SEATTLEUNIVERSITY
AlbersSchool of Business and Economics
MBA 518 Operations Management Winter 2005
INSTRUCTOR: Greg Magnan, Ph.D. ()
Web:
Pigott 426 / phone: 206.296.6466 / fax: 206.296.2083
OFFICE HRS:4:30 – 5:45 T, 4:30 – 5:30 TH (Bellevue), and by appointment.
CLASS TIME:5:30 – 8:10 TH (Bellevue)
MATERIALS:(1) CoursePack(from XanEdu, required)Go to:
see course web page and First Day Assignment for further directions.
(2) The Goal, by Eli Goldratt, 2nd Revised Edition, 1992, North River orLean Thinking by Womack & Jones, 1996, Simon & Schuster(this isrequired, but you’ll have to get books other than The Goal from an off-campus provider such as Amazon or Half-Price Books)
(3) Operations Management for MBAs, by Meredith & Schafer, 2nd Edition, 2002, Wiley (SU Bookstore: recommended)
Course Description
When customers place orders for products or services, the order is eventually routed to the firm’s operations function for production and delivery. Operations is one of the last functional areas to touch the product or service before it reaches the customer. Characteristics of the transaction—having the right product or service, at the right price, in the correct quantity, delivered on time, at the correct quality level, and to the right location—affect how the customer perceives the entire company.
Operations is also the function with greatest proportion of company assets and labor. As companies are increasingly being evaluated on value creation and using financial tools such as EVA, a well-run operations group can deliver significant returns through intelligent use of assets. Additionally, in most firms, 40 - 70% of incoming dollars flow directly to suppliers and the operations area (i.e., procurement) often has responsibility for the goods and services being purchased.
The ability of the operations function to efficiently manage the transformation process can deliver value to the company. Its effectiveness at managing the process can keep customers coming back.
Operations management (OM) generally refers to the management of the processes that efficiently and effectively transform resources into goods (e.g., airplanes, ultrasound equipment, furniture) and services (e.g., health care, rented cars, education) desired by customers. These goods and services have characteristics that distinguish them in the marketplace, such as high quality, low cost, high customization, or rapid delivery. In most instances, the operations area dramatically influences how well a firm meets the expectations of customers, and therefore can significantly affect overall company performance. Again, performance is affected from both a top- AND bottom-line perspective.
OM is an extremely broad discipline, so we will be covering a lot of ground in this course. The topics include:
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- operations strategy
- system & process design
- quality management
- product design
- social responsibility
- inventory management
- supply management
- facility location and layout
- lean manufacturing/JIT
- production or workforce planning
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Perhaps the most important contribution of the operations function is that of increasing a firm’s competitiveness through superior customer satisfaction, whether the customer is the next process (internal customer) or the end user (external customer). Managing the above issues across the globe increases the complexity as separations in both time and space complicate the efficient movement of goods and effective communication between organizations. MBA 518 is designed to help students understand how the operations function—in both manufacturing and service industries—works with other functions to provide superior products and services to its customers and to improve the competitive positioning of the company.
Given the broad nature of operations management and that all organizations in the world offer a product or service (and therefore have “operations”), there are many opportunities to highlight the manner in which operations management interfaces with other company disciplines. Examples from student experiences and current employers will contribute to our understanding of what OM is and how firms are working to make it better.
During this course, we will emphasize the integration between operations and other disciplines, including finance (e.g., evaluating operations investment decisions), marketing/sales (e.g., providing customers what they want when they want it), and management (e.g., how people and processes are managed.) In addition, we will explore ways in which the functions of accounting (e.g., measuring “efficiency” and inventory), engineering (e.g., how products interact with processes and the environment) affect the operations system.
Successful companies demonstrate that world-class performance is achieved through cross-functional approaches. A recurring theme throughout this course will be the interaction between the operations function and the engineering, finance, accounting, management, information systems, and marketing functions as business problems arise and solutions are identified.
A final objective is to introduce students to the tools and techniques of OM, many of which apply to all functions of a business (as well as the processes within those functions.) As firms seek to identify and improve core processes, the operations tools associated with improvements in quality, time/speed, and productivity can (and should) be applied to all facets of an organization. Staffing levels, capacity, facility layout and location, process flow analysis, quality improvement, and cycle time reduction are examples of topics in which the analytical tools can be applied to other functional areas.
Teaching Method
This class will incorporate a collection of lectures, cases, text readings, in-class simulations, and articles from academic and business periodicals to promote operations and cross-functional learning. I believe that use of these different tools will satisfy a wider variety of learning styles and to keep long class sessions interesting. In-class discussions are a major component of learning in this course as the experiences of class members help to teach us all.
Course Requirements
First, I would like to mention the quality of this course is largely a function of the involvement of you, the student/customer (as is the case in most service encounters!) To that end, the bulk of responsibility for learning is yours—keeping current with the reading and participating in case and class discussions are critical to a successful course.
