Operations and Productivity

Operations and Productivity

DR. SUYANTO, SE, MM, MAk ALAMAT : Perumahan : Kota Kembang Depok Raya Sektor Melati Blok F1 No. 3 RT 05/05 Jatimulya, Sukmajaya, Kota Depok 16413 Telephone : 021-87913345, Fax. 021-87913347 Mobile Phone : 0811-952956, 0813-14222230 Flexi : 021-7024 4569, 7027 7997 E-mail : [email protected] 2006 Prentice Hall, Inc. 11 MANAJEMEN OPERASI DAN STRATEGI DALAM MENGHADAPI PERSAINGAN (Studi Kasus : ) BAB I : PENDAHULUAN I.1. Latar Belakang Masalah I.2. Permasalahan I.3. Ruang Lingkup BAB II : PEMBAHASAN

II.1. Landasan Teori II.2. Analisa Masalah (SWOT Analysis) II.3. Pemecahan Masalah (Problem Solving) PENUTUP III.1. Kesimpulan III.2. Saran Daftar Pustaka Lampiran 2006 Prentice Hall, Inc. 12 Good Corporate Governance Governance: Mengatur/Mengelola -- accountable Bad Governance rendahnya akuntabilitas Good Governance accountable

Definisi: Komite Cadburry: keseimbangan antara kekuatan & kewenangan akuntabilitas kpd share/stakeholders OECD: akuntabilitas kpd shareholders via proses pengambilan keputusan yg bernilai tambah (transparan, responsible, accountable, dan fairness). ADB: accountability, transparency, predictability, & participation 2006 Prentice Hall, Inc. 13 Key aspect GCG Struktur yg mengatur hubungan yg harmonis tentang Dekom, Direksi, RUPS, & stakeholeders

Sistem check & balance ttg perimbangan kewenangan atas pengendalian perusahaan utk mencegah pengelolaan yg salah & penyalahgunaan asset Proses yg transparan atas penentuan/pencapaian tujuan perusahaan & pengukuran kinerja. 2006 Prentice Hall, Inc. 14 Tujuan GCG Melindungi hak & kepentingan share/stakeholders

Meningkatkan nilai perusahaan Meningkatkan efisiensi & efektifitas Meningkatkan mutu hubungan berbagai elemen organisasi di perusahaan 2006 Prentice Hall, Inc. 15 Manfaat GCG: Mengurangi agency cost

Mengurangi cost of capital Meningkatkan nilai saham perusahaan Menciptakan dukungan dari para stakeholders Lingkup: Extern sistem hukum Intern Budaya perusahaan 2006 Prentice Hall, Inc. 16 Prinsip GCG (OECD):

Transparency Accountability Responsibility Independency Fairness 2006 Prentice Hall, Inc. 17 Operations

Management Chapter 1 Operations and Productivity PowerPoint presentation to accompany Heizer/Render Principles of Operations Management, 6e Operations Management, 8e 2006 Prentice Hall, Inc. Hall, Inc. 2006 Prentice 18 Outline Global Company Profile: Hard Rock Cafe What Is Operations Management? Organizing To Produce Goods And Services Why Study OM? What Operations Managers Do

How This Book Is Organized 2006 Prentice Hall, Inc. 19 Outline - Continued The Heritage Of Operations Management Operations In The Service Sector Differences Between Goods And Services Growth Of Services Service Pay Exciting New Trends In Operations Management 2006 Prentice Hall, Inc. 1 10 Outline - Continued The Productivity Challenge Productivity Measurement Productivity Variables

Productivity And The Service Sector Ethics And Social Responsibility 2006 Prentice Hall, Inc. 1 11 Learning Objectives When you complete this chapter, you should be able to: Identify or Define: Production and productivity Operations management (OM) What operations managers do Services 2006 Prentice Hall, Inc. 1 12 Learning Objectives When you complete this chapter, you should be able to: Describe or Explain :

