Cadena de suministro

Mtro. William H. Delano Frier

Module 2
Operations and Productivity

Cadena de suministro | Profesor William H. Delano Frier

What is Operations Management?

Production
Is the creation of
goods and services.

Cadena de suministro | Profesor William H. Delano Frier

Operations
Management
Is the series of
activities generating
value added in the
form of goods and
services,
transforming raw
materials into
products.

Finishes Goods Characteristics

Tangible
Consistent definition
Production separated
from consumers
Usually carry
inventory
Limited end user
interaction
Cadena de suministro | Profesor William H. Delano Frier

Service Characteristics
Intangible
Produced and consumed
in the same place
Most of the times is
unique
High user participation
Inconsistent product
definition
Usually based on
knowledge
Cadena de suministro | Profesor William H. Delano Frier

Organization to produce Goods

and Services
Main activities:
Marketing Generates demand
Production / Operations Create the product
Finance and accounting- Audit the execution,
manage receivables and payments

Cadena de suministro | Profesor William H. Delano Frier

Organization
Commercial Bank

Operations

Finance

Marketing

ATM programming,
check approval,
transaction processes,
layout design, security,
maintenance.

Investments, security,
Real Estate.

Commercial, financial
and personal loans,
mortgage loans,
trusts.

Cadena de suministro | Profesor William H. Delano Frier

Organization
Manufacturing

Operations

Facilities, Inventory
and Production
Control, Quality
Assurance, Supply
Chain, Manufacturing,
Design.

Cadena de suministro | Profesor William H. Delano Frier

Finance / Accounting

Marketing

Promotional sales,
publicity, market
analysis.

Evolution

Cadena de suministro | Profesor William H. Delano Frier

Sales Plan

Concept (MRPII)

Business Plan

Production Plan

Feasible
Yes

Planning

Inventory

BOM

Programming

Production Routes

Master Planning
(MPS)
Material Planning
(MRP)
Capacity Planning

Execution
Manufacturing Orders

Floor Control

Feasible
Yes

Manufacturing

Productivity

Customer Service
Cadena de suministro | Profesor William H. Delano Frier

No

Purchase Orders

Purchasing

PERFORMANCE DEVELOPMENT

No

Challenges
With an effective operation consolidation as a result
of the synergies.
Economies of scale and operations efficiency.
Not always true due to differences in culture and
technology infrastructure.
Hewlett-Packard / Compaq
Chrysler / Mercedes Benz

Cadena de suministro | Profesor William H. Delano Frier

Challenges
Develop Flexible Supply Chains to enable a massive
configuration of Finished Goods and Services.
Expand the portfolio to meet customer
expectations.
The challenge is not only to manufacture it, but to
distribute it effectively.

Cadena de suministro | Profesor William H. Delano Frier

Challenges
Manage global procurement,
distribution chains
Enable Global ERP

production

and

Centralize & empower where needed.

Service

Develop a personalized service for each customer.

Without loosing productivity.

Value-Added Services
Pre / Post Sales

Production Order Status? Model Changes? Online Help?

Efficient use of available Communication and

Technology tools. (TICs)
Cadena de suministro | Profesor William H. Delano Frier

The economic system

Processes

Inputs
Manpower,
Management

The economic model transforms

the inputs into finished goods
and services. The productivity
increase is due to an efficient use
of capital, manpower and
management.

Feedback
Cadena de suministro | Profesor William H. Delano Frier

Products
Finished
Goods
and
Services

Operations and Productivity

Productivity Challenges
Productivity Variables
Manpower
Education
Nutrition
Social Welfare

Capital
Tools

Management
Technology
Knowledge Usage

Cadena de suministro | Profesor William H. Delano Frier

Productivity
The productivity challenge
Involves the productive process
improvement
What we normally do

Reduce resources used

Maintain production
Maintain the balanced use of
resources
Increase production

The new challenge for globalization

Reduce resources used
Increase production

Cadena de suministro | Profesor William H. Delano Frier

Measurement problems
The quality can vary even when the input and output
quantities remain unchanged.
External elements can affect the increase or decrease
in productivity.

Cadena de suministro | Profesor William H. Delano Frier

Productivity Variables
ManpowerContributes around 10% of
annual growth.
ManagementContributes around 52% of
annual growth.
Capital
Contributes around 38% of the
annual growth.
Cadena de suministro | Profesor William H. Delano Frier

Key variables to increase productivity

Quality of education
Health and nutrition
Social environment that enables manpower
availability.
Maintain and develop skills needed to incorporate
new technologies and knowledge.
Cadena de suministro | Profesor William H. Delano Frier

Operations and Productivity

Measurement

Productivity = Units Produced / Required Inputs

Cadena de suministro | Profesor William H. Delano Frier

Operations and Productivity

Measurement:
Factor
Multifactor
FACTOR
Data

Units Produced
Labor (hours)
Resin (pounds)
Capital Invested ($)
Energy (BTU)

Last Year

Now

1000
300
50
10000
3000

1000
275
45
11000
2850

Cadena de suministro | Profesor William H. Delano Frier

$ per unit
(optional)

Results
Last Year
Now
Productivity Productivity
Productivity Productivity Ratio
Increase
3.3333
20.0000
0.1000
0.3333

3.6364
22.2222
0.0909
0.3509

109.0909%
111.1111%
90.9091%
105.2632%

9.0909%
11.1111%
-9.0909%
5.2632%

Operations and Productivity

Measurement
Multifactor
Data
Last Year
Units Produced
Labor (hours)
Resin (pounds)
Capital Invested ($)
Energy (BTU)
Multifactor

1000
300
50
10000
3000
4850

Now

$ per unit
(optional)

1000
275
45
11000
2850
4510

Cadena de suministro | Profesor William H. Delano Frier

10
5
1%
0.5

Results
Last Year
Now
Productivity Productivity
Productivity Productivity Ratio
Increase
3.3333
20.0000
0.1000
0.3333
0.2062

3.6364
22.2222
0.0909
0.3509
0.2217

109.0909%
111.1111%
90.9091%
105.2632%
107.5388%

9.0909%
11.1111%
-9.0909%
5.2632%
7.5388%