1. PLANT TOUR PRESENTATION / WRITE-UP (20%):The purpose of the tour is to merge theory with reality by exposing students to the operations of actual firms. Students will form teams of about 5 people and each team will arrange a tour of the operations function of a local manufacturing or service company. Each team will analyze the practices and policies the firm employs within the operations function and how they support the business strategy of the firm. These practices can include the layout/process flow, process technology, the use of quality tools, materials flow, planning systems, the role of inventory in the supply chain, people, environmental issues, etc. (note that these parallel the topics discussed in the course.) Addressing how the firm handles these issues in light of their business/competitive environment, as well as a short set of recommendations, is required.
Teams can approach this requirement in two ways. The first is to analyze a firm’s operations from a broad, systems perspective. The focus in this analysis is to identify how the individual elements of operations work together to provide support to the business strategy. The second approach is to perform an in-depth analysis of a limited set of elements/processes (one or two) such as how inventory is managed, how orders are conveyed from sales to the planning system to the floor, or perhaps how a centralized planning system orders materials for plants in different /locations countries.
Teams can deliver their projects in one of two ways—either through an in-class presentation or a 20 (maximum!) page paper. Team choosing to present their findings will do so during the final two class sessions. Presentations will be limited to 20 minutes in length (NOTE: due the extreme importance of managing time during these sessions, a five-pointper minute penalty will be assessed to presentations longer than 20 minutes.) Presentations will be graded on content, organization, clarity, creativity, and level of interest. Teams must use a professional presentation software package. Please review the project evaluation sheet (see web site) for specific areas to be evaluated.
Teams presenting must submit a copy of the slides used in the presentation before the presentation begins (no plastic report covers, please). Presenting groups must also submit a 2-page executive summary, one that is suitable to return to the site company, and a copy of the thank-you letter. The purpose of the executive summary is to provide the company visited with a hard-copy of the observations and recommendations from a team of sharp MBAs, your gift for them granting you access and spending time with the team.
Groups/individuals writing papers: Teams choosing to write their findings/analysis must submit their reports on or before the finals week class meeting (see schedule). Papers should be no longer than 20 double-spaced pages (charts and diagrams may be included as an appendix).
Again, presentations and papers should focus on observations of how the company applies the concepts discussed in class to support their business strategy.
Each team must select the firm they will visit and make all necessary arrangements. For the host company, a 2 page executive summary and thank you letter is mandatory. Please notify the instructor of your team’s choice by late-January so that duplications can be avoided. Keep in mind that, in addition to the larger local companies, there are numerous smaller firms that can be visited. However, companies with less than 20 employees should be avoided (as should wineries and breweries—they just don’t make for interesting projects!). Finally, please recognize that your role is not to prepare a marketing presentation of the merits of the firm you visit. Instead, your role is one of an analyst of the operations organization of the target firm. Determining recommendations based on the analysis is required.
2. EXAMS (40%): A midterm and a final exam will be given. The exams will be “take-home” and are comprised of mixture of multiple-choice questions and several short essay questions. The midterm will be due February 10, 2005 and the final is due the session of Finals Week, March 17, 2005. Exams will be posted on the class web site approximately two weeks before they are due.
3. PARTICIPATION (10%): Participation in class discussions isrequired. Quantity of quality contributions to discussions in class will count 10% of your grade and will be evaluated by the instructor’s judgment. It should be mentioned that participation does not translate into volume! Strive to be prepared and concise (i.e., get to-the-point and avoid rambling in your remarks.) This is a large class so please be courteous of others at all times and be cognizant of the limited bandwidth.
4. QUIZZES (15%):Throughout the quarter, short quizzes will be conducted drawing questions from the day’s readings, including the text and articles/readings. For the cases, questions will center on the main problem and potential solutions. Make-up quizzes are not given, but the lowest quiz score will be dropped.
5. BOOK OR RESEARCH REPORT (15%):There are four options for this requirement—report on one of the books The Goal, It’s Not Luck, or Lean Thinking, or a research report on a topic relating to the course. Each student may submit a short analysis of The Goal. The analysis should include your opinion of what “the goal” is (1 to 2 pages) and a brief description of Goldratt's measures (T, OE, and I). Additionally, identify what you feel are the three most important steps Alex’s team took to improve the plant. Finally, discuss how the concepts of the book might be applied in your firm, division, department, or group (identify the goal, how you would measure T, I, and OE in your example, and the primary constraints faced).
The write-up should be no longer than three double-spaced pages and is due March 3, 2005.
If you have already read The Goal, you are encouraged to read either the sequel, It’s Not Luck or try something new and read Lean Thinking. These reviews should also be 3 pages (double spaced) and identify and describe the five key concepts presented in the book.
A final option is to research and write a 3-page paper on an operations-related topic. Potential topics could include a short review of e-procurement offerings, environmental management systems, identification of advanced inventory management practices, overview of set up reduction techniques, engineering’s role in mass customization, etc. This approach allows for a more in-depth analysis of a topic and must involve researching articles on the subject.