A brief history of operations management Career opportunities in operations management The future of the discipline Measuring productivity 2006 Prentice Hall, Inc. 1 13 The Hard Rock Cafe First opened in 1971 Now 110 restaurants in over 40 countries Rock music memorabilia Creates value in the form of good food and entertainment 3,500+ custom meals per day in Orlando How does an item get on the menu? Role of the Operations Manager 2006 Prentice Hall, Inc. 1 14

What Is Operations Management? Production is the creation of goods and services Operations management (OM) is the set of activities that creates value in the form of goods and services by transforming inputs into outputs 2006 Prentice Hall, Inc. 1 15 Organizing to Produce Goods and Services Essential functions: Marketing generates demand Production/operations creates the product Finance/accounting tracks how well the organization is doing, pays bills, collects the money

2006 Prentice Hall, Inc. 1 16 Organizational Charts Commercial Bank Operations Finance Marketing Teller Scheduling Check Clearing Collection Transaction processing Facilities design/ layout Vault operations Maintenance Security

Investments Security Real estate Loans Commercial Industrial Financial Personal Mortgage Accounting Auditing Trust Department Figure 1.1(A) 2006 Prentice Hall, Inc. 1 17 Organizational Charts Airline Operations

Ground support equipment Maintenance Ground Operations Facility maintenance Catering Flight Operations Crew scheduling Flying Communications Dispatching Management science 2006 Prentice Hall, Inc. Finance/ accounting Accounting Payables Receivables General Ledger Finance Cash control International

exchange Marketing Traffic administration Reservations Schedules Tariffs (pricing) Sales Advertising Figure 1.1(B) 1 18 Organizational Charts Manufacturing Operations Facilities Construction; maintenance Production and inventory control Scheduling; materials control

Quality assurance and control Supply-chain management Manufacturing Tooling; fabrication; assembly Design Product development and design Detailed product specifications Industrial engineering Efficient use of machines, space, and personnel Process analysis Development and installation of production tools and equipment 2006 Prentice Hall, Inc. Finance/

accounting Disbursements/ credits Receivables Payables General ledger Funds Management Money market International exchange Capital requirements Stock issue Bond issue and recall Marketing Sales promotion Advertising Sales Market research Figure 1.1(C)

1 19 Why Study OM? OM is one of three major functions (marketing, finance, and operations) of any organization We want (and need) to know how goods and services are produced We want to understand what operations managers do OM is such a costly part of an organization 2006 Prentice Hall, Inc. 1 20 Options for Increasing Contribution Marketing Option Current Sales Cost of Goods

Gross Margin Finance Costs Subtotal Taxes at 25% Contribution 2006 Prentice Hall, Inc. $100,000 80,000 20,000 6,000 14,000 3,500 $ 10,500 Finance/ Accounting Option Increase Reduce Sales Finance

Revenue 50% Costs 50% $150,000 120,000 30,000 6,000 24,000 6,000 $ 18,000 $100,000 80,000 20,000 3,000 17,000 4,250 $ 12,750 OM Option Reduce Production Costs 20% $100,000 64,000

36,000 6,000 30,000 7,500 $ 22,500 1 21 What Operations Managers Do Basic Management Functions Planning Organizing Staffing Leading Controlling 2006 Prentice Hall, Inc. 1 22 Ten Critical Decisions Ten Decision Areas Service and product design Quality management

Process and capacity design Location Layout design Human resources, job design Supply-chain management Inventory management Scheduling Maintenance 2006 Prentice Hall, Inc. Chapter(s) 5 6 6 Supplement 7 7 Supplement 8 9 10 10 Supplement 11

11 Supplement 12, 14, 16 13, 15 17 Table 1.2 1 23 The Critical Decisions Service and product design What good or service should we offer? How should we design these products and services? Quality management How do we define quality? Who is responsible for quality? Table 1.2 (cont.) 2006 Prentice Hall, Inc. 1 24 The Critical Decisions

