Operations Management For Dummies

Standards Information Network (Verlag)
  • 2. Auflage
  • |
  • erschienen am 1. November 2021
  • |
  • 416 Seiten
E-Book | ePUB mit Adobe-DRM | Systemvoraussetzungen
978-1-119-84312-2 (ISBN)
The plain language guide to getting things running smoothly in the world of business

Operations management is all about efficiency, and Operations Management For Dummies is all about efficiently teaching you what you need to know about this business hot topic. This book tracks typical operations management MBA courses, and it will help you un-muddle concepts like process mapping, bottlenecks, Lean Production, and supply chain management. Learn to step into a business, see what needs improving, and plug in the latest tools and ideas to shape things up in any industry.

This latest edition covers, you guessed it, digital transformation. Technology is completely upending operations management, and Dummies walks you through the latest, so you can stay at the front of the pack. Other new stuff inside: supply chain traceability, ethical sourcing and carbon footprint, business resiliency, and modularizing the supply chain. It's all here!

Optimize operations and increase revenue with strategies and ideas that make businesses run better and cheaper
Get easy-to-understand explanations of complex topics and theories in operations management
Learn how operations management is affected by digital transformation and sustainability concerns
Evaluate, design, improve, and scale all sorts of processes, regardless of business size or area of operation

Businesses can't operate successfully without effective operations and supply management. That makes Operations Management For Dummies a must-for MBA students and business professionals alike.
2nd Revised edition
  • Englisch
  • USA
John Wiley & Sons Inc
  • Für Beruf und Forschung
  • Überarbeitete Ausgabe
  • Reflowable
  • 5,92 MB
978-1-119-84312-2 (9781119843122)

weitere Ausgaben werden ermittelt
Mary Ann Anderson is Director of the Supply Chain Management Center of Excellence at the University of Texas at Austin.

Edward Anderson, PhD, is Professor of Operations Management at the University of Texas McCombs School of Business.

Geoffrey Parker, PhD, is Professor of Engineering at Dartmouth College.
Introduction 1

