Operation Management (OM) Introduction Ing.J.Skorkovský, CSc, Department of Corporate Economy FACULTY OF ECONOMICS AND ADMINISTRATION Masaryk University Brno Czech Republic What is going on ? Use of Operations Management (OM) in external environment (main target) General knowledge of OM methods acquired at university and long-standing experience Knowledge of methods and experience from research and literature - teachers Knowledge of methods and experience from outside world – consultants, managers, … Extent of knowledge Extent of knowledge OM all around us OM is the management of all processes used to design, supply, produce, and deliver valuable goods and services to customers TQM = Total Quality Management MRP, JIT, APS, Lean Manufacturing, Little´s law ERP: Marketing, Selling, Invoicing, Payment,…. ERP: Logistics, Transportation , Some OM methods •Theory of Constraints •Balanced Scorecard •Project Management methods (Critical Chain, SCRUM,…) •Material Requirement Planning (MRP) and Just-in-Time •Advanced Planning and Scheduling (APS) •Six Sigma – quality management •Boston, SWOT and Magic Quadrant Matrices •Little´s Law (relations between WIP, Throughput and Cycle time) •Linear programming - optimisation •Yield Management •Kepner-Tregoe (support of decision making) •Decision trees • • • Some tools which have to be used •ERP-Enterprise Resource Planning (MS Dynamics NAV) –Basic installation, handling and setup –Inventory – Items – Transports –Availability of components –Purchase –dealing with Suppliers (SCM) –Selling – dealing with Customers –Payment – bank operations –Accounting basics –CRM- Customer Relationship Management –Manufacturing – Planning and Shop Floor Control –Cost management – – • • • Controlling processes in Supply Chain Management (SCM) Supply Production Orders Operation Strategies and Innovations , R&D Forecasts, Blank Orders Long term planning Marketing Logistic operations Routing control, TQM Packaging , Transportation MRP, Replenishment MRP_II ; JIT, Capacities Cash flow Strategic Operational Tactical Operational Used abbreviations : R&D –Research and Development; TQM-Total Quality Management; JIT- Just –In-Time; MRP_II-Manufacturing and Resource Planning Used abbreviations (slide number 3 ): : ERP - Enterprise Resource Planning ; APS – Advanced Planning and Scheduling Deming cycle (based on periodicity) Plan: Define the problem to be addressed, collect relevant data, and ascertain the problem's root cause (e.g. by use of TOC) Do: Develop and implement a solution; decide upon a measurement to gauge its effectiveness. Check: Confirm the results through before-and-after data comparison. Act: Document the results, inform others about process changes, and make recommendations for the problem to be addressed in the next PDCA cycle. Used abbreviations : TOC – Theory of Constraints Project management Theory of constraints Production Critical chain Drum –Buffer-Rope MRP-MRP-II,JIT,APS Linear programming Cutting, blending Total quality management Pareto, ishikawa Product postitioning Little´s law Boston Matrix Gartner QM Workflow CONWIP Logistics EOQ Decision Making -trees Kepner-Tregoe Hurwitz Business Intelligence Yield management Prospect Theory Another angle of view ABC Pareto, Ishikawa Six Sigma Product Life Cycle LEAN Function block Logistic more in detail will be presented later in this show SCRUM Used abbreviations : QM– Quadrant Matrix; CONWIP – Constant Work in Progress; EOQ – Economic Order Quantity ; MRP - Material Requirement Planning This will be modified in following South African project show (use of Balanced Score Card) Another angle of view Demand Financial needs Money Product Operations See next slide Function block Logistic-simplified Orders (dependent demand) Forecasts (independent demand) Inventory Management Inventory Costing Transportation Warehouse Management Will be part of our course regarding ERP system MS Dynamics NAV Procedures-simplified Resource (modified) : dowtsx Input Transformation Output Processing (not organised set of processes, will be presented also as a introduction to project management PWP