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Lecture Notes on Project Management - Operations Management | MGT 301, Study notes of Production and Operations Management

Bryant UniversityProduction and Operations Management
Prof. Glenn A. Jefferson

Material Type: Notes; Professor: Jefferson; Class: Operations Management; Subject: Management; University: Bryant University; Term: Fall 2009;

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Chapter 7 Project Management
DEFINITION
Project- series of related jobs or tasks focused on the completion of an overall objective,
doing a unique thing Ex. contractor building a house.
Project management- involves the planning, directing and controlling resources (people,
equipment, material) to meet the technical, cost and time constraints of the project.
Differences between managing ongoing processes and managing projects: organizational
structure, types of tasks (effective project management requires constant monitoring,
updating, and re-planning throughout the life).
Project starts out as a statement of work- written as a description of the objectives to be
achieved.
Program- synonym for a project, although it can consist of several interrelated projects Ex.
introduction of a new healthcare system.
-tasks or activities are subdivisions of a project, not longer than several months and
performed by one group or organization.
-subtask may be used if needed to further subdivide the project.
-work package is a group of activities combined to be assignable to a single organizational
unit.
Milestones- specific major events to be completed at certain times in the project.
Work Breakdown Structure.
Work breakdown structure- method by which a project is divided into tasks and subtasks.
A good structure: allows activities to be worked on independently, makes activities
manageable in size, gives authority to carry out the program, monitors and measures the
program and provides the required resources.
Steps to making something successfully with number one being defining what you want.
CONSIDERATIONS
Role of the Project Manager.
Have a unique role within the traditional organization structure.
Involve people with a wide variety of skills from different organizational units.
Must create a collaborative work environment.
Keep a team motivated and resolve team conflicts.
Development Stages of Teamwork.
1. Forming
2. Storming
3. Norming
4. Performing
5. Adjourning
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Chapter 7 Project Management

DEFINITION

 Project- series of related jobs or tasks focused on the completion of an overall objective, doing a unique thing Ex. contractor building a house.  Project management- involves the planning, directing and controlling resources (people, equipment, material) to meet the technical, cost and time constraints of the project.  Differences between managing ongoing processes and managing projects: organizational structure, types of tasks (effective project management requires constant monitoring, updating, and re-planning throughout the life).  Project starts out as a statement of work- written as a description of the objectives to be achieved.  Program- synonym for a project, although it can consist of several interrelated projects Ex. introduction of a new healthcare system. -tasks or activities are subdivisions of a project, not longer than several months and performed by one group or organization. -subtask may be used if needed to further subdivide the project. -work package is a group of activities combined to be assignable to a single organizational unit.  Milestones- specific major events to be completed at certain times in the project. Work Breakdown Structure.  Work breakdown structure- method by which a project is divided into tasks and subtasks.  A good structure: allows activities to be worked on independently, makes activities manageable in size, gives authority to carry out the program, monitors and measures the program and provides the required resources.  Steps to making something successfully with number one being defining what you want. CONSIDERATIONS Role of the Project Manager.  Have a unique role within the traditional organization structure.  Involve people with a wide variety of skills from different organizational units.  Must create a collaborative work environment.  Keep a team motivated and resolve team conflicts. Development Stages of Teamwork.

  1. Forming
  2. Storming
  3. Norming
  4. Performing
  5. Adjourning

High Team Performance.  Most work in modern times is done in teams.  Following factors are critical for a successful project team:

