Production Operations
Management
Introduction to POM
U. Akinc
1
POM

Productivity
– What is it to POM?
– What is it to a Company?
– What does it Mean to You?

Production/ Operations Management
– What?
– Who?
Business Strategy and Operations Management

2
Productivity
Definition:
Economic output per unit of input
Productivity = Output/Input (resource)
3
US. Productivity Trends

600% since 1900

2.6% between 1945 - 1973

1.2% between 1973 - 1980

1.0% between 1980 – 1990

2.5% after 1990
4
Recent US Productivity Changes
Series Id: PRS84006093
Duration: index, 1992 = 100
Measure: Output Per Hour
Sector: Business
Year
1
2
3
1993
100.3
100.1
100.2
1994
101.6
101.7
101.4
1995
101.8
102.1
102.2
1996
104.2
105.3
105.3
1997
106.1
107.1
108.1
1998
109.6
109.6
110.2
1999
112.3
112.1
113.1
2000
114.8
116.6
116.8
2001
117.4
117.8
118.8
2002
123 .9
124.1
125 .9
2003
125.8
128.0
130.8
2004
131.4
132.8
133.0
2005
134.4
134.3
135.9
2006
136.4
136.6
136.1
2007
136.6
137.5
4
101.2
102.1
103.1
105.7
108.3
111.5
114.7
117.5
121.3
126.4
130.3
133.5
135.5
36.5
Annual
100.5
101.7
102.3
105.1
107.4
110.2
113
116.5
118.8
125 .1
128.7
132.7
135.0
136.4
change
0.50%
1.19%
0.59%
2.74%
2.19%
2.61%
2.54%
3.10%
1.97%
5.3 0%
2.88%
3.11%
1.73%
1.04%
5
Productivity Trends
6
International Comparisons
7
International Comparisons
8
Pressures on Productivity:
Why Does Productivity Have to Grow?
 Aging Population
9
Pressures on Productivity:
Why Does Productivity Have to Grow?
 Aging Population

Environmental Demands
10
Pressures on Productivity:
Why Does Productivity Have to Grow?
 Aging Population

Environmental Demands

Global Competition
11
Pressures on Productivity:
Why Does Productivity Have to Grow?
 Aging Population

Environmental Demands

Global Competition

Social Pressures
12
Sources of productivity?
Where does productivity come from?
Capital
 Technology
 Better Management of Resources:


Specialization

Macro (Organizational)

Micro
13
Organizational Goals

Why do organizations exist?
An alliance of at least
– Labor
– Management
– Stockholders

Organizational Goals

Productive use of resources
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Operations

Activities that organizations perform to
achieve their goals.
Definition:
Activities aimed at bringing about goal
oriented changes by designing and using
processes.

15
Processes

Any set of activities that use resources,
transform and add value to deliver one or
more outputs to its customers.

Processes can be nested.. A process may
include one or more sub processes
16
17
Porter’s Value Chain
18
Domain of POM (WHAT?)
Determining the Desired Outputs
 Determining the Necessary Inputs
 Determining the Technology Necessary
 Planning and Controlling the

– quality
– availability
– cost of Work Processes and Their Results

Delivery and Distribution of the Output
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POM Decisions
20
The Professionals (WHO?)
CEO
VPMarketing
VPOperations
VPFinance
Plant
Manager(s)
Materials
Manager
Production
Scheduling
Purchasing
Stock
Control
Quality
Control
Manufacturing
Manager
Maintenance
Engineer
Personnell
Shipping
and receiving
21
WHAT? Design
Many of the design functions are strategic
 Facilities design
–
–
–
–
–
Locations
Sizes
Layouts
Equipment
Transportation means
Product/Product Line
 Management Systems

22
WHAT? Planning
Determining the ways in which the
productive facility will be used
 Demand
Forecasting
 Production Planning
 Material Requirements Planning
 Inventory Planning
 Staffing Needs
 Equipment Needs
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WHAT? Scheduling
Determining the time and the resources with
which the tasks will be performed.
Examples:
 Assignment of specific customer orders to
individual machines or individuals
 Assignment of workers to work centers
 Sequencing of work
 Vehicle Dispatching
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WHAT? Control
Determining the degree of match between
actual and planned outcomes
Examples:
 Quality
Control
– Conformance
– Design
 Materials
Control (Inventory Control)
 Equipment Control (Maintenance)
 Cost Control (Variance Analysis)
25