presentation later) • Input check • Put-away • •Cross-docking • Transfer • to • Production • • Consumption registration •Production Output registration • •Inventory value •calculation • • Output check •(Quality control) • •Delivery • •Load-despatch • •Production Planning • •Sales Order • • •Component replenishment • •Purchase Order • • •Invoicing • •Payment • Finished • goods to • Inventory • • Picking from • Inventory • • •Reporting • •Statistics Resource : Skorkovský Your main task (to organize processes based on business logic) • Input check Put-away Cross-docking • Transfer • to • Production • • Consumption registration •Production Output registration Inventory value calculation • Output check • •Shipment • •Load-despatch • •Production Planning • •Sales Order (demand) • • •Component replenishment • •Purchase Order • • •Invoicing • •Payment from •Customer Finished goods to Inventory • •Picking from • Inventory • • •Reporting • •Statistics • •Inventory value •calculation • • •Inventory value •calculation • • •Payment to •Vendor Transformation Input Output Control Logistics Resource : Skorkovský Your main task (possible problems, bottlenecks, undesirable effects..) • Input check • Put-away • •Cross-docking • Transfer • to • Production • • Consumption registration •Production Output registration • •Inventory value •calculation • • Output check • •Shipment • •Load-despatch • •Production Planning • •Sales Order • • •Component replenishment • •Purchase Order • • •Invoicing • •Payment from •Customer • Finished • goods to • Inventory • • Picking from • Inventory • • •Reporting • •Statistics • •Inventory value •calculation • • •Inventory value •calculation • • •Payment to •Vendor Application of TOC ->thinking tools->Current Reality Tree – first stage Resource : Skorkovský Your main task (Search - HOW ??? Measure impacts –HOW ??? and Destroy – HOW ???) Root Problem (e.g.low profit ) Cause-Effect relations Cause-Effect relation Cause-Effect relation Cause-Effect relation Cause-Effect relation https://www.toc.tv/TV/video.php?id=701&open=excerpt#.V6xCP00kpFo Basic problem I. (one of many) momentus 33e68905-3e3e-4556-bc5b-c5e41f6527fa_Pakistan_Musharraf • •We have •a huge data •quantity 33e68905-3e3e-4556-bc5b-c5e41f6527fa_Pakistan_Musharraf • •Moore's law is the observation that the number of transistors in a dense integrated circuits doubles approximately every two years – so -> capacity of memory is going up Big data and analysis problem In test and measurement applications, engineers and scientists can collect vast amounts of data every second of every day. •For every second that the Large Hadron Collider at CERN runs an experiment, the instrument can generate 40 terabytes of data. •For every 30 minutes that a Boeing jet engine runs, the system creates 10 terabytes of operations information. •For a single journey across the Atlantic Ocean, a four-engine jumbo jet can create 640 terabytes of data. •Multiply that by the more than 25,000 flights flown each day, and you get an understanding of the enormous amount of data that exists (Rogers, 2011). That’s “Big Data.” CERN = Conseil Européen pour la Recherche Nucléaire –Resource : https://home.cern/about Hardon Collider-accelerator •To solve it we should use finite capacity scheduling (APS)- will be presented later improve01_01 •Op1 •Op2 •Op3 Zobrazit obrázek v plné velikosti press Zobrazit obrázek v plné velikosti •T1 •T2 • T1+T2=X • •Opt=Min(X) •Op1 •Op2 •Op3 •T1 = 0 •T2 = 0 • Basic problem III. Will be explained in Little´s law presentation . WIP= Work In Progress •Op1 •Op2 •Op3 20 pcs of A7 and 20 pcs of A8 •A0 •A1 •A2 •A3 •A4 •A5 10 pcs of A4 and 10 pcs of A5 (will be delivered in T1+X time ) •T1 •T0 Lead time to produce A6 •A6 •A7 •A8 • •Op1 •Op2 •Op3 •X= slack = delay •T1 •T1+X Bill Of Material=BOM Lead time to produce A3 •T2 For sake of simplicity we did not mentioned components A1 and A2 and possible delays having cause in delivery times of bad quality !!! Same with capacities of machines allocated to OP1-OP2-OP3 ( sudden breakdowns) •APS result ->18.8.->23.8. a 27.8.->10.9 Gannt chart Thanks for your attention