Process and capacity design What process and what capacity will these products require? What equipment and technology is necessary for these processes? Location Where should we put the facility? On what criteria should we base the location decision? Table 1.2 (cont.) 2006 Prentice Hall, Inc. 1 25 The Critical Decisions Layout design How should we arrange the facility and material flow? How large must the facility be to meet our plan? Human resources and job design How do we provide a reasonable work

environment? How much can we expect our employees to produce? Table 1.2 (cont.) 2006 Prentice Hall, Inc. 1 26 The Critical Decisions Supply-chain management Should we make or buy this component? Who are our suppliers and who can integrate into our e-commerce program? Inventory, material requirements planning, and JIT How much inventory of each item should we have? When do we re-order? Table 1.2 (cont.) 2006 Prentice Hall, Inc. 1 27

The Critical Decisions Intermediate and shortterm scheduling Are we better off keeping people on the payroll during slowdowns? Which jobs do we perform next? Maintenance Who is responsible for maintenance? When do we do maintenance? Table 1.2 (cont.) 2006 Prentice Hall, Inc. 1 28 Where are the OM Jobs? 2006 Prentice Hall, Inc. Figure 1.2 1 29 Where are the OM Jobs?

2006 Prentice Hall, Inc. Technology/methods Facilities/space utilization Strategic issues Response time People/team development Customer service Quality Cost reduction Inventory reduction Productivity improvement 1 30

Significant Events in OM Figure 1.3 2006 Prentice Hall, Inc. 1 31 The Heritage of OM Division of labor (Adam Smith 1776; Charles Babbage 1852) Standardized parts (Whitney 1800) Scientific Management (Taylor 1881) Coordinated assembly line (Ford/ Sorenson/Avery 1913) Gantt charts (Gantt 1916) Motion study (Frank and Lillian Gilbreth 1922) Quality control (Shewhart 1924; Deming 1950) 2006 Prentice Hall, Inc. 1 32 The Heritage of OM

Computer (Atanasoff 1938) CPM/PERT (DuPont 1957) Material requirements planning (Orlicky 1960) Computer aided design (CAD 1970) Flexible manufacturing system (FMS 1975) Baldrige Quality Awards (1980) Computer integrated manufacturing (1990) Globalization (1992) Internet (1995) 2006 Prentice Hall, Inc. 1 33 Eli Whitney Born 1765; died 1825 In 1798, received government contract to make 10,000 muskets Showed that machine tools could make standardized parts to exact specifications Musket parts could be used in any musket 2006 Prentice Hall, Inc.

1 34 Frederick W. Taylor Born 1856; died 1915 Known as father of scientific management In 1881, as chief engineer for Midvale Steel, studied how tasks were done Began first motion and time studies Created efficiency principles 2006 Prentice Hall, Inc. 1 35 Taylors Principles Management Should Take More Responsibility for: Matching employees to right job Providing the proper training Providing proper work methods and tools

Establishing legitimate incentives for work to be accomplished 2006 Prentice Hall, Inc. 1 36 Frank & Lillian Gilbreth Frank (1868-1924); Lillian (1878-1972) Husband-and-wife engineering team Further developed work measurement methods Applied efficiency methods to their home and 12 children! Book & Movie: Cheaper by the Dozen, book: Bells on Their Toes 2006 Prentice Hall, Inc. 1 37 Henry Ford Born 1863; died 1947 In 1903, created Ford Motor Company In 1913, first used moving assembly

line to make Model T Unfinished product moved by conveyor past work station Paid workers very well for 1911 ($5/day!) 2006 Prentice Hall, Inc. 1 38 W. Edwards Deming Born 1900; died 1993 Engineer and physicist Credited with teaching Japan quality control methods in postWW2 Used statistics to analyze process His methods involve workers in decisions 2006 Prentice Hall, Inc. 1 39 Contributions From Human factors

Industrial engineering Management science Biological science Physical sciences Information science 2006 Prentice Hall, Inc. 1 40 New Challenges in OM From Local or national focus Batch shipments Low bid purchasing Lengthy product development Standard products Job specialization 2006 Prentice Hall, Inc. To Global focus Just-in-time

