Operations Management
Operations management is about decision-making in planning, coordination and improvement in the design, implementation, and execution of the organization's work processes for creating and delivering value (products and services) to customers. Operations management processes include operations planning - setting operations goals and aligning these goals with the goals of workers under the manager's control; short-term capacity planning - involving considerations related to variations in capacity requirements due to seasonal, random, and irregular fluctuations in demand.
Our Operations Management solutions are based on computer simulation to inform management understanding and decisions on resource utilization, process coordination of network of resources in creating and delivering value to customers, and competency - operations system effective capacity. The resource and process views are complementary; the process view focuses on how work is done, while the resource view focuses on who or what performs the work. Both are necessary to understand operations well.
Operations management is about decision-making in planning, coordination and improvement in the design, implementation, and execution of the organization's work processes for creating and delivering value (products and services) to customers. Operations management processes include operations planning - setting operations goals and aligning these goals with the goals of workers under the manager's control; short-term capacity planning - involving considerations related to variations in capacity requirements due to seasonal, random, and irregular fluctuations in demand.
Our Operations Management solutions are based on computer simulation to inform management understanding and decisions on resource utilization, process coordination of network of resources in creating and delivering value to customers, and competency - operations system effective capacity. The resource and process views are complementary; the process view focuses on how work is done, while the resource view focuses on who or what performs the work. Both are necessary to understand operations well.
Resource View of Operations and Resource Decisions
The resource view of an organization or any of its parts as a bundle of resources (real assets). Viewing operations as a bundle of real assets is most useful when decision on amounts and types of resources the operation needs. This investment or capital budgeting decision, along with the allocation of resources to activities, is one of the major tasks of management.
Resources or real assets can be divided into two groups: tangible and intangible assets. Tangible real assets are human resources (people) and capital assets (property, plants, and equipment as shown on the balance sheet). Intangible assets include relationships with suppliers and customers, intellectual property, reputation and brands, and knowledge and experience in processing, technology, and markets. Often tangible real assets do the work, while intangible assets embody the know-how to do the work.
Our operations simulation tool EPCAD enables an organization to create operations system simulation to inform capacity sizing, capacity timing, and capacity type decisions in configuring the organization's resource portfolio.
The resource view of an organization or any of its parts as a bundle of resources (real assets). Viewing operations as a bundle of real assets is most useful when decision on amounts and types of resources the operation needs. This investment or capital budgeting decision, along with the allocation of resources to activities, is one of the major tasks of management.
Resources or real assets can be divided into two groups: tangible and intangible assets. Tangible real assets are human resources (people) and capital assets (property, plants, and equipment as shown on the balance sheet). Intangible assets include relationships with suppliers and customers, intellectual property, reputation and brands, and knowledge and experience in processing, technology, and markets. Often tangible real assets do the work, while intangible assets embody the know-how to do the work.
Our operations simulation tool EPCAD enables an organization to create operations system simulation to inform capacity sizing, capacity timing, and capacity type decisions in configuring the organization's resource portfolio.
- Capacity Sizing Decisions - These are decisions on how many resources to invest in for each resource type. Simulation enables organizations to define experiments to determine bottleneck resources and resource types to inform strategic decisions on investing in new resources and/or tactical design decisions on adding buffers and sizing their desired inventory to accommodate scale economies (e.g., for batch processing or quantity discounts), and decisions on buffering processing resources against supply and demand variability and uncertainty.
- Capacity Timing Decisions - These are decisions on when to increase or reduce resources. It specifies the availability of capacity and the timing of capacity adjustments, both expansions and contractions.
- Capacity Type Decisions - These are decisions on characterizing the type and nature of each resource. For example, is it human (labor) or capital resource?
- Capacity Location Decisions - These are decisions that specify where to locate resources. Capacity locations deals with finding appropriate geographical sites and assigning roles to them. Location decisions are part of network strategy. Network strategy includes topology or configuring connections between locations, e.g., hub-and-spoke or star topology for airline routing; or tiered or tree topology used by automobile companies, etc. The interconnections specify logistics (transportation) arrangements.
Human Resource View of Operations and Staffing Decisions
Rightsizing means managing employees as human resources, at a level that better fits your organizational needs. Estimating the right staffing levels and labor requirements (rightsizing) is an operational planning function which involves systematic review of staffing mix and levels, tasks and work processes to determine the appropriate number (quantity) and mix of staff (workers) needed to meet organizational goals in areas such as medical practice, quick service and full service restaurants, barber shops and salons, etc. This process is organization-specific (i.e., for a specific medical practice for example) and is influenced by the expectations of the organization, internal limiting factors (constraints), organizational culture, strategic goals and objectives, and operational goals.