  1. Task-related variables- direct measures of task performance such as the ability to produce quality results on time and within budget, innovative performance and the ability to change.
  2. People-related variables- affect the inner workings of the team and include good communication, high involvement, the capacity to resolve conflict, and mutual trust and commitment to project objectives.
  3. Leadership variables- associated with the various leadership positions within the project team. Leaders can be appointed project managers and task leaders, or they emerge dynamically based on expertise, trust, respect, credibility, friendship and empathy. Characteristics include ability to organize and direct task, facilitate group decision making, motivate, assist in conflict and problem resolution and create a work environment that satisfies the needs of the members.
  4. Organizational variables- include overall organizational climate, command-control- authority structure, policies, procedures, regulations and regional cultures, values and economic conditions.  Variables are problems or challenges that a team faces.  Barriers to high team performance: role conflicts and power struggles.  Different points of view are beneficial to a team and should not be considered a barrier because it prevents blindspots. PROJECT CONTROL  Graphics software has been written for most computers so management, the customer and the project manager have a wide choice of how data are presented.  Gantt Chart- graphical tool that shows the amount of time required for each activity and the sequence in which activities are to be performed.  Exhibit 7.3 A Sample of Graphic Project Reports  Planning and scheduling is important and these pictorial charts help make sure everything goes according to the plan.  Ex. Campbell’s soup: creating a new flavor. SOFTWARE  Necessity for today’s project managers.  Provide managers with fast updates on a frequent basis.  Divided into 2 groups: desktop products and web-enabled products.  Large cross-functional projects place additional requirements on both the project manager and the software. RELATE ISSUES Closing out and Evaluating Projects.  Project members must debrief, assess what worked well and what didn’t.  Process of managing a project is repeated, even though the actual project is not normally.
  1. Process velocity- (manufacturing velocity)  Process velocity = total throughput time / value-added time
  2. Performance- measures a workers ability to meet standards in a predetermined amount of time.  Performance = actual / budgeted work standard (labor cost)  Direct labor- actually added value to a product ex. machinists, engineers.  Indirect labor- people needed that don’t add value ex. janitors, truckers.
  3. Efficiency- measures a supervisor’s ability to provide direct labor people with direct labor activities.  Efficiency = actual direct / budgeted work standard + indirect labor Manufacturers have many options. ANALYSIS  Multistage process- process that consists of more than one step.  Hybrid process- multistage process that consists of more than one type of process.  Make-to-stock system- process for making highly standardized products for finished goods inventory. (more costly due to storage)  Made to order system- process for making customized products to meet individual customer requirements.  Modularization- use of standard components and subassemblies to produce customized products.  Bottleneck- stage or stages that limit total output of a process; line balancing. 1  2  3  4 100  100  *50  100  Material stacks up at stage 3, solutions can be to add people or replace them with machines.  Process flowchart- schematic diagram for describing a process.  See if you can disintermediate a step.  Service blueprint- process flow charts for services that includes the customer; line of visibility: all things above include customer, below do not; steps include identifying the process, isolating the fail points, establishing a time frame and analyzing profitability.  Fail-safing- designing a service process so as to make it error free or foolproof ex. bathroom door on airplane only lights up when door is locked. BENCHMARKING  Benchmarking- comparison of a company’s measures of performance with those of firms that are considered to be world class ex. FedEx - world class; LL Bean - processes information at order taking stage. What should be benchmarked.  Goods and services- identifies the features and functions desired by customers and then incorporated into product planning, design and development.  Business processes- provides the basis for business process improvement and reengineering.  Performance measures- goal of benchmarking is to establish and validate objectives for identified critical measures. Steps.
  1. Planning- identifies areas that should be benchmarked, organizations against which to benchmark, types of data and ways to collect the data.
  2. Analysis- obtaining an in-depth understanding of our firm’s existing practices and processes and organizations against which to benchmarking.
  3. Integration- use findings to define target areas to change.
  4. Action- findings and goals must be translated and incorporated into the existing process. Types.
  5. Internal- comparison among similar operations or processes within a firm’s organization; first step of documentation.
  6. Competitive- comparison of an organization’s performance and that of its best competitors; difficult because of unwillingness to share information.
  7. Functional- comparison with the best functional areas, regardless of industry.
  8. Generic- comparison of specific work processes that are virtually the same for all industries with these processes. REENGINEERING  Reengineering- process of rethinking and restructuring an organization.  Starting over; blank sheet of paper.  Can be done to a process or organization.  Technology advancements are a cornerstone.  Must be approved by management and fit into the corporate structure. CLASS NOTES 9-

Chapter 9 Quality Management

 Six Sigma- in order to run, maximum allowable defects should be 3.4 per million transactions.  Nominal differences allowable but within parameters (upper and lower control limits).  Quality control- inspecting quality between good and bad.  Process shift- change in size in sequential order means adjustment to machines must be made.  Quality assurance- making it right the first time (machine or employee checks parts as they are made); in order for this to occur, must teach employees and convince managers of its benefits. QUALITY GURUS  Quality gurus- individuals who have been identified as making a significant contribution to improving the quality of goods and services. Walter A. Shewart.  Developed a system that permitted workers to determine whether the variability of a process was truly random or due to assignable causes.  “In control” if it exhibited only random variation; if nonrandom variation, cause had to be identified and addressed.  Developed the “plan-do-check-act” cycle to emphasize need for continued improvement.