About This Book 1

Conventions Used in This Book 3

Foolish Assumptions 3

Icons Used In This Book 4

Beyond the Book 4

Where to Go from Here 4

Part 1: Getting Started with Operations Management 7

Chapter 1: Discovering the Fundamentals of Operations Management 9

Defining Operations Management 10

Getting beyond the smokestack 10

Seeing the relevance of operations management 11

Understanding the Process of Operations 12

Driving the business model 12

Recognizing the diversity of processes 13

Managing processes 15

Handling special situations 17

Meeting the Challenges 18

Firefighting 18

Technology 18

Complacency 19

Metrics 19

Perspective 19

Outsourcing 20

Chapter 2: Defining and Evaluating Processes 21

Mapping Processes 22

Distinguishing between operations and delays 24

Identifying waste 24

Developing a process map 26

Evaluating the Elements of a System 28

Checking productivity 28

Considering capacity 28

Clocking cycle time 29

Getting a handle on constraints 29

Talking thruput and takt time 30

Going with the flow time 31

Monitoring utilization 32

Accounting for variability 35

Chapter 3: Designing Processes to Meet Goals 37

Getting Started with Process Improvement 38

Planning Operations 38

Considering a serial process 39

Placing operations in parallel 39

Improving Processes According to a Goal 42

Reducing customer flow time 43

Increasing system capacity 44

Balancing the line 46

Utilizing flexible resources 48

Improving a process that has excess capacity 49

Managing Bottlenecks 50

Getting tripped up by overproduction 50

Increasing process capacity 52

Chapter 4: Dealing with Shared Resources, Batches, and Rework 55

Sharing Resources 56

Assigning a resource to more than one operation 56

Allocating resources to more than one process 57

Batching Parts and Setting Up Operations 58

Working with batches 59

Maximizing operation batch size 60

Optimizing transfer batch size 62

Optimizing batch size with operation setups 65

Handling Poor Quality 68

Putting rework back in the process that created it 69

Pulling rework out of the main process 71

Chapter 5: Designing Your Process to Match Your Product or Service 73

Considering Costs, Standardization, Volume, and Flexibility 74

Balancing operating costs 75

Blurring the lines: Making standardized stuff customizable 79

Improving Face-to-Face and Back-Office Operations 80

Strengthening the customer interface 81

Improving efficiencies behind the scenes 83

Fulfilling Customer Demand: Making to Stock or Making to Order 84

Making to stock 84

Making to order 85

A tale of two companies: Making either method work 86

Getting It to Your Customer 87

Ordering Online and Pickup in Store or Curbside 87

Ordering Online with Delivery 88

Designing for X: Designing Products with Operations in Mind 89

Part 2: Managing Variability and Risk 91

Chapter 6: Forecasting Demand 93

Getting Savvy about Forecasts 94

Building a Forecast to Predict Demand 95

Recognizing demand variation 95

Looking to the past to predict the future 96

Lacking data: No problem 101

Acknowledging the Error of Your Ways 103

Hunting down the source of your error 103

Measuring how inaccurate you are 105

Chapter 7: Planning Capacity 107

Considering Capacity 108

Matching supply and demand 109

Timing adjustments just right 110

Balancing Capacity and Inventory 111

Producing to match demand 113

Producing at capacity 113

Increasing capacity 115

Addressing Wait Time for Services 116

Getting the why of waiting 116

Estimating waiting time with queuing theory 119

Altering customer perceptions 126

Chapter 8: Managing Inventory 129

Dealing with the Business of Inventory 130

Recognizing inventory's purposes 131

Measuring the true cost of inventory 132

Managing Inventory 133

Continuous review 135

Periodic review 137

Single period review 138

Comparing the options 139

Getting Baseline Data on Performance 139

Assessing the inventory management? system 140

Evaluating the quality of customer service 141

Reducing Inventory without Sacrificing Customer Service 141

Multitasking inventory: The commonality approach 142

Holding on: The postponement strategy 143

Managing Inventory across the Supply Chain 145

Keeping track of the pipeline inventory 145

Setting service levels with multiple suppliers 147

Chapter 9: Planning for Successful Operations 149

Planning from the Top Down 150

Determining corporate strategy 150

Preparing for success 151

Executing the plan 153

Exploring the Components of an Aggregate Plan 153

Putting together a plan 154

Creating the master schedule 154

Considering Materials 156

Gathering information for the system 156

Getting system results 157

Planning for Services 159

Seeing the difference in services 159

Establishing the service plan 160

Applying Information to the Entire Organization 161

Part 3: Improving Operations 163

Chapter 10: Becoming Lean 165

Evolving to Lean 165

Mastering the craft 166

Producing in mass 167

Trimming the Fat 170

Eliminating the waste 170

Involving everyone 171

Leveling production 171

Embracing your supplier 174

Focusing on quality 175

Implementing continuous improvement 176

Producing Just in Time 176

Knowing when to work 177

Differentiating the customer interface 178

Implementing pull 178

Knowing when to JIT 180

