Essay About Performance Measures And Operations Managementwhat

Mgmt 372 – Marketing Study
MGMT 372 Test 1 Study GuideThe test will come entirely from the material here, with the highlighted material prioritized.Chapter 1 – Introduction to Operations ManagementWhat is an Operations Manager?  Let’s break that title apart. When we serve as a manager, we typically are managing people. This is the perspective of management we get from MGMT 371 (Organization Behavior and Management) and MGMT 374 (Human Resource Management).  We are managing people within an organization of people.  That is very important.But we are also managing a function.  If are managing a department in a company, that department has a function, in the context of all the other departments functions that work together to fulfill the mission of the company.  That function may be to maintain the computer systems.  That function may be to assemble BMWs.  That function may be to litigate legal cases.  The MGMT 372 perspective is how an operations manager manages that function. What does it mean to manage a function?  It means to be responsible for the operation meeting its performance measures such as production quantity, quality, cost, labor use, etc.  It means you are responsible for troubleshooting and correcting problems.  It means you are responsible for determining improvement actions and implementing them to improve the operation’s performance. We are going to study how to manage functions in general, regardless of the function, and we are going to study some specific functions common to many companies. My hope for you is that after you finish this class, and when you get a job being a manager, or start your own company to manage, you are a more effective manager of its operations because of this class.Three Categories of Functions Necessary for any Business – Sales/Marketing, Operations, Finance/AccountingWhat functions or departments fall under operations?The primary one is production.  We can define this as the set of activities that produces the goods and/or services that an organization offers.  The set of activities that create value by transforming inputs into outputs.Product DevelopmentMaintenanceHuman ResourcesMaintenanceLogistics / ShippingSupply Chain / PurchasingProcess EngineeringQualityForecasting SalesProduction SchedulingPurchasing and Supply Chain ManagementWhere are operations managers in these examples?Performance measures are something I will emphasize repeatedly in this class.  Performance measures, first of all, define what is important for the function to achieve for the success of the organization.  Second, performance measures assess how well the function is performing.  What are some performance measures for organizations’ functions?Productivity = Units Produced / Input UsedQuality ($ in returns, number of returns, % returns, defect rate)Cost ($)Lead Time or Cycle Time (minutes, hours, days, etc.)Safety (accidents or injuries by OSHA category)Customer SatisfactionOn Time DeliveryDifferences Between Service and Manufacturing BusinessesGoods (tangible product) versus Service (intangible product) versus a combination of the two.Give examples of the three categories:Book, TV production, airplane mfg, farming, etc.Education, repair shop, beauty services, hotel, airlineRestaurantAspects of a service vs. goodsNo inventory, produced and consumed simultaneouslyCannot resell productProduct is not transportableUniqueHigh customer interactionSelling is not as distinct from productionOften tailored to each customerDifficult to automateGrowth of Services – Largest economic sector, and growing.[pic 1]Chapter 2 – Competitiveness, Strategy and ProductivityLet me start by again emphasizing the importance of performance measures.  Performance measures are important for at least two reasons:Performance measures define and focus attention on what is important.Performance measures give objective information on the performance of the operation, allowing the manager to assess, troubleshoot and improve the operation.A key performance measure is productivityA measure of the effective use of resources, usually expressed as the ratio of output to input Productivity = Units Produced / Input Used (Inputs can be labor hours, pounds of raw material, KWH of energy, etc.)[pic 2][pic 3][pic 4][pic 5]Note, that in all of these problems for the whole semester, you need to keep the units on your numbers when you do the calculations and when you report the answers.A producer of wooden crates has a way to increase productivity by increasing the quality of the wood he purchases by using a professional buyer, allowing more crates per unit of wood but increasing labor costs.  Look first at labor rate:CurrentProposedCrates240260Labor300 hrs308 hrsCrates / labor-hr0.80.844[(0.844 – 0.80)  / 0.80] x 100 = 5.5% increaseLooking at the multifactor productivity: CurrentProposedCrates240260Labor300 hrs x $10/hr. = $3,000308 hrs x $10/hr. = $3,080Material100 logs/day x $10/log = $1,000100 logs/day x $10/log = $1,000Capital$350 / day$350 / dayEnergy150 KWH/day x $1/KWH = $150/day150 KWH/day x $1/KWH = $150/dayTotal Cost$4,500$4,580Crates / $0.05330.0568[(0.0568 – 0.0533) / 0.0533] x 100 = 6.6% increase