 Can reduce total overall cost by improving quality of processes.  Costs estimated as 25% of revenues for manufacture and 40% of operating expenses for service.  Could be less than 2.5% of sales. Genichi Taguchi.  Refinement of quality management philosophy and development of quality tools.  Engineering approach: focusing on design of experiments to improve yield and performance.  Emphasized minimal variation to reduce costs to firma and society.  External failure (Juran) must include cost to firm that ships defective product and firm that accepts it, customer that buys and uses it etc.  Engineering-philosophical perspective shows how much is lost when products doesn’t meet specifications. Kaoru Ishikawa.  Son of founder and first chairman of Japanese Union of Scientists and Engineers.  Developed problem solving tools: cause-and-effect diagram.  Father of quality circles.  Written about differences between Eastern and Western cultures.  “To practice quality control is to develop, design, produce and service a quality product which is most economical, useful and satisfactory to customer. DEFINITION  After WWII, quality viewed as defensive function.  Emphasis was on quality control: reducing customer complaints.  Reliance on identifying poor quality through inspection rather than preventing.  Cost incurring, therefore the assumption was that high quality is more costly.  Today, companies recognize strategic importance of quality.  Can identify new markets and increase market share. Goods Quality.  Dimensions of quality- elements of quality as perceived by customers by David Garvin.

  1. Performance: measure of product’s primary operating characteristics; compared to competition.
  2. Features: options that are offered with a product. Accessories.
  3. Reliability: relates to the probability that the product will not fail within a specified time; measured as mean time between failures or failure rate per unit of time or other measure of usage.
  4. Durability: relates to the expected operational life of a product; can be measured as the mean time to replacement.
  5. Conformance: meeting to design specifications is primarily process orientated; reflects how well the product and components meet establish standards.
  6. Serviceability: concerned with how readily a product can be repaired and speed, competence and courtesy associated with that repair; many times overlooked in design stage. Quick and easy to fix.
  7. Aesthetics: high degree of individual judgment and highly subjective; opportunity to create market niche. Style.
  1. Perceived Quality: directly related to the reputation of a firm; rely on past performance and reputation; like brand image. How company is viewed ex. Johnson and Johnson Tylenol Capsules- gained respect after “potassium cyanide” controversy in 1982 but Audi 5000- lost respect after “brake pedal worked as gas pedal” controversy in 1987 as well as Pepsi Cola- lost respect after “hypodermic needs in Pepsi cans” controversy in 1993. Methods to handling situations: something is wrong with the product and company fixes it, something is wrong with the product but company denies it.
  2. UPS to Germany: difficulties because it brought up bad memories about the “brown shirts” so used grey suits.
  3. UPS to France: difficult because truck drivers were hard to find since wine drinking is popular during meals and they could not drive drunk.
  4. UPS to Scotland: difficult because truck drivers would bring dogs or passengers for entertainment since radio was hard to find. These can bring a business to a stop; what matters? Service Quality.
  5. Reliability: (outcome) relates to ability to perform promised service dependably and accurately. Field service, test to make sure it works.
  6. Tangibles: (process) the physical aspects of service, include appearance of physical facilities, equipment, personnel and communications materials. Little things that make big differences. Go above and beyond to get increased revenues. (Thoreau- borrowed an ax then sharpened and cleaned it)
  7. Responsiveness: (process) the willingness of service providers to help customers and to provide prompt service.
  8. Assurance: (process) relates to the knowledge and courtesy of employees and ability to convey trust and confidence.
  9. Empathy: (process) ability to show caring, individualized attention to customers. Style of substance, bedside manner. COST  Cost of quality- framework for identifying quality components that are related to producing both high-quality and low-quality products with the goal of minimizing the total cost of quality.  Ranges from 15-25% of total cost of product.  Include waste, rework, inspections, recalls, customer allowances, complaint handling, excessive overtime and lost or wasted capacity  Divided into following categories:
  10. Cost of prevention- costs associated with the development of programs to prevent defectives from occurring in the first place; includes investments in machinery and technology, education and training programs, costs to administer program, data collection and data analysis. Lowest costs of quality, training, raw materials and instructions.
  11. Cost of detection/appraisal- costs associated with the test and inspection of subassemblies and products after they have been made; includes incoming material inspection, tests and inspection throughout transformation process, test equipment maintenance and products destroyed during destructive testing. Inspectors – indirect labor force, intermediate costs.