Seeking the Silver Bullet 181

Chapter 11: Proofing against Disruption 183

Understanding Disruptions 184

Planning for Disruption 187

Knowing your supply chain and operations 187

Using new technology 187

Planning for scenarios collaboratively 188

Investing in Relationships 188

Fattening the Supply Chain 189

Stockpiling inventory 189

Maintaining stand-by capacity 190

Exploiting flexible capacity 190

Redesigning Your Product and Process 191

Designing for multiple parts 191

Designing for multiple processes 191

Replacing labor with autonomy 191

Protecting against Cyberhacking 192

Mixing and Matching Strategies 192

Chapter 12: Managing Quality 193

Deciding What Matters 193

Recognizing the Value of Quality 196

Assessing the cost of failure 196

Detecting defects 197

Getting the perks of high quality 198

Preventing defects in the first place 199

Addressing Quality 199

Considering the customer 200

Getting all hands on deck 200

Sticking to the improvement effort 201

Designing for Quality 202

Starting with the end in mind 202

Cascading to production 205

Measuring Quality 205

Understanding variation 206

Measuring "goodness" of a process 207

Controlling processes 210

Chapter 13: Creating a Quality Organization 215

Reaching Beyond Traditional Improvement Programs 216

Multiplying failures 216

Raising the bar 218

Varying skill levels 218

Adding to the Tool Box 219

Defining the problem 220

Measuring the process 221

Analyzing the problem 221

Implementing a solution 227

Maintaining the gain 229

Overcoming Obstacles 230

Failing to focus 230

Prioritizing into paralysis 231

Avoiding the lure of magical solutions 231

Lacking employee involvement 232

Knowing what to do 232

Learning from the experience 232

Calling it a program 233

Giving up 233

Part 4: Managing the Supply Chain 235

Chapter 14: Understanding Supply Chain Basics 237

Seeing the Structure of Supply Chains 238

Getting through the tiers 239

Linking in support services 239

Aligning the Supply Chain with Business Strategy 240

Defining product demand 241

Choosing the right supply chain strategy 241

Exploring the Bullwhip Effect 243

Finding the bullwhip triggers 244

Dodging the bullwhip 247

Improving Supply Chain Management 249

Communicating better 249

Outsourcing inventory management 249

Simplifying the chain by consolidating shipments 250

Chapter 15: Sourcing Strategically 253

Seeing the Upsides and Downsides of Outsourcing 253

Benefiting from the pros 254

Avoiding the cons 255

Getting Down to the Basics 257

Figuring out what to outsource 258

Choosing the right partner 259

Developing a lasting relationship 262

Integrating the product 264

Chapter 16: Digitalizing the Supply Chain 267

Navigating the Digital World 268

Defining the difference between digitizing and digitalizing 268

Realizing the benefits 268

Mapping a Digital Strategy 269

Undergoing a digital transformation 270

Selecting the best solution 271

Chapter 17: Scaling throughout the Product Life Cycle 273

Managing Operations Age-Appropriately 273

Swooning over the Baby 275

Keeping capacity flexible to minimize inventory during unpredictable demand 275

Designing a supply chain for a new product 277

Defining a market with no competitors 278

Avoiding failure in incubation 278

Surviving the Awkward Stage of Quick Growth 279

Balancing Capacity and inventory for growing demand 279

Growing your supply chain 281

Distinguishing your product from competitors' products 281

Getting Comfortable with Market Maturity 282

Exploiting capacity and optimizing inventory for steady demand 282

Balancing a mature supply chain 283

Preparing for the End 283

Emerging Anew 284

Repositioning 284

Making improvements 285

Changing the product portfolio 285

Managing Start-up Operations 286

Operating on a shoestring 287

Transitioning to growth 287

Part 5: Managing Projects 289

Chapter 18: Leading Successful Projects 291

Defining Success 292

Prioritizing criteria 292

Seeing the interaction of factors 293

Figuring Out Why Projects Fail 295

Laying Out the Project Management Life Cycle 296

Detailing the phases of the cycle 296

Deciding to go or not to go 298

Documenting the project 300

Leading a Project 300

Developing a project proposal with a team 301

Communicating with stakeholders 302

Keeping stakeholders in the loop 303

Managing the team 303

Chapter 19: Estimating and Scheduling Projects 307

Estimating Time and Cost 308

Compiling a list of tasks 308

Adding up the project costs 312

Timing: The critical path 314

Assigning tasks 319

Presenting the schedule 320

Working with Uncertainty 321

Estimating with ranges 321

Using historical data 321

Relying on expert knowledge 326

Putting It All Together 328

Avoiding the estimation dance 328

Accelerating the project 329

Chapter 20: Becoming Agile 331

Escaping the Waterfall 332

Deciding on Agile 333

Gearing Up for Agile 334

Sprinting through the Project 335

Planning the sprint 336

Standing up with scrum meetings 339

Rinsing, washing, and repeating 340

Avoiding Common Agile Mistakes 342

Starting without planning 343

Ignoring Waterfall skills 343

Combining Agile and Waterfall 344

Chapter 21: Responding to Risks That Threaten Your Project 345

Tracking Project Progress 346

Assessing earned value 346

Earning value over time 349

