MAIN FUNCTIONS OF BUSINESS

Making
Production/ products/
Service
services
Demand
from Money
customers

INTRODUCTION TO
Marketing Interactions Finance
PRODUCTION AND
OPERATIONS MANAGEMENT Production/ Service plays a key role

It employs the highest quantity of

labors and capitals
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ON TARGET

ON TARGET
IMPORTANCE OF POM IMPORTANCE OF POM
POM AS A CORE FUNCTION How other functions support production management:

Capital market Marketing: Provide customer demands.

Finance: Provide investment for production and

finance requirements from shareholders
supplier

sourcing

HR: Labor training, development, hiring and firing

labor

Production/
HR

service Sourcing: Procurement of materials and equipments.

marketing

customer

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 ON TARGET
Production – Transformation process

Additional value
Feedback

Transformation process Output

Input
production?
feedback feedback

Labor Material Product

capital service
Machine
Management…

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Production management: managing the production HISTORY OF POM

systems in which the inputs are processed to create
the outputs.
Objectives: improve the process performance and
the additional value.
C
FIRST CONCEPTS Management Mass production
O (1776 – 1880) science (1880 – (1910 – 1980)
1910)
S
What is production management? T Labor specialization Gantt chart Assembly line (Ford,
(Smith, Babbage) (Gantt) Sorensen)
Time and motion Sampling statistics
F study (Gilbreth) (Shewhart)
O Procedure Economic order
Problem for production analysis (Taylor) quantity EOQ (Harris)
C
management: efficiency Queuing theories PERT/CPM (DuPont)
U (Erlang)
of the processes creating MRP
S
additional values

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 ON TARGET
HISTORY OF POM NEW TRENDS IN POM

Global Focus
JIT
Lean production (1980 – Customized mass production
Supply-chain partnering
1995) (1995 – 2010) Rapid product development
Just In Time Globalization Mass customization
CAD
Electronic data interchange
Internet
ERP
Labor empower
TQM Learning organization Environmentally friendly production
Quality award ISO Business ethics
Kanbans Supply chain management
Fast production
E-commerce
Make to order

9 QUALITY FOCUS CUSTOMIZATION FOCUS 10

ON TARGET

Latecoere France Passenger door

Labinel France Wiring
Dassault France Design & PLM software

90% cartoons of Disney, Marvel, Warner Brothers Messier-Bugatti France Electric Brake
Thales France Electrical power conversion system & integrated
designed in Manila- Philippines (Tom & Jerry, standby flight display

Aladdin, Donald) – Philippnes: $130,000/ep; Korea: Messier-Dowty

Diehl
France
Germany
Landing Gear Structure
Interior lighting
$160,000/ep, US: $500,000/ep FR-HiTemp UK Fuel pumps & valve

Sony – assembled in Thailand, Malaysia, China … Rolls Royce

Smith Aerospace
UK
UK
Engines
Central computer system

Boeing 787 – Dreamliner with parts produced BAE SYSTEM

Alenia Aeronautica
UK
Italy
Electronic
Upper Center fuselage & horizontal stabilizer
globally (France, Germany, England, Italy, Japan, Toray Industry Japan Carbon fiber for wings & tail units

China…) Fuji Heavy Industry Japan Center wing box

Kawasaki Heavy Industry Japan Forward fuselage, fixed sections of wing, landing wheel
well
Teijin Seiki Japan Hydraulic actuators
Mitsubishi Heavy Industry Japan Wing box
Chengdu Aircraft Group China Rudder
Hafei Aviation China Parts

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ON TARGET

ON TARGET
PRODUCTION STRATEGIES PRODUCTION STRATEGIES

Best cost (cost Best cost (cost Lowest cost  lowest

driven) driven) price
Maximum customer
Competitive value
Differentiation advantages Differentiation Lowest cost does not
mean low value or low
quality
Fast response Fast response

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ON TARGET
PRODUCTION STRATEGIES
Southwest Airlines is a cheap airline of US who
is very successful while others get loss of billion
dollars: Best cost (cost Provide unique values.
driven)
Exploit cheap and short flights. Identify all
Use secondary airport or terminal. characteristics of products/
No seat booking. services impacting the
Aircrew with few people but more working Differentiation
potential customer values:
time.
No meal serving Convenience.
Online ticket Fast response Customer services.
Only Boeing 737 After-sales support.

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 Hard Rock Café attracts customers with:
classical Rock music, Rock video on large screen,
Electronic products “Made in Japan” from Sony,
Toshiba… make the differentiation through?
souvenir with story-tellers, staff tells about the
exhibits, a store for selling souvenirs for customers
as a tangible value of their experience.

Hard Rock Café make the differentiation by QUALITY

providing customers with a dinner experience
rather than purely a meal.

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ON TARGET

PRODUCTION STRATEGIES
Flexibility: respond to KFC delivery to home in 30 minutes.
Best cost (cost
driven) changes (forms, quantity,
quality)
Fast and reliable response: Dell – Customized design and production of
PCs in 18 hours
Differentiation Ontime product
development and delivery.
Reliable plan. Mechanical industry in Germany with highest
labor cost still maintains its competitive ability
Quickness: Speed in design,
Fast response through quick response
production and delivery.

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 PLANNING AND CONTROL PLANNING AND CONTROL
ON TARGET

ON TARGET
Planning
Control
• - Long-term planning (> 12 months)
• Two essential responsibilities for POM managers:
• - Medium-term (1 month to 12 month) planning & control.
• - Short-term (< 1 month) daily/weekly operations. • Control is measurable way that the POM managers
can manage the efficiency of operational planning.
• Long-term (or strategic planning): the important
decisions such as production lines, new machines • Control volume & quality of output  some
necessary data in MIS such as: revenue, Sales,
investment or equipment replacement.
Costs, Volume, No. of served customers, Product
• Medium-term: focus on purchasing raw materials or quality, & No. of returned customers.
using human resource.
• Short-term: focus on specific operations (daily or
weekly) in scheduling and sequencing.

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POM DECISIONS POM DECISIONS

ON TARGET

ON TARGET
1. Quality 5. Material handling and work-in-process
• Q is the most important decision in operations • Meet production requirements.
2. Product/service design 6. Job design
• Beginning of production process. • More productivity & quality
3. Process & technology planning 7. Demand forecasting
• Based on product design. • Quantity & time for production
4. Facility layout 8. Scheduling and sequencing
• Assign & locate machines and tools for efficient • Using and arranging production resources to meet
operations. customers’ demand.

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THANKS FOR YOUR
ATTENTION!