Production and Operations Management (POM) : An Introduction

Production and Operations Management (POM): An Introduction
Introduction
Production and operations management (POM) is the management of an organizations production system. A production system takes inputs and converts them into outputs. The conversion process is the predominant activity of a production system. The primary concern of an operations manager is the activities of the conversion process.
Organizational Model
Finance Sales POM Marketing
HRM
QA
Engineering
MIS
Accounting
Organization Chart-Major Elements

Manufacturing Organization
Operations Finance/Accounting Disbursements & Credits Funds Management Capital Requirements Marketing Sales Promotion Advertising Sales Market Research
Facilities Production & Inventory ontrol Quality Assurance & Control Procurement Engineering Design Industrial Engineering Process Engineering
Entry-Level Jobs in POM

Purchasing planner/buyer Production (or operations) supervisor Production (or operations) scheduler/controller Production (or operations) analyst Inventory analyst Quality specialist
Historical Milestones in POM

The Industrial Revolution Post-Civil War Period Scientific Management Human Relations and Behaviorism Operations Research The Service Revolution
The Industrial Revolution

The industrial revolution developed in England in the 1700s. The steam engine, invented by James Watt in 1764, largely replaced human and water power for factories. Adam Smiths The Wealth of Nations in 1776 touted the economic benefits of the specialization of labor. Thus the late-1700s factories had not only machine power but also ways of planning and controlling the tasks of workers.
The Industrial Revolution CONTD

The industrial revolution spread from England to other European countries and to the United Sates. In 1790 an American, Eli Whitney, developed the concept of interchangeable parts. The first great industry in the U.S. was the textile industry. In the 1800s the development of the gasoline engine and electricity further advanced the revolution. By the mid-1800s, the old cottage system of production had been replaced by the factory system
Post-Civil War Period

During the post-Civil War period great expansion of production capacity occurred. By post-Civil War the following developments set the stage for the great production explosion of the 20th century:
increased capital and production capacity the expanded urban workforce new Western U.S. markets an effective national transportation system
Scientific Management
Frederick Taylor is known as the father of scientific management. His shop system employed these steps:
Each workers skill, strength, and learning ability were determined. Stopwatch studies were conducted to precisely set standard output per worker on each task. Material specifications, work methods, and routing sequences were used to organize the shop. Supervisors were carefully selected and trained. Incentive pay systems were initiated
Scientific Management CONTD..

In the 1920s, Ford Motor Companys operation embodied the key elements of scientific management:
standardized product designs mass production low manufacturing costs mechanized assembly lines specialization of labor interchangeable parts
Human Relations and Behavioralism

In the 1927-1932 period, researchers in the Hawthorne Studies realized that human factors were affecting production. Researchers and managers alike were recognizing that psychological and sociological factors affected production. From the work of behavioralists came a gradual change in the way managers thought about and treated workers.
Operations Research
During World War II, enormous quantities of resources (personnel, supplies, equipment, ) had to be deployed. Military operations research (OR) teams were formed to deal with the complexity of the deployment. After the war, operations researchers found their way back to universities, industry, government, and consulting firms. OR helps operations managers make decisions when problems are complex and wrong decisions are costly.
The Service Revolution

The creation of services organizations accelerated sharply after World War II. Today, more than two-thirds of the U.S. workforce is employed in services. About two-thirds of U.S. GDP is from services. There is a huge trade surplus in services. Investment per office worker now exceeds the investment per factory worker. Thus there is a growing need for service operations management.
Today's Factors Affecting POM

Global Competition U.S. Quality, Customer Service, and Cost Challenges Computers and Advanced Production Technology Growth of U.S. Service Sector Scarcity of Production Resources Issues of Social Responsibility
Different Ways to Study POM

Production as a System Production as an Organization Function Decision Making in POM
Production as a System
Production System Conversion Subsystem
Control Subsystem
Inputs
Outputs
17
Inputs of a Production System

External
Legal, Economic, Social, Technological
Market
Competition, Customer Desires, Product Info.
Primary Resources
Materials, Personnel, Capital, Utilities
Conversion Subsystem
Physical (Manufacturing) Locational Services (Transportation) Exchange Services (Retailing) Storage Services (Warehousing) Other Private Services (Insurance) Government Services (Federal, State, Local)
Outputs of a Production System

Direct
Products Services
Indirect
Waste Pollution Technological Advances
Production as an Organization Function

U.S. companies cannot compete using marketing, finance, accounting, and engineering alone. We focus on POM as we think of global competitiveness, because that is where the vast majority of a firms workers, capital assets, and expenses reside. To succeed, a firm must have a strong operations function teaming with the other organization functions.
Decision Making in POM

Strategic Decisions Operating Decisions Control Decisions
Strategic Decisions
These decisions are of strategic importance and have long-term significance for the organization. Examples include deciding:
the design for a new products production process where to locate a new factory whether to launch a new-product development plan
Operating Decisions
These decisions are necessary if the ongoing production of goods and services is to satisfy market demands and provide profits. Examples include deciding:
how much finished-goods inventory to carry the amount of overtime to use next week the details for purchasing raw material next month
Control Decisions
These decisions concern the day-to-day activities of workers, quality of products and services, production and overhead costs, and machine maintenance. Examples include deciding:
labor cost standards for a new product frequency of preventive maintenance new quality control acceptance criteria
What Controls the Operations System?

Information about the outputs, the conversions, and the inputs is fed back to management. This information is matched with managements expectations When there is a difference, management must take corrective action to maintain control of the system
Wrap-Up: World Class Practice

POM important in any organization Global competition forces rapid evolution of POM Decision based framework focus of course
Strategic, Operating, and Control

Production and Operations Management (POM) : An Introduction

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Production and Operations Management (POM): An Introduction

Organization Chart-Major Elements

Entry-Level Jobs in POM

Historical Milestones in POM

The Industrial Revolution

The Industrial Revolution CONTD

Post-Civil War Period

Scientific Management CONTD..

Human Relations and Behavioralism

The Service Revolution

Today's Factors Affecting POM

Different Ways to Study POM

Inputs of a Production System

Outputs of a Production System

Production as an Organization Function

Decision Making in POM

What Controls the Operations System?

Wrap-Up: World Class Practice

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