Monitoring the metrics: Who's responsible? 351

Realizing your project's in trouble 351

Planning Ahead with Risk Registers 354

Knowing what can go wrong 355

Prioritizing risks 356

Developing a contingency plan 358

Responding Productively to Risk 361

Staying productive: Parkinson's Law 361

Recovering from delays: Brook's Law and Homer's Law 362

Delay the project 364

Sacrificing functionality 364

Part 6: The Part of Tens 365

Chapter 22: Ten Pivotal Operations Management Developments 367

Logistics 367

Division of Labor 368

Interchangeable Parts 368

Scientific Management and Mass Production 369

Statistical Quality Control 369

Lean Manufacturing 370

Scientific Project Planning 370

Supply Chain Management 371

Computerized Supply Chain Coordination 371

Electronic Commerce 372

Chapter 23: Ten Mistakes That New Operations Managers Make 373

Beginning an Improvement Journey without Knowing your Process 373

Creating Overly Complex Processes 374

Missing the Real Bottleneck 375

Managing Based on Utilization 375

Not Standardizing 375

Automating Bad Processes 376

Misdefining Quality 376

Improving Process through "Big Bangs" rather than Continuous Improvement 377

Not Doing Enough Project Planning Upfront 377

Not Focusing on the Customer 378

Chapter 24: Ten Traits of World-Class Operations 379

Knowing Thyself 379

Possessing Profound Knowledge of the Customer 380

Focusing Intensely on Quality 380

Adapting to Change 381

Getting Better All the Time 381

Appreciating Employees 381

Paying Constant Attention to Product Offerings 382

Using Relevant Process Metrics 382

Balancing Respect and Expectations for the Supply Chain 382

Avoiding Unnecessary Complexity 383

Index 385

Chapter 1

Discovering the Fundamentals of Operations Management


Understanding the function and value of operations management

Getting a handle on business models and processes

Facing key challenges in operations management

Operations - a set of methods that produce and deliver products and services in pursuit of specific goals - are the heartbeat of every kind of organization, from consumer electronic and hospital emergency wards to high finance and professional services. Well-designed operations enhance profitability. Poor operations, at best, equal ineffective processes and wasted resources. At worst, poor operations can drive a company out of business. Therefore, managing operations with competence is vital to meeting strategic goals and surviving financially.

In this chapter, we point out what's part of operations and what isn't. We also describe key concepts in the world of operations and tell you what you can do to improve operations in a business or any other type of organization.

Defining Operations Management

When most people think of operations management, if any picture comes to mind at all, an image of a large factory billowing smoke often emerges. And, yes, factories that billow smoke are indeed performing operations, but they're only a small subset of everything that's involved with operations management. Ultimately, operations determine the cost, quality, and timing of every interaction an organization has with the people it serves.

In this section, we tell you exactly what operations management is - and what it's not. Moreover, we point out why operations are such a critical part of an organization and why all departments must care about operations for an organization to be successful.

Getting beyond the smokestack

No job is so simple that it can't be done wrong.


Operations management is the development, execution, and maintenance of effective processes related to activities done over and over, or to one-time major projects, to achieve specific goals of the organization.

Operations management covers much more than smokestacks or manufacturing parts and products; it also encompasses services and all sorts of projects and initiatives that groups of people undertake together. From restaurants and fast-food joints to medical services, art galleries, and law firms, operations management ensures that organizations minimize waste and optimize output and resource use for the benefit of customers as well as everyone else with skin in the game, or the stakeholders.

Doing something a little inefficiently one time is no big deal, but when you do something inefficiently over and over, hundreds or even millions of times per year, even little mistakes can add up to very expensive amounts of waste. Mistakes in an operation that result in defective products, even if they represent only 1 percent of total output, can alienate millions of customers. Similarly, if poorly designed operations result in habitually serving customers late, a company will eventually lose customers to better-functioning competitors.

In for-profit firms, operations management is concerned with the cost-effective operation and allocation of resources, including people, equipment, materials, and inventory - the stuff you use to provide goods or services for customers - to earn the big bucks and maximize your return on investment. Just look at the annual reports of big successful firms. Some, like Apple, take pride in their operational excellence. In the case of Apple, removing just pennies from the cost of one phone can mean millions of dollars to the bottom line.

