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INTRODUCTION TO OPERATIONS MANAGEMENT (NURUL WULANDARI/Strategic Operations Management/REG 64-A)

OLD PARADIGM (PRODUCTION)


TRANSFORMATION

INPUTS
Transformation inputs:
Capital, Technology,
Energy, and Know-how

Transformation of
inputs adding value
throughout the entire
process from basic
inputs to finished
goods and services

OUTPUT

Dalam Operations:
Value = f (Benefits Sacrifices) x Long-Term Mutual Relationship

The final, completed product/service


offering for the customer. Tangible and
intangible elements, combining physical and
psychological effects and benefits for the
customer are in place for in the final

NEW PARADIGM (OPERATIONS)


Operations management is concerned with those activities that enable an
organization (and not just one part of it) to transform a range of basic inputs
(materials, energy, customers requirements, information, skills, finance, etc.)
into outputs for the end customers.

Operations Management = S-I-P2-O2-C

Operations management is very wide in scope of responsibilities and


will draw upon a range of functions within the organization, not be
limited to a specific department.

Key Areas of Responsibility for Operations Managers:


Management of value
Capacity of management
Location decisions the range and locations of facilities
Process management technology investment to support process and product developments
Managing technology
Human resources management
Formation of strategic buyer-supplier relationships as part of the organizations extended enterprise
The rate of new product or service introduction
The Critical Link between Marketing and Operations

VIUP: Value in Use Process

The Transition from Craft to Strategic Operations

STRATEGIC OPERATIONS MANAGEMENT


What the institution wants to be; where we want to go.
A necessity to realize the vision. Action is an Action Does.
The Ten Action Challenges are Plan, Allocate, Lead,
Strengthen, Mobilize, Clarify, Cultivate, Integrate, Wire,
and Reenergize for action.

(NURUL WULANDARI/SOM/REG 64-A)

Tactical and Strategic Concerns in Operations

We live in a VUCA world


Volatile
Uncertain
Complex
Ambiguous

the new
normal

What the institution is trying to do; Where we are going.

VUCA Prime to anticipate VUCA situation


How we are going to get there; is the art of creating
value with 5Ps: Plan, Pattern, Position, Perspective, Ploy;
Going in the right direction.
Doing the right things at the right time.

Volatile
Uncertain
Complex
Ambiguous

Vision
Understanding

Clarity
Agility

In addition to the huge managerial responsibility of managing


key assets, costs and human resources, the contribution of
production and operations management is vital because it can
provide a number of competitive opportunities for the firm.

Strategies must be in place if the organization is to compete in


a business world which is now chaotic, requiring rapid and
continuous innovation, and open to global competition in
many industries and markets.
Operations Strategy is vital as part of the wider, business
strategy, in integrating and combining major competitive
requirements including cost, delivery speed, delivery
reliability, flexibility and customer-specific configurations.

Yudhit Setiyawan (14/376091/PEK/20261)


Understanding Operations Management

Introduction to Operations Management


Key Areas of Responsibility for Operations Managers:

Operations management is concerned with those


activities that enable an organization (and not just
one part of it) to transform a range of basic inputs
(materials, energy, customers requirements,
information, skills, finance, etc.) into outputs for the
end customer.
Operations management is very wide in scope of
responsibilities and will draw upon a range of
functions within the organization, not be limited to a
specific department.

Management of value
Capacity management
Location decisions - the range and locations of facilities
Process management - technology investment to support
process and product developments
Managing technology
Human resources management
Formation of strategic buyer-supplier relationships as part of
the organizations extended enterprise
The rate of new product or service introduction

The Manufacturing/Service Interface in the


Offer to the Customer
I
n
p
u
t
s

Manufacturing
operations

Service
Operations

The Combined
Manufacturing and service
operations provide and
overall offer to the cutomers

C
u
s
t
o
m
e
r
s

Basic Operations System


The Critical Link between Marketing and Operations

input
Processes
Transformation
inputs: Capital,
Technology,
Energy,
and
Know-how

Transformation of
Inputs,
adding
value throughout
the entire process
from basic inputs
to finished goods
and services

Feedback

outputs
The Transition from Craft to Strategic Operations
The final, completed
product/service offering
for
the
customer.
Tangible and intangible
elements,
combining
physical & psychological
effects & benefits for
the customer are in
place for in the final
transaction. Services &
production operations
have become linked

Yudhit Setiyawan (14/376091/PEK/20261)

Competitive priorities in Operations Management


Competitive Priorities in
operation Management

Flexibility Importance

Quality Importance

Delivery Time Importance

Product mix
Volume
Changeover
Modification

Performance
Features
Reliability
Conformance
Durability
Service Ability

Short Delivery Time


Delivery on due date
Reduce production
lead time
On time Delivery
Production Life cycle

Cost Importance

Production Cost
Productivity
Capacity Utilization
Inventory reduction

Methods
A sample of 400 companies was selected from the Harris Industrial and Manufacturing Directory. Of these
companies, 200 were contacted by phone to solicit their participation in the study. Of the 200 contacted, 175
firms agreed to participate in the study and 110 firms actually responded (55% response rate). A questionnaire
was also mailed to the remaining 200 companies in the sample without any telephone contact and 34
responded (17% response rate).