b. Conformance quality- defines how well the product is made with respect to its design specifications. c. Fitness for use- both design and conformance quality should provide products that meet the customer’s objectives for those products and it entails identifying dimensions of product that customer wants and developing a quality control program to ensure dimensions are included.  Companies have adopted several ways to implement TQM.  Edwards Fuchs causes for failure:

  1. Lack of focus on strategic planning and core competencies.
  2. Obsolete, outdated cultures.  Other reasons for failure:
  3. Lack of companywide definition of quality.
  4. Lack of formalized strategic plan for change.
  5. Lack of customer focus.
  6. Poor intra organizational communication.
  7. Lack of real employee empowerment.
  8. Lack of employee trust in senior management.
  9. View of quality program as a quick fix.
  10. Drive for short-term financial results.
  11. Political and turf issues. Six Sigma.  Six sigma- a statistically based structured methodology for identifying and eliminating cause of errors in a process. Look at the baseline and fix it. (68.2 %, 95.5% and 99.7%)  Introduced by Motorola.  Goal is to reduce process variation to the point where there are only 3.4 defects per million.  Especially important for those businesses such as services and high-volume manufacturing firms that involve a very large number of operations or transactions on a continuous basis.  Evolved into a management tool to reduce forms of waste.  Includes common language and set of goals used throughout organization.  Process referred to as DMAIC: define, measure, analyze, improve and control.  Requires commitment of top management and incentives.  Key employees “Black Belts” chosen to lead major improvements projects and trained in quantitative improvement tools using statistical software and in teamwork and communication.  Incorporated into services due to large number of transactions especially in financial services and health care. RECOGNITION AND REWARDS Malcolm Baldrige National Quality Award.  Passed in 1987 to recognize total quality management in American industry.  Represents government’s endorsement of quality as an essential part of successful business strategy.  Baldrige criteria- factors used to assess the overall quality of an organization and to determine the winners of the Malcolm Baldrige National Quality Award.

 Evaluated on three dimensions: the soundness of the approach or system, the deployment or integration of those systems throughout the entire organization and the results generated by those systems.  Baldrige criteria used to: help and design a total quality system, evaluate ongoing internal relationships among departments, divisions and functional units within an organization, assess and assist outside suppliers of goods and services to a company and assess customer satisfaction. ISO 9000  International Organization for Standardization published first standards in 1986.  ISO 9000 series quality standards- international set of standards for documenting the processes that an organization uses to produce goods and services.  Purpose to satisfy customer organization’s assurance requirements and increase level of confidence of customer organizations in suppliers.  Revisions made in 2000 to quality management systems.  First party, second party and third party certifications.  Say what you do (document everything and do a pre-audit), do what you say (follow your process guidelines)  Get provisional certification: 6 month, 1 year and 2 year.  European business plans: be certified.  Keep it up: can’t explain if it is lost.  A skill that is in demand.

Chapter 10 Lean Production

 Deadly wastes:

  1. Overproduction- producing more than is required by the market.
  2. Waiting time- workers who are idle because they have completed their work or who watch machines but cannot prevent problems.
  3. Transportation- moving materials between work stations without adding value.
  4. Processing- downtime because machines need maintenance or repair.
  5. Inventory- the costs associated with loss, obsolescence and damage to inventories as well as the cost of excess inventory itself.
  6. Motion- movement that is not related to adding value to the produce.
  7. Waste from product defects: the costs of scrap and rework and the costs associated with defective output reaching the customer.  Toyota Production System- developed in 1950s with roots in Japan also called lean production.  Lean descries a philosophy that uses a collection of tools and techniques to optimize time, human resources and assets while improving the quality level of products and services to their customers. FUNDAMENTALS  Lean production- an integrated set of activities designed to achieve high-volume flexible production using minimal inventories of raw materials.

