OM1 Introduction to OM and the New Product Development Process 09 11 2015 Operations is the part of a business organization that is responsible for producing goods and or services The ideal situation for a business organization is to achieve an economic match of supply and demand On the supply side are operations and supply chain sales and marketing on the demand side Operations function is responsible for producing products and or delivering services it needs the support and input from other areas of the organization Finance is responsible for securing financial resources at favorable prices and allocating those resources throughout Marketing is responsible for assessing consumer wants and needs and selling and promotion the organization s goods and services Operation management is the management of systems or processes that create goods and or provide services Supply chain the sequence of activities and organizations involved in producing the good or service Operations supply chain are intrinsically linked no business could exist without both The sequence begins with basic suppliers of raw materials and extended to the final product Note that the value of the product increase as it moves through the supply chain The creation of goods and services involves transforming or converting inputs capital labor and information into outputs using transformational processes Transformational process establish standards to determine whether corrective action is needed control The below can diagram can also be known as the value added process at one point takes feedback and then compares them with previously Goods and services it is very difficult to separate them it is a continuum This is why companies usual sell product packages a combination of goods and services The essence of the operations function is to add value during the transformation process Value added is the term used to describe the difference between the cost of inputs and the value or price of outputs Value can also be psychological as in branding Product vs Service Characteristics Output Customer contact Labor content Uniformity of inputs Measurement of productivity Opportunity to correct problems Inventory Wages Patentable Goods Tangible Low Low High Easy High Much Narrow range Usually Services Intangible High High Low Difficult Low Little Wide range Not usually Operations and sales are the two line functions in a business organization All other functions accounting finance marketing IT support the two line function Marketings focus is on selling and or promoting the goods or services of an organization Marketing is also responsible for assessing customer wants and needs and for communicating those to operations people short term and to design people long term Operations needs information about demand over the short to intermediate term so that it can plan accordingly while design people need information that relates to improving current products and services and designing new ones Lead time the time between ordering a good or service and receiving it One important piece of information marketing needs form operations is the lead time Process one or more actions that transform inputs into outputs Generally there are three categories of business processes Upper management processes Operational processes production marketing sales etc Supporting processes operations of the entire organization core processes that make up the value stream purchasing these support the core processes accounting human resources The variety of goods and services being offered greater variation is production or service Process Variation requirements Structural variation in demand Trends and seasonal variations Random variation Assignable variation caused by defected inputs incorrect work methods out of adjustment equipment An important way to deal with variation is to use metrics such as mean and standard deviation is describe it Certain decisions affect the design of the system and others affect the operation of the system Assembly operations buying components such as frames tires wheels and assembling the product Fabrication making the frames gears and chains System design involves decisions that relate to system capacity long term commitments System operations involves management of personnel inventory planning scheduling etc Tactical and operational decisions Feedback on these decisions involve measurement Strategic decisions and planning System design essentially determines many of the parameters of system operations What does product and service design do Translate consumer wants and needs into product and service requirements marketing operations Refine existing products and services marketing Develop new products and services marketing operations Formulate quality goals marketing operations Formulate cost targets accounting finance operations Construct and test prototypes operations marketing engineering Document specifications Translate product and service specification into process specifications engineering operations Key Questions Is there demand for it Can we do it What level of quality is appropriate Does it make sense form an economical standpoint The main forces that initiate design or redesign are marketing opportunities and threats A main motivator for new and improved products are competitors products and services This is when they would use reverse engineering R D Basic research objective of advancing the state of knowledge about a subject without ay near term expectation of commercial applications Applies research objective of achieving commercial applications Development converts the results from applies research into useful commercial applications Legal Ethical Consideration Product liability responsibility of a manufacturer for any injuries or damage caused by a faulty product because of poor workmanship or design o Incentive for improvement Uniform Commercial Code says that products carry an implication of merchantability and fitness the product must be usable for the intended purposes Organizations want designers to adhere to Produce products consistent with goals Give customers values they expect Make health and safety a priority Phases in product design and development Feasibility analysis collaboration amongst all fields Product specifications what I needed to meet or exceed customer wants legal marketing operations Process specifications accounting and operations Prototype development Design review collaboration