Introduction: What is Operations Management?
Operations is how we make things run: it is how McDonalds is able to serve a chicken sandwich in just a few minutes or how Amazon manages an inventory that delivers anything a customer wants right in front of a customer in just 2 days. Without efficient and effective operations management, companies and businesses are unable to sustain and go bankrupt. Conversely, good operations management means good survival.
So what exactly does Operations Management consist of? To start off, inventory, manufacturing, queuing, and quality control systems are primary functions that any operations engineer or manager should be concerned with. With a well balanced, efficient system, it is possible to make more products and services while consuming less resources, improving customer satisfaction, and ensuring quality control. These functions will be discussed in this blog post.
Inventory Management is tricky. Inventory provides insurance to a company and ensures that a company is able to provide the goods to a customer when needed. Inventory cost can be costly: net profits result from revenue, holding costs, ordering costs, or lost opportunity due to stocking out. While having too little inventory is risky, having too much inventory is a detriment due to holding costs, maintenance, and security. Nevertheless there are many benefits including pushing for economies of scale and preparing for anticipated sales such as the holiday season.
It is important for operations engineers and managers to consider how inventory should be present to meet the expected demand of consumers. There are many factors to consider including: demand, purchase timing, purchase levels, purchase price, shipping, storage , security, waste, and inventory consumption rates. Operations engineers and managers typically strive for the economic order quantity, or in other words, the order size that will result in the least total inventory cost.
There are many types of strategies to get to a finished good or product, and how operations managers lay it out can determine its effectiveness. Basic models of production include Make-To-Stock, Make-To-Order, and Make-To-Assemble. Make-To-Stock production allows for an inventory of finished goods which allow for short service times such as a pizzeria. Make-To-Order does not allow for an inventory of finished goods, but does offer more variety of options, which is great for a more general restaurant. Finally, there is Make-To-Assemble in which the finished good is assembled throughout the order allowing for fast, and flexible production. A great example for a Make-To-Assemble production model is Chipotle.
In addition to the strategy, how it is implemented and what environment is set contributes to its effectiveness. There are different types of production facility layouts such as Line Flow Layout, Continuous-Flow, and Flexible Flow Layout each with its own pros and cons. An assembly line is only as strong as its weakest link so bottlenecks in an assembly are where operations engineers and managers need to focus on optimizing. Lean Manufacturing and Six Sigma Methods are strategies to further improvement upon manufacturing operations.
Nobody likes waiting on lines, but queues are a necessary evil for successful operations. Having too many servers would be a poor waste of financial and time resources while having too few will anger customers. As an operations engineer or manager, the goal is to find a perfect balance between the customers, employees, and business.
There are different types of queues: single server, multi-server, and many other complex queuing systems. In a simple operations model, adding more servers will significantly decrease queue times. Using customer arrival rates (CAR), and employee service rate (ESR), operations engineers and managers can better optimize the queue. For example, by simply dividing the CAR by ESR, that would indicate the average percent of time an employee is expected to be busy assisting the queue.
Quality Control Management:
Quality Control Management is the least mathematical of operations management as quality is subjective to consumers by how they view and define their sense of value. Operations engineers and managers should understand the market: understand customer needs, meet their values, and exceed their expectations. Furthermore, their products or services should be of value in all different types of dimensions.
Reliability is a big concern in Quality Control Management. Reducing rates of failure prevents returns and will ensure customer satisfaction. A product’s reliability is only as good as its weakest subpart/subcomponent reliability, thus a simple is important to reduce complexity. Six Sigma and Lean Six Sigma are process strategies that aim to achieve a free-of-defect rate of 99.99966% of all opportunities. These steps are to define. measure, analyze, improve control of the system.
Applying Operations Management to the Shapiro Design Lab:
Operations Management can even be applied to how the Shapiro Design Lab operates throughout the school year. The Shapiro Design Lab is service to its patrons but also faces limitations of resources and time of a traditional business, and especially as it continues to grow its presence on campus.
Some of the many desirable equipment in the Shapiro Design Lab are the audio, editing, and 3D printing equipment. As of January 2020, all resources are not time constrained, so servicing times are variables that can be more difficult to model. When one or two printer goes down, the 3D printing capacity is greatly decreased which could satisfy patrons who may be turned away or not be serviced as soon as possible. In addition, since our 3D printer do not operate by online server automation (similar to robotic automation), 3D printing is limited to the day time open lab hours where a Design Lab intern is needed to assist the patron.
Other examples of ways we can improve upon the Shapiro Design Lab in an operations standpoint is by examining our inventory (3D filament, Laser Cutting Materials, Dry Erase Markers to name a few), the necessary number of employees needed for a given time of day to service patrons, and how the space and facility can be better configured to support customers, and lab staff. Lean Engineering techniques can also be applied to the lab to reduce waste.
As an Industrial & Operations Engineering student, I enjoyed learning all of the following information from Eddie Davila’s LinkedIn Learning Course, “Operations Management Foundations.” Although I don’t think I will necessarily becoming an Operations Engineer or Manager in the future, it is interesting to think about how things can be optimized. Operations Management is not only a business engineering tool, but also one that can be used in one’s personal life. In what ways can you better “operate” your daily life?