Grading
A straight grading scale will be used to determine final grades (A = 95-100, A- = 90-94, B+ = 87-89, B = 83-86, B- = 80-82, C+ = 79-77, etc.) Course requirements are assigned the following weights:
Plant Tour Pres. or Paper:20%Participation:10%
Quizzes15%Midterm exam:20%
Final exam:20%Report:15%
Feedback Team
A 2-person feedback team will be created on the first evening whose function is to serve as a liaison between the class and the instructor. The team will communicate class perception on issues such as the learning instruments, class pace, session clarity, workload, etc. to the instructor. The team will meet with the class to gather feedback and suggestions/solutions to perceived problems and then reports back to the instructor with the data collected. The team is voluntary and will meet once or twice during the quarter. Please note that the formation of this committee does not mean that individual office appointments should not be made. On the contrary, I still encourage you to seek assistance or provide input.
TENTATIVE COURSE SCHEDULE
MBA 518, Winter 2005
# / Date / Topics / Elements / Ch / Articles [auth. (yr)] / Case / ActivityModule 1: Operations Strategy
1 / 1/6 / Syllabus
Introduction to Operations Management
Operations Strategy / •Review
•Competitiveness
•Services
•Comp. Priorities
•OS Elements / 1
[skim]
2 / Drickhamer (Industry Week, 2004), “The Big Leagues”
Industry Week (2004), “IW’s Best Plants”
2 / 1/13 / Product Planning & Process Types / •Product Design Social Responsib.
•Process Types
•World Class Mfg. / 5 / Vokurka, et al. (Competitiveness Review, 2002),“Cumulative Improvement Approach”
Teresko (IW, 2004), “Before Offshoring, Try This”
Goodson (HBR, 2002), “How to Read a Plant Fast” [for plant tour project] / American Connector (case)
Module 2: Producing Quality Goods & Services
3 / 1/20 / Quality Management and Process Improvement / •TQM/People
•7-Tools of quality
•Six Sigma
•Environmental / 3 / ReVelle (Professional Safety, 2004), “Six Sigma: Creating Healthier, Safer Worksites”
ManrodtVitasek (JBL, 2004), “Global Process Standardization”
Weiler (Quality Progress, 2004), “What Do CEOs Think About Quality?”
Okes (Quality Progress, 2002), “Organize Your Quality Toolbelt”
Alukal (Quality Progress, 2003), “Create a Lean, Mean Machine”
McCulloch, et al., (Diabetes Spectrum, 2004), “Bridge Across Quality Chasm”
Sergesketter (Quality Progress, 2004), “Better Life with Quality Tools”
4 / 1/27 / Issues
in Service Operations / •Characteristics
•Service Types
•Service Quality / -- / Swank (HBR, 2003), “Lean Service Machine”
Karmarkar (HBR, 2004), “Will You Survive the Services Revolution?”
Polito & Watson (JAAB, 2004), “The Content Continuum” / Mt.AuburnHospital
(case)
Module 3: Operations & Finance/Accounting Interface
5 / 2/3 / Inventory Management
Mass Customization / •Functions of Inv.,
Forms, and costs
•Independent Dem.
•Continuous/Periodic
Systems
•Service Levels / 9 / Matthews & Syed (SCMR, 2004), “The Power of Postponement”
Arntzen & Shumway (SCMR, 2002), “Driven by Demand”
Fugate & Mentzer (SCMR, 2004), “Dell’s SC DNA”
Avery (Purchasing, 2003), “Cessna Soars”
6 / 2/10 / Supply Chain Mgt. / •Strategic Influences
•Purchasing
•Logistics
•Developing Suppliers / 8 / Trent (SCMR, 2004), “What Everyone Needs to Know About SCM”
Ferdows, et al. (HBR, 2004), “Rapid Fire Fulfillment”
Ellram, et al. (JSCM, 2004), “Services Supply Chain”
Purdum & Teresko (IW, 2004), “Smart Outsourcing”
Drickhamer (IW, 2004), “Supply Chain Superstars” / Take-home
Midterm due!!
Module 4: Operations & Marketing Interface
7 / 2/17 / Global Operations
Planning Issues / •Forecasting
•Planning
•Chain-wide capacity
•Aggregate Planning
•Dependent Demand
•Enterprise Systems / 6 / Christopher & Towill (IJLM, 2002), “Market Specific SC Strategies”
Vitasek et al., (SCMR, 2003), “Supply-Demand Mismatch”
Taylor (SCMR, 2004), “Master Plan for Software Selection”
Bartholomew (IW, 2004), “Procurement’s New Role”
8 / 2/24 / Lean Production Systems / •Strategic Elements
•Tactical Issues / 11 / Womack & Jones (HBR, 1996), “Beyond Toyota”
9 / 3/3 / Responsibility & Sustainability / •Ethical Sourcing
•Environmental
•Life Cycle Assessment
•Sustainability
•The Goal discussion / 7
10 / Roberts (Journal of Business Ethics, 2003), “Ethical Sourcing Initiatives”
Kumaran, et al. (Env. Mgt. & Health, 2001), “Env. LCA of Products”
Vinas (IW, 2004), “Cradle to Cradle”
Vinas (IW, 2004), “Green $ide of Green”
Demystifying ISO 14000 / Book / Research report due
10 / 3/10 / Presentations / Plant Tours
11 / 3/17 / Presentations / Plant Tours / Take-home Final due!!
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