PRODUCTION PLANNING AND CONTROL CHAPTER 1: INTRODUCTION Several different terms are used such as: operations management,

, production and operation management, production planning and control, manufacturing system and management, etc. Originally applied primarily in manufacturing companies focus on production management. These approaches and tool later applied to service organisations focus on managing an organisations operation. Operations management: the management of an organisations productive resources or its production system, which converts inputs into the organisations products and services. A production system:
Inputs Managers Outputs

Raw materials, Personnel, machines, buildings, cash, info, Other resources

Conversion Process (operation & production)

Products and services

Operations Create products or services

Marketing Create demand

Finance Manage financial issues

Figure 1

The Evolution of POM

Tomorrow Todays Development Operations Research Scientific Management Human Relations & Industrial Revolution Post-Civil War Period

P O M

Computer Revolution Service Revolution

Historical developments of POM evolution The industrial revolution

Division of Labour
Post-civil war period (US) Scientific management

Interchangeable parts

Systematic approach to improve worker efficiency: Identify ability and skill to assign job Stopwatch studies Standardised work methods and work flow Improve supervision with careful selection & training Incentive pay system

Contributor F.W Taylor 1856-1915 F.B. Gilbreth 1868-1934 L.M. Gilbreth 1878-1973 Henry L. Gantt 1861-1919 C.G. Barth 1860-1939 Harrington Emerson 1885-1931 Morris L. Cooke 1872-1960

Contribution Scientific management principles, time study, method analysis, standards, etc Motion study, therbligs, consulting, etc

Fatigue studies, human factor in work, employee selection and training Gantt charts, incentive pay systems, humanistic approach to labour, training Mathematical analysis, slide rule, feeds and speed studies, etc Principles of efficiency, methods of control, etc

Scientific management application to education and government

Human relations and behaviouralism

Hawthrone Studies

Operations research

Operation research seeks to replace intuitive decision making for large complex problems with an approach that identitifies the optimal, or best, alternative through analysis. Uses total system approach and of interdisciplinary teams and the utilisation of complex mathermatical techniques

 Service revolution - e.g. Airlines, Entertaiment, Telecommunication, Food services, Banks, etc. Computer revolution - the usage of computers and software, Internet, e-mail, e-business, etc. Factors affecting operations management Reality of global competition Quality, customer service, and cost challenges Rapid expansion of advanced technologies Continued growth of the service sector Scarcity of operations resources Social-resplonsibility issues Operations as a System

A system is a whole that cannot be taken apart without loss of its essential characteristics, and hence it must be studied as a whole Inputs External
Legal, social, etc..

Conversion subsystem Physical Mfg, mining Locational Sve Transport Exch Sve Retail Sotrage Sve Warehouse Other Insurance, etc. Government Outputs Direct Outputs Products, services Indirect Outputs Taxes, wages, environmental impact, etc

Market
Competition, customer, etc

Primary Resources MatL, people

Decision making in POM

Strategic Decision

Decisions about products, processes, and facilities. These decisions are of strategic importance and have long-term significance for the organisation Decisions about planning production to meet demand. These decisions are necessary if the ongoing production of goods and services is to satisfy the demands of the market and provide profit for the company Decisions about planning and controlling operations. These decisions concern with the day-to-day activities of workers, quality of products and service, production and overhead costs, and maintenance of equipment.

Operating Decision

Control Decision

Assignment 1 Find at least three (3) entry-level jobs (in Malaysia) at three (3) different companies which are related to the production and operations management function. Describe the jobs and how they are related to the production and operation management. Describe the companies, mentioning what type of prodcution system they are, primary inputs, conversion subsystem and outputs. You could search for the jobs at Jobstreet (www.jobstreet.com) or JobsDB (www.jobsdb.com). [][][]

Operations management in e-Business Trade that occurs over the Internet

Business

Consumer

Business

B2B Commerceone.com

B2C Amazon.com

Consumer

C2B Priceline.com

C2C eBay.com

Types of B2B transactions

Globalisation Two third of todays business operate globally. Why global? Favorable cost Access to international markets More responsive to demand Building reliable supply sources Keeping up with latest trends and technologies

$ 35 $ 30 $ 25 $ 20 $ 15 $ 10 $5 $0

Germany J a pa n United States EU

| | | | | | 1975 1980 1985 1990 1995 2000

Asian NIEs Mexico

Competitiveness the degree to which a nation can produce goods and services that meet the test of international market. Industry competitiveness can be measured by the number of major players in an industry and the market share of the industry leader. Competing on cost - Eliminate all waste Invest in - Updated facilities & equipment - Streamlining operations - Training & development Competing on flexibility
- Produce wide variety of products - Introduce new products - Modify existing products quickly - Respond to customer needs

Competing on quality
- Please the customer - Understand customer attitudes toward and expectations of quality

Competing on speed
- Fast moves - Fast adaptations - Tight linkages

Strategic decision in operations

Products

Services Human Resources

Processes and Technology

Capacity

Quality

Facilities

Sourcing

Operating Systems

Example in operations technology: Wal-Mart Wal-Mart Mission Competitive Priority

Provide value for our customers

Low prices, everyday

Operations Strategy Operations Structure

Low inventory levels

Short flow times

Linked communications between stores

Fast transportation system

Enabling Process and Technologies

EDI/satellites

Cross-docking

Focused locations

Product and services Make-to-order Made to customer specifications after order received Make-to-stock Made in anticipation of demand Assemble-to-order Add options according to customer specification Processes and technology Project One-time production of product to customer order Batch production Process many jobs at same time in batch Mass production Produce large volumes of standard product for mass market Continuous production Very high volume commodity product Product-Process matrix Service-Process matrix

Issues and Trends Global markets, sourcing, operations Virtual companies Greater choice Emphasis on service Speed and flexibility Supply chains C-commerce Technological advances Knowledge Environment and social responsibilities