Rightsizing involves creating a simulation model of the business operations that enables evaluation of the organization's value creation and delivery systems. The evaluation involves analysis of simulation results in the form of output models that inform decisions in the following areas:
Rightsizing means managing employees as human resources, at a level that better fits your organizational needs. Estimating the right staffing levels and labor requirements (rightsizing) is an operational planning function which involves systematic review of staffing mix and levels, tasks and work processes to determine the appropriate number (quantity) and mix of staff (workers) needed to meet organizational goals in areas such as medical practice, quick service and full service restaurants, barber shops and salons, etc. This process is organization-specific (i.e., for a specific medical practice for example) and is influenced by the expectations of the organization, internal limiting factors (constraints), organizational culture, strategic goals and objectives, and operational goals.
Rightsizing involves creating a simulation model of the business operations that enables evaluation of the organization's value creation and delivery systems. The evaluation involves analysis of simulation results in the form of output models that inform decisions in the following areas:
- Analyzing current productivity - Understanding the current productivity levels of staff and support staff.
- Analyze current operating system - Determine the model by which the organization operates. This includes the staff number and function allocated to each position/role, customer (patient) check-in and check-out processes, customer record management, scheduling procedures and communication processes.
- Analyze process performance - Monitor and review performance measures to identify resource bottlenecks and areas of capacity improvements.
Simulation Output & Analysis
The simulation output provides staffing resource utilization and workload information, and associated overall business (throughput) performance information to inform staffing decisions. Operations Analytics Simulation provides you the evidence to allow you to make bold, confident decisions because you are sure you are making the right choice.
The simulation output provides staffing resource utilization and workload information, and associated overall business (throughput) performance information to inform staffing decisions. Operations Analytics Simulation provides you the evidence to allow you to make bold, confident decisions because you are sure you are making the right choice.
Facility and Equipment View of Operations and Equipment Decisions
Businesses typically have a mix of production and services that collectively define the the value creation and delivery processes. Product-mix decisions are usually supported by analytical methods such as Linear Programming (LP). These decisions are usually made so that the market demand is met and the firm profit is maximized. However, the complexity, and stochastic and dynamic nature of real-world production and business systems often lead to production levels that are different from those determined by analytical methods. Analytical methods also have problems coping with the dynamic changes in the product-mix which usually requires enhancing system parameters and/or configuration 0f value creation and delivery processes.
Businesses typically have a mix of production and services that collectively define the the value creation and delivery processes. Product-mix decisions are usually supported by analytical methods such as Linear Programming (LP). These decisions are usually made so that the market demand is met and the firm profit is maximized. However, the complexity, and stochastic and dynamic nature of real-world production and business systems often lead to production levels that are different from those determined by analytical methods. Analytical methods also have problems coping with the dynamic changes in the product-mix which usually requires enhancing system parameters and/or configuration 0f value creation and delivery processes.
Simulation Output & Analysis
The simulation output provides information on facility and equipment resources' utilization and workloads, and associated overall business (throughput) performance information to inform equipment decisions. Operations Analytics Simulation provides you the evidence to allow you to make bold, confident decisions because you are sure you are making the right choice.
The simulation output provides information on facility and equipment resources' utilization and workloads, and associated overall business (throughput) performance information to inform equipment decisions. Operations Analytics Simulation provides you the evidence to allow you to make bold, confident decisions because you are sure you are making the right choice.
Process View of Operations and Process Decisions
The process view of operation shows how the resource portfolio is utilized and allocated to activities with the intent of adding value. Processes are structured, recurrent activities that transform inputs into outputs. A process is a network of activities with specific precedence relationships among activities - the relationships that specify which activities must be finished before another activity can begin. The process view considers an organization (or any of its parts) to be an activity network or a collection of processes. A process can refer to detailed workflow, such as billing a customer, or implementing an engineering change order, or to aggregate activities of new product development, or customer service. Adopting a process view means that we visualize instances of work, called flow units (e.g., consulting engagements, hospital patients, barbershop patrons, hotel guests, or orders) flowing through a network of activities and buffers. The primary workflow is typically accomