Operations Management For Dummies

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 1About This Book 1Conventions Used in This Book 3Foolish Assumptions 3Icons Used In This Book 4Beyond the Book 4Where to Go from Here 4Part 1: Getting Started with Operations Management 7Chapter 1: Discovering the Fundamentals of Operations Management 9Defining Operations Management 10Getting beyond the smokestack 10Seeing the relevance of operations management 11Understanding the Process of Operations 12Driving the business model 12Recognizing the diversity of processes 13Managing processes 15Handling special situations 17Meeting the Challenges 18Firefighting 18Technology 18Complacency 19Metrics 19Perspective 19Outsourcing 20Chapter 2: Defining and Evaluating Processes 21Mapping Processes 22Distinguishing between operations and delays 24Identifying waste 24Developing a process map 26Evaluating the Elements of a System 28Checking productivity 28Considering capacity 28Clocking cycle time 29Getting a handle on constraints 29Talking thruput and takt time 30Going with the flow time 31Monitoring utilization 32Accounting for variability 35Chapter 3: Designing Processes to Meet Goals 37Getting Started with Process Improvement 38Planning Operations 38Considering a serial process 39Placing operations in parallel 39Improving Processes According to a Goal 42Reducing customer flow time 43Increasing system capacity 44Balancing the line 46Utilizing flexible resources 48Improving a process that has excess capacity 49Managing Bottlenecks 50Getting tripped up by overproduction 50Increasing process capacity 52Chapter 4: Dealing with Shared Resources, Batches, and Rework 55Sharing Resources 56Assigning a resource to more than one operation 56Allocating resources to more than one process 57Batching Parts and Setting Up Operations 58Working with batches 59Maximizing operation batch size 60Optimizing transfer batch size 62Optimizing batch size with operation setups 65Handling Poor Quality 68Putting rework back in the process that created it 69Pulling rework out of the main process 71Chapter 5: Designing Your Process to Match Your Product or Service 73Considering Costs, Standardization, Volume, and Flexibility 74Balancing operating costs 75Blurring the lines: Making standardized stuff customizable 79Improving Face-to-Face and Back-Office Operations 80Strengthening the customer interface 81Improving efficiencies behind the scenes 83Fulfilling Customer Demand: Making to Stock or Making to Order 84Making to stock 84Making to order 85A tale of two companies: Making either method work 86Getting It to Your Customer 87Ordering Online and Pickup in Store or Curbside 87Ordering Online with Delivery 88Designing for X: Designing Products with Operations in Mind 89Part 2: Managing Variability and Risk 91Chapter 6: Forecasting Demand 93Getting Savvy about Forecasts 94Building a Forecast to Predict Demand 95Recognizing demand variation 95Looking to the past to predict the future 96Lacking data: No problem 101Acknowledging the Error of Your Ways 103Hunting down the source of your error 103Measuring how inaccurate you are 105Chapter 7: Planning Capacity 107Considering Capacity 108Matching supply and demand 109Timing adjustments just right 110Balancing Capacity and Inventory 111Producing to match demand 113Producing at capacity 113Increasing capacity 115Addressing Wait Time for Services 116Getting the why of waiting 116Estimating waiting time with queuing theory 119Altering customer perceptions 126Chapter 8: Managing Inventory 129Dealing with the Business of Inventory 130Recognizing inventory’s purposes 131Measuring the true cost of inventory 132Managing Inventory 133Continuous review 135Periodic review 137Single period review 138Comparing the options 139Getting Baseline Data on Performance 139Assessing the inventory management? system 140Evaluating the quality of customer service 141Reducing Inventory without Sacrificing Customer Service 141Multitasking inventory: The commonality approach 142Holding on: The postponement strategy 143Managing Inventory across the Supply Chain 145Keeping track of the pipeline inventory 145Setting service levels with multiple suppliers 147Chapter 9: Planning for Successful Operations 149Planning from the Top Down 150Determining corporate strategy 150Preparing for success 151Executing the plan 153Exploring the Components of an Aggregate Plan 153Putting together a plan 154Creating the master schedule 154Considering Materials 156Gathering information for the system 156Getting system results 157Planning for Services 159Seeing the difference in services 159Establishing the service plan 160Applying Information to the Entire Organization 161Part 3: Improving Operations 163Chapter 10: Becoming Lean 165Evolving to Lean 165Mastering the craft 166Producing in mass 167Trimming the Fat 170Eliminating the waste 170Involving everyone 171Leveling production 171Embracing your supplier 174Focusing on quality 175Implementing continuous improvement 176Producing Just in Time 176Knowing when to work 177Differentiating the customer interface 178Implementing pull 178Knowing when to JIT 180Seeking the Silver Bullet 181Chapter 11: Proofing against Disruption 183Understanding Disruptions 184Planning for Disruption 187Knowing your supply chain and operations 187Using new technology 187Planning for scenarios collaboratively 188Investing in Relationships 188Fattening the Supply Chain 189Stockpiling inventory 189Maintaining stand-by capacity 190Exploiting flexible capacity 190Redesigning Your Product and Process 191Designing for multiple parts 191Designing for multiple processes 191Replacing labor with autonomy 191Protecting against Cyberhacking 192Mixing and Matching Strategies 192Chapter 12: Managing Quality 193Deciding What Matters 193Recognizing the Value of Quality 196Assessing the cost of failure 196Detecting defects 197Getting the perks of high quality 198Preventing defects in the first place 199Addressing Quality 199Considering the customer 200Getting all hands on deck 200Sticking to the improvement effort 201Designing for Quality 202Starting with the end in mind 202Cascading to production 205Measuring Quality 205Understanding variation 206Measuring “goodness” of a process 207Controlling processes 210Chapter 13: Creating a Quality Organization 215Reaching Beyond Traditional Improvement Programs 216Multiplying failures 216Raising the bar 218Varying skill levels 218Adding to the Tool Box 219Defining the problem 220Measuring the process 221Analyzing the problem 221Implementing a solution 227Maintaining the gain 229Overcoming Obstacles 230Failing to focus 230Prioritizing into paralysis 231Avoiding the lure of magical solutions 231Lacking employee involvement 232Knowing what to do 232Learning from the experience 232Calling it a program 233Giving up 233Part 4: Managing the Supply Chain 235Chapter 14: Understanding Supply Chain Basics 237Seeing the Structure of Supply Chains 238Getting through the tiers 239Linking in support services 239Aligning the Supply Chain with Business Strategy 240Defining product demand 241Choosing the right supply chain strategy 241Exploring the Bullwhip Effect 243Finding the bullwhip triggers 244Dodging the bullwhip 247Improving Supply Chain Management 249Communicating better 249Outsourcing inventory management 249Simplifying the chain by consolidating shipments 250Chapter 15: Sourcing Strategically 253Seeing the Upsides and Downsides of Outsourcing 253Benefiting from the pros 254Avoiding the cons 255Getting Down to the Basics 257Figuring out what to outsource 258Choosing the right partner 259Developing a lasting relationship 262Integrating the product 264Chapter 16: Digitalizing the Supply Chain 267Navigating the Digital World 268Defining the difference between digitizing and digitalizing 268Realizing the benefits 268Mapping a Digital Strategy 269Undergoing a digital transformation 270Selecting the best solution 271Chapter 17: Scaling throughout the Product Life Cycle 273Managing Operations Age-Appropriately 273Swooning over the Baby 275Keeping capacity flexible to minimize inventory during unpredictable demand 275Designing a supply chain for a new product 277Defining a market with no competitors 278Avoiding failure in incubation 278Surviving the Awkward Stage of Quick Growth 279Balancing Capacity and inventory for growing demand 279Growing your supply chain 281Distinguishing your product from competitors’ products 281Getting Comfortable with Market Maturity 282Exploiting capacity and optimizing inventory for steady demand 282Balancing a mature supply chain 283Preparing for the End 283Emerging Anew 284Repositioning 284Making improvements 285Changing the product portfolio 285Managing Start-up Operations 286Operating on a shoestring 287Transitioning to growth 287Part 5: Managing Projects 289Chapter 18: Leading Successful Projects 291Defining Success 292Prioritizing criteria 292Seeing the interaction of factors 293Figuring Out Why Projects Fail 295Laying Out the Project Management Life Cycle 296Detailing the phases of the cycle 296Deciding to go or not to go 298Documenting the project 300Leading a Project 300Developing a project proposal with a team 301Communicating with stakeholders 302Keeping stakeholders in the loop 303Managing the team 303Chapter 19: Estimating and Scheduling Projects 307Estimating Time and Cost 308Compiling a list of tasks 308Adding up the project costs 312Timing: The critical path 314Assigning tasks 319Presenting the schedule 320Working with Uncertainty 321Estimating with ranges 321Using historical data 321Relying on expert knowledge 326Putting It All Together 328Avoiding the estimation dance 328Accelerating the project 329Chapter 20: Becoming Agile 331Escaping the Waterfall 332Deciding on Agile 333Gearing Up for Agile 334Sprinting through the Project 335Planning the sprint 336Standing up with scrum meetings 339Rinsing, washing, and repeating 340Avoiding Common Agile Mistakes 342Starting without planning 343Ignoring Waterfall skills 343Combining Agile and Waterfall 344Chapter 21: Responding to Risks That Threaten Your Project 345Tracking Project Progress 346Assessing earned value 346Earning value over time 349Monitoring the metrics: Who’s responsible? 351Realizing your project’s in trouble 351Planning Ahead with Risk Registers 354Knowing what can go wrong 355Prioritizing risks 356Developing a contingency plan 358Responding Productively to Risk 361Staying productive: Parkinson’s Law 361Recovering from delays: Brook’s Law and Homer’s Law 362Delay the project 364Sacrificing functionality 364Part 6: The Part of Tens 365Chapter 22: Ten Pivotal Operations Management Developments 367Logistics 367Division of Labor 368Interchangeable Parts 368Scientific Management and Mass Production 369Statistical Quality Control 369Lean Manufacturing 370Scientific Project Planning 370Supply Chain Management 371Computerized Supply Chain Coordination 371Electronic Commerce 372Chapter 23: Ten Mistakes That New Operations Managers Make 373Beginning an Improvement Journey without Knowing your Process 373Creating Overly Complex Processes 374Missing the Real Bottleneck 375Managing Based on Utilization 375Not Standardizing 375Automating Bad Processes 376Misdefining Quality 376Improving Process through “Big Bangs” rather than Continuous Improvement 377Not Doing Enough Project Planning Upfront 377Not Focusing on the Customer 378Chapter 24: Ten Traits of World-Class Operations 379Knowing Thyself 379Possessing Profound Knowledge of the Customer 380Focusing Intensely on Quality 380Adapting to Change 381Getting Better All the Time 381Appreciating Employees 381Paying Constant Attention to Product Offerings 382Using Relevant Process Metrics 382Balancing Respect and Expectations for the Supply Chain 382Avoiding Unnecessary Complexity 383Index 385