output, both planned and actual, over a period of time.
c) The Gantt chart visually shows when tasks are supposed to be done and
compares the assigned date with the actual progress on each.
d) A Gantt chart actually becomes a managerial control device—the manager
looks for deviations from the plan.
e) See Exhibit 15-5.
f) A modified version of the Gantt chart is a load chart.
(1) Load charts list either whole departments or specific resources (See Exhibit
15-6).
(2) Allows managers to plan and control for capacity utilization.
(3) Load charts schedule capacity by workstations.
5. What is a PERT Network Analysis?
a) What if a manager had to plan a large project—such as a complex
reorganization, the launching of a major cost-reduction campaign, or the
development of a new product—that required coordinating inputs from
marketing, production, and product design personnel?
b) See Exhibit 15-7.
c) The program evaluation and review technique—usually just called PERT, or
the PERT network analysis—was originally developed in the late 1950s for
coordinating the more than 3,000 contractors and agencies working on the
Polaris submarine weapon system.
(1) This project was incredibly complicated, with hundreds of thousands of
activities that had to be coordinated.
(2) PERT is reported to have cut two years off the completion date for the
Polaris project.
d) A PERT network is a flowchart-like diagram that depicts the sequence of
activities needed to complete a project and the time or costs associated with
each activity.
e) With a PERT network, a project manager must think through what has to be
done, determine which events depend on one another, and identify potential
trouble spots.
f) To understand how to construct a PERT network, you need to know three
terms: events, activities, and critical path.
(1) Events are end points that represent the completion of major activities.
(2) Activities are the actions that take place.
(3) The critical path is the longest or most time-consuming sequence of events
and activities required to complete the project in the shortest amount of time.
(4) Example, apply PERT to a construction manager’s task of building a
6,500-square-foot custom home.
(a) Outline the major events in the construction project and your estimate
of the expected time required to complete each activity. (See Exhibit
15-8.)
(b) Based on the events, activities, and critical path, create PERT network.
(See Exhibit 15-9.)
g) How does PERT operate?
(1) Your PERT network tells you that if everything goes as planned, it will take
just over 32 weeks to build the house.
(a) Trace the network’s critical path: A B C D E F G H I J K L M N P Q.
(b) Any delay in completing the events along this path will delay the
completion of the entire project.
(2) Slack time is the time difference between the critical path and all other
paths.
(3) If the project manager notices some slippage on a critical activity, perhaps
slack time from a noncritical activity can be borrowed and temporarily
assigned to work on the critical one.
h) PERT is both a planning and a control tool.
(1) PERT helps to estimate the times associated with scheduling a project and
gives clues about where controls should be placed.
(2) Because any event on the critical path that is delayed will delay the overall
project, attention needs to be focused on the critical activities at all times.