In nonprofit organizations, managing resources is also vital. Here, operations management may be concerned primarily with maximizing a specific metric, such as people served with their limited resources.

Seeing the relevance of operations management

Operations management is a fundamental part of any organization. In fact, Forbes magazine reported that about three quarters of all CEOs came from an operations background. Not all these CEOs studied operations in school; only some of them did. Many majored in finance, marketing, information systems, or engineering and ended up in operations at some point in their careers.

Even if you don't want to be a CEO or ever work in operations, you'll probably have to work with operations people during your career. So consider these facts about the impact of operations on various business functions:

  • Engineering: Engineers are notoriously great with numbers and focus. That doesn't always translate to being great with operations. Operations analysis is both quantitative and intuitive, and engineers without operations training can - and do! - waste millions of dollars when tasked to oversee operations. For maximum benefit, you need to evaluate the individual process in the context of the overall system of processes it connects to. So some operations knowledge can help engineers place their analysis of an individual process into an overall context of the operations system.
  • Finance: Corporate finance folks exercise oversight over budgets, so having some operations knowledge can help this team make good decisions. For instance, when an operations leader asks for money to de-bottleneck a process (check out Chapter 3 for information on bottlenecks), knowing what this means tells you the intent is to increase the capacity of an existing operation. This almost always makes more economic sense than building a new plant. It also makes it easier to evaluate costs and benefits of the investment. Otherwise, you may suspect it's like spending money to put paint on an old jalopy.
  • Information technology (IT): A big part of IT within some companies is to automate operations. Knowing the core principles of operations can help these folks build an operations superhighway instead of paving a cow path. Companies tend to easily accept the traditional way of doing things without question. There's a great temptation to simply automate an existing process with imbedded inefficiencies. Some knowledge of operations may help IT professionals to more effectively partner with operations management people to truly create competitive advantage by improving processes while they automate.
  • Marketing: When the marketing folks come up with a new product idea or promotions concept, they need to talk to operations to find out whether it can be produced profitably. If the answer is no - operations managers are sometimes a grumpy lot - persuading them to find a solution may be easier if marketing can speak the language of operations and understand their concerns.

Marketing and operations must also be in sync when planning promotional campaigns. For example, if the marketing campaign increases demand quickly, they may not have enough capacity to meet the demand, which can lead to unhappy customers.

Understanding the Process of Operations

The field of operations management isn't always intuitive. Ultimately, the intent is to eliminate waste and maximize profitability. Depending on the type of organization and its specific goals, operations can be managed with a wide range of strategic approaches and techniques.

This section describes some of the major aspects of operations that often trip up people who study and work in this field.

Driving the business model

An organization's business model should influence operations strategy; likewise, operations strategy drives the business model (see Figure 1-1). The business model - which identifies the target market, the product or service available for sale, pricing, marketing, and overall budget - is intimately entwined with operations.

In other words, operations determine the cost, quality, and timing of the value proposition that a company delivers to its customers. Operations determine the customer experience, whether it's a service or a tangible product. If the customer experience is good, then financials also tend to be good - and there are always ways to further improve the business model (much more on continuous improvement later). If, on the other hand, operations and the customer experience are poor, then financials are also likely to be poor. This situation calls for a reevaluation of the business model, the operations strategy, or both.

© John Wiley & Sons, Inc.

FIGURE 1-1: The business model drives operations, and operations drive the business model.

In the pragmatic gray area of the real world, operations at a company may be independently good in some areas but out of alignment with the business model. For example, if the operations strategy emphasizes low cost, but the business model relies on using customization to obtain a higher markup from customers, then a company is functioning with fundamentally incompatible goals, making the "good" operations ineffective.

Recognizing the diversity of processes

Processes vary in thousands of ways for different kinds of organizations with different kinds of needs. Start-up firms need to scale up rapidly, and the restaurant business requires some artistry. Pharmaceutical companies must stay...

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