WORKFORCE INVOLVEMENT

 Following factors important:

  1. Top management commitment.
  2. Supervisor involvement.
  3. Suggestion system administrator.
  4. Employee orientation and training.
  5. Suggestion program committee. ISSUES  Quality Management- closely linked, both must work well.  Supply Chain Management  Product Design- need standard product configurations and few, standardized parts.  Performance Measurement- need continuous improvement and anticipation of problems, performance measures emphasize number.  JIT systems evaluated by following factors:
  6. Trends in improvements, costs and productivity.
  7. Quality trends, improvement in process capability and improvement in quality procedures.
  8. Running to a level schedule and providing parts.
  9. Trends in departmental inventory levels.
  10. Staying within budget for expenses.

Chapter 11 Facility Location and Capacity

 Manufacturing large and heavy products = close to supplier.  Manufacturing small and light products = close to consumer.  Minimize distribution costs. What do you need? Qualitative Factors.  Local infrastructure- institutional and transportational.  Worker Education and Skills- must be highly educated, trained and equipped.  Product Content Requirements- requirement that a percentage of a product must be within a country for it to be sold there.  Political/Economic Stability- refers to the number and intensity of economic and political fluctuations that might occur there.  Repatriation of Profits Costs- requirements that money made in a place stay in that place. Quantitative Factors.  Labor costs- vary with location.  Distribution costs- more global, more costs; time also considered.  Facility costs- special economic zones- duty-free areas in a country established to attract foreign investment in the form of manufacturing facilities. King of situation when starting a

business; must negotiate things such as 10 years minimum of tax breaks, utility rates and labor costs. Know your operating costs.  Exchange rates  Tax Rates Don’t take things at face value! Service Facilities.  Types identified based upon degree and type of contact each has with customer.

  1. Facilities with direct customer contact. -actual presence of customer required. -brick-and-mortar operations- a front-of-the-house service that requires a physical structure to interact directly with the customer. -ex restaurants, hotels, branch offices of banks, hospitals and retail stores. -critical success factor: volume of sales a given location can generate.
  2. Facilities with indirect customer contact. -telephone call centers. -ex hotels, airlines, and car rental agencies. -normally call centers and websites are located in same facility.
  3. Facilities with no customer contact. -back-of-the-house- a service facility or part of a service process that does not come in contact with the customer.
    • categories: distribution of goods and distribution of information. -quasi-manufacturing operations- a service firm’s dedicated production and distribution facility that supplies its retail operations. Priorities of facilities:
  4. Safety
  5. Functionality
  6. Comfort
  7. Environment- simple and easy (whatever else it takes). Capacity.  Capacity flexibility- ability to provide a wide range of products and volumes with short lead times; achieved through flexible plants, processes, workers and use of external capacity.  Agile manufacturing- ability of a manufacturing process to respond quickly to changes in the marketplace.  Strategies
  8. Proactive- anticipating future growth and building facility.
  9. Neutral- middle of the road when demand is 50% of planned capacity.
  10. Reactive- not added until all of the planned output from facility can be sold. Break down maintenance.

Chapter 12 Facility Layouts

Need uninterrupted flow of materials to ensure efficiency.

 Steps of shifting from process to GT cellular layout:

  1. Grouping parts into families that follow common sequence of operations.
  2. Identifying dominant flow patterns of parts-families as basis for location of processes.
  3. Physically regrouping machines and processes into cells. SERVICE LAYOUTS  Goal to minimize travel time for workers and create and understandable flow for customers when they are directly involved in process.  Goal of management is greater profits. Types.
  4. Process layout ex emergency room in a hospital.
  5. Product layout ex cafeteria line with stations.
  6. Fixed-position layout ex automobile repair shops and operating room in a hospital.