Supply chain partnering Rapid product development, alliances Mass customization Empowered employees, teams 1 41 Characteristics of Goods Tangible product Consistent product definition Production usually separate from consumption Can be inventoried Low customer interaction 2006 Prentice Hall, Inc. 1 42

Characteristics of Service Intangible product Produced and consumed at same time Often unique High customer interaction Inconsistent product definition Often knowledge-based Frequently dispersed 2006 Prentice Hall, Inc. 1 43 Industry and Services as Percentage of GDP 90 Services 80

Manufacturing 70 60 50 40 30 20 2006 Prentice Hall, Inc. US UK Spain South Africa Russian Fed Mexico Japan

Hong Kong Germany France Czech Rep China Canada 0 Australia 10 1 44 Goods Versus Services Attributes of Goods (Tangible Product)

Attributes of Services (Intangible Product) Can be resold Can be inventoried Some aspects of quality measurable Selling is distinct from production Product is transportable Reselling unusual Difficult to inventory Quality difficult to measure Site of facility important for cost Often easy to automate Revenue generated primarily from tangible product 2006 Prentice Hall, Inc. Selling is part of service Provider, not product, is

often transportable Site of facility important for customer contact Often difficult to automate Revenue generated primarily from the intangible service Table 1.3 1 45 Goods and Services Automobile Computer Installed carpeting Fast-food meal Restaurant meal/auto repair Hospital care Advertising agency/ investment management Consulting service/ teaching Counseling 100% |

75 | 50 | 25 | 0 | 25 | 50 | 75 | 100% |

Percent of Product that is a Good Percent of Product that is a Service Figure 1.4 2006 Prentice Hall, Inc. 1 46 Organizations in Each Sector Service Sector Example % of all Jobs Professional Services, Education, Legal, Medical Notre Dame University, San Diego Zoo, Arnold Palmer Hospital

25.5 Trade (retail, wholesale) Walgreens, Wal-Mart, Nordstroms 20.6 Utilities, Transportation Pacific Gas & Electric, American Airlines, Santa Fe R.R., Roadway Express 7.1 Table 1.4 2006 Prentice Hall, Inc. 1 47

Organizations in Each Sector Service Sector Example % of all Jobs Business and Repair Services Snelling and Snelling, Waste Management, Pitney-Bowes 6.9 Finance, Insurance, Real Estate Citicorp, American Express, Prudential,

Aetna, Trammel Crow 6.7 Food, Lodging, Entertainment McDonalds, Hard Rock Caf, Motel 6, Hilton Hotels, Walt Disney, Paramount Pictures 5.4 Public Administration U.S., State of Alabama, Cook County 4.5 Table 1.4 2006 Prentice Hall, Inc.

1 48 Organizations in Each Sector Manufacturing Sector Example % of all Jobs General General Electric, Ford, U.S. Steel, Intel 13.3 Construction Bechtel, McDermott 7.1

Agriculture King Ranch 2.5 Mining Homestake Mining 0.4 Sector Percent of all jobs Service 76.7% Manufacturing 23.3%

Table 1.4 2006 Prentice Hall, Inc. 1 49 Development of the Service Economy 100 90 Services 80 70 M an uf ac tu rin g

60 50 40 30 20 Agriculture 10 0 1800 1850 1900 1950 2000 Figure 1.5 (A) 2006 Prentice Hall, Inc. 1 50

30 150 25 Industrial production 125 20 Manufacturing employment 100 15 75 10 50

5 25 0 0 Index: 1997 = 100 Employment (millions) Development of the Service Economy Estimate 1950 1970 1990 2010

Figure 1.5 (B) 2006 Prentice Hall, Inc. 1 51 Development of the Service Economy United States Canada France Italy Britain Japan W. Germany 1970 2005 | | 40

50 | | 60 70 Percent | 80 Figure 1.5 (C) 2006 Prentice Hall, Inc. 1 52 New Trends in OM Past Causes

Future Local or national focus Low-cost, reliable worldwide communication and transportation networks Global focus Batch (large) shipments Short product life cycles and cost of capital put pressure on reducing inventory Just-in-time shipments