Result
If the raters responses are completely interchangeable, the degree of interrater agreement will equal
1.0. At the other extreme, if raters responses are completely random with respect to each other, the
degree of interrater agreement will be 0.0. The interrater agreement values for the four constructs are
.94 for cost, .84 for quality, .85 for delivery time, and 89 for flexibility. The results indicate that the 27
pairs of managers exhibited a high level of agreement about the competitive priorities for their
businesses.

Management Implications

Predictive Validity of
Competitive Priorities
Predictive validity, is established by using data
collected from an instrument to explain or predict
current or future performance.
The importance of cost as a competitive priority
increases as process choice moves from the job
shop setting to the flow shop setting. Conversely,
the importance of flexibility as a strategic
capability is lower for plants that have flow-type
process designs as opposed to discOntinuous flow
process designs

Relative Scales Versus Absolute Estimates


Each of the competitive priority scales are composed exclusively of items that
askinformants to assess their relative importance on a Likert scale.
Likert scales provide a proven method for constructing such measurements.
Likert scales that ask informants to provide a relative assessment on a
continuum are commonly used for collecting primary data in empirical
Operations strategy research and, more generally, in management research.

Conclusion
The results suggest that researchers in operations strategy use multiple respondents
from individual firms, particularly when the instrument is unproven. Multiple
respondents allow researchers to better gauge the reliability of the instrument and
also to identify and discard unreliable measures

Operational measures of key decision variables such as competitive priorities are useful to both decision makers and researchers. Measures of competitive priorities are particularly important because these
variables are thought to guide decisions made on process choice, technology, capacity, manufacturing plan.
This research also shows that the expected relationship between process choice and competitive priorities that is central to much of the conceptual work in manufacturing strategy can be demonstrated
empiricallynning and control systems, and quality.
Because competitive priorities continue to be important variables in operations strategy research, it is important for researchers to build on each others work, using scales that have proved to be reliable and
valid, and searching for new measures for variables not well measured to date.

Methods

A sample of 400 companies was selected from the Harris Industrial and Manufacturing Directory. Of these companies, 200
were contacted by phone to solicit their participation in the study. Of the 200 contacted, 175 firms agreed to participate in the
Predictive Validity of
study and 110 firms actually responded (55% response rate). A questionnaire was also mailed to theResult
remaining 200 companies
Competitive Priorities
in the sample without any telephone contact and 34 responded (17% response rate).
Table 1 shows the varimax rotated factor loadings for a four-factor solution. In addition to the obvious
Respondents titles included president, vice president of manufacturing, vice president of operations, director of
conceptual basis for four dimensions, a four-factor solution is supported empirically
by analysis
of isa established
scree
Predictive
validity,
by using data collected from a
manufacturing, director of operations, plant manager, production manager, manufacturing manager, controller, and strategic
plot, which indicates a clear elbow between four and five factors.
predict current or future performance. To demonstrate criterio
planning manager. Having respondents at this level helped assure adequate knowledge of the array of strategic and operational
If the raters responses are completely interchangeable, the degree of interrater
agreementpriorities
will equalinstrument
1.0. At in question, it is necessary to
competitive
practices at the plant.
the other extreme, if raters responses are completely random with respect to each
other,
degree predict
of
priorities
sothe
measured
other behavior
interrater agreement will be 0.0. The interrater agreement values for the four
are .94offor
cost,
constructs
The importance
cost
as a.84
competitive priority increases as pr
for quality, .85 for delivery time, and 89 for flexibility. The results indicate that the
27 pairs
of managers
job shop
setting
to the flow shop setting. Conversely, the impor
exhibited a high level of agreement about the competitive priorities for their businesses.
strategic capability is lower for plants that have flow-type proce
discOntinuous flow process designs. Because these results are a
literature, the findings suggest that the measures of competitiv
of manufacturing strategy theory.

Relative Scales Versus Absolute Estimates


Each of the competitive priority scales are composed exclusively of items that askinformants to assess
their relative importance on a Likert scale.
Likert scales provide a proven method for constructing such measurements. Likert scales that ask
informants to provide a relative assessment on a continuum are commonly used for collecting primary
data in empirical Operations strategy research and, more generally, in management research.
Table 2 provides some insight on this issue by showing the degree of interrater agreement for both
competitive priority (relative) scales and absolute estimates of routine, descriptive information
collected with the same instrument from the same respondents. Along with means, standard
deviations, and mean differences, two measures of agreement are provided in Table 2

Conclusion

The results suggest that researchers in operations strategy use multiple respondents from ind
firms, particularly when the instrument is unproven. Multiple respondents allow researchers to
gauge the reliability of the instrument and also to identify and discard unreliable measures

Management Implications
Operational measures of key decision variables such as competitive priorities are useful to both
decision makers and researchers. Measures of competitive priorities are particularly important
because these variables are thought to guide decisions made on process choice, technology, capacity,
manufacturing plan.
This research also shows that the expected relationship between process choice and competitive
priorities that is central to much of the conceptual work in manufacturing strategy can be
demonstrated empiricallynning and control systems, and quality.
Because competitive priorities continue to be important variables in operations strategy research, it is
important for researchers to build on each others work, using scales that have proved to be reliable

Abstract