Low-bid purchasing Quality emphasis requires that suppliers be engaged in product improvement Supplychain partners, Enterprise Resource Planning, e-commerce Figure 1.6 2006 Prentice Hall, Inc. 1 53 New Trends in OM Past Causes

Future Lengthy product development Shorter life cycles, Internet, rapid international communication, computeraided design, and international collaboration Rapid product development, alliances, collaborative designs Standardized products Affluence and worldwide markets; increasingly flexible production

processes Mass customization with added emphasis on quality Job specialization Changing socioculture milieu; increasingly a knowledge and information society Empowered employees, teams, and lean production Figure 1.6 2006 Prentice Hall, Inc.

1 54 New Trends in OM Past Low-cost focus Causes Environmental issues, ISO 14000, increasing disposal costs Future Environmentally sensitive production, green manufacturing, recycled materials, remanufacturing Figure 1.6

2006 Prentice Hall, Inc. 1 55 Productivity Challenge Productivity is the ratio of outputs (goods and services) divided by the inputs (resources such as labor and capital) The objective is to improve this measure of efficiency Important Note! Production is a measure of output only and not a measure of efficiency 2006 Prentice Hall, Inc. 1 56 The Economic System Inputs Processes Outputs

Labor, capital, management The U.S. economic system transforms inputs to outputs at about an annual 2.5% increase in productivity per year. The productivity increase is the result of a mix of capital (38% of 2.5%), labor (10% of 2.5%), and management (52% of 2.5%). Goods and services Feedback loop Figure 1.7 2006 Prentice Hall, Inc. 1 57

Increasing Productivity The LA Motor Pool Before: Cost $120 million annually 21,000 vehicles 30% of the 900 trash trucks were in repair 11% of police cars were in repair Actions: Created team assignments Assigned parking places for trucks Tires checked and trucks emptied each night Standard customer pickups established Computerized fleet management Mechanics moved to night shift 2006 Prentice Hall, Inc. 1 58 Increasing Productivity The LA Motor Pool Before: Cost $120 million annually Results: 21,000 vehicles

30% of thefleet 900 reduced garbage by trucks were in repair Total 500 vehicles 11% of police cars were in repair Parts inventory dropped 20% reducing Actions: cost by $5.4 million annually Creating team assignments Standardized pickups reduced costs by Assigned parking places for trucks $12 million annually Tire checked and trucks emptied each night Out ofcustomer service garbage dropped Standard pickupstrucks

established to 18% Computerized fleet management Mechanics moved to night shift 2006 Prentice Hall, Inc. 1 59 Productivity Units produced Productivity = Input used Measure of process improvement Represents output relative to input Only through productivity increases can our standard of living improve 2006 Prentice Hall, Inc. 1 60 Productivity Calculations Labor Productivity Units produced

Productivity = Labor-hours used 1,000 = = 4 units/labor-hour 250 2006 Prentice Hall, Inc. 1 61 Multi-Factor Productivity Output Productivity = Labor + Material + Energy + Capital + Miscellaneous Also known as total factor productivity Output and inputs are often expressed in dollars 2006 Prentice Hall, Inc. 1 62 Collins Title Productivity

Old System: Staff of 4 works 8 hrs/day Payroll cost = $640/day 8 titles/day Overhead = $400/day 8 titles/day Old labor productivity = 32 labor-hrs 2006 Prentice Hall, Inc. 1 63 Collins Title Productivity Old System: Staff of 4 works 8 hrs/day Payroll cost = $640/day 8 titles/day Overhead = $400/day 8 titles/day

Old labor productivity = 32 labor-hrs = .25 titles/labor-hr 2006 Prentice Hall, Inc. 1 64 Collins Title Productivity Old System: Staff of 4 works 8 hrs/day Payroll cost = $640/day New System: 14 titles/day 8 titles/day Overhead = $400/day Overhead = $800/day 8 titles/day Old labor productivity = 32 labor-hrs = .25 titles/labor-hr 14 titles/day New labor productivity = 32 labor-hrs

2006 Prentice Hall, Inc. 1 65 Collins Title Productivity Old System: Staff of 4 works 8 hrs/day Payroll cost = $640/day New System: 14 titles/day 8 titles/day Overhead = $400/day Overhead = $800/day 8 titles/day Old labor productivity = 32 labor-hrs = .25 titles/labor-hr 14 titles/day New labor productivity = 32 labor-hrs = .4375 titles/labor-hr 2006 Prentice Hall, Inc. 1 66

Collins Title Productivity Old System: Staff of 4 works 8 hrs/day Payroll cost = $640/day New System: 14 titles/day 8 titles/day Overhead = $400/day Overhead = $800/day 8 titles/day Old multifactor productivity = $640 + 400 2006 Prentice Hall, Inc. 1 67 Collins Title Productivity Old System: Staff of 4 works 8 hrs/day Payroll cost = $640/day

New System: 14 titles/day 8 titles/day Overhead = $400/day Overhead = $800/day 8 titles/day Old multifactor productivity = $640 + 400 = .0077 titles/dollar 2006 Prentice Hall, Inc. 1 68 Collins Title Productivity Old System: Staff of 4 works 8 hrs/day Payroll cost = $640/day New System: 14 titles/day 8 titles/day Overhead = $400/day

Overhead = $800/day 8 titles/day Old multifactor productivity = $640 + 400 = .0077 titles/dollar 14 titles/day New multifactor productivity = $640 + 800 2006 Prentice Hall, Inc. 1 69 Collins Title Productivity Old System: Staff of 4 works 8 hrs/day Payroll cost = $640/day New System: 14 titles/day 8 titles/day Overhead = $400/day Overhead = $800/day 8 titles/day

Old multifactor productivity = $640 + 400 = .0077 titles/dollar 14 titles/day New multifactor productivity = $640 + 800 = .0097 titles/dollar 2006 Prentice Hall, Inc. 1 70 Measurement Problems Quality may change while the quantity of inputs and outputs remains constant External elements may cause an increase or decrease in productivity Precise units of measure may be lacking 2006 Prentice Hall, Inc. 1 71 Productivity Variables Labor - contributes about 10% of

the annual increase Capital - contributes about 32% of the annual increase Management - contributes about 52% of the annual increase 2006 Prentice Hall, Inc. 1 72 Key Variables for Improved Labor Productivity Basic education appropriate for the labor force Diet of the labor force Social overhead that makes labor available Maintaining and enhancing skills in the midst of rapidly changing technology and knowledge 2006 Prentice Hall, Inc. 1 73

Labor Skills About half of the 17-year-olds in the US cannot correctly answer questions of this type Figure 1.8 2006 Prentice Hall, Inc. 1 74 Percent increase in mfg productivity Investment and Productivity in Selected Nations 10 8 Japan Belgium 6 Italy 4

2 Netherlands France Canada US 0 10 UK 15 20 25 30 35

Percentage investment 2006 Prentice Hall, Inc. 1 75 Service Productivity Typically labor intensive Frequently focused on unique individual attributes or desires Often an intellectual task performed by professionals Often difficult to mechanize Often difficult to evaluate for quality 2006 Prentice Hall, Inc. 1 76 Productivity at Taco Bell Improvements: Revised the menu Designed meals for easy preparation Shifted some preparation to suppliers Efficient layout and automation

Training and employee empowerment 2006 Prentice Hall, Inc. 1 77 Productivity at Taco Bell Improvements: Results: Revised the menu Designed meals for easy preparation Preparation time cut to 8 seconds Shifted some preparation to suppliers Management span of control Efficient layout and automation increased from 5 to 30 Training and employee empowerment In-store labor cut by 15 hours/day Stores handle twice the volume with half the labor Fast-food low-cost leader 2006 Prentice Hall, Inc.

1 78 Ethics and Social Responsibility Challenges facing operations managers: Developing safe quality products Maintaining a clean environment Providing a safe workplace Honoring community commitments 2006 Prentice Hall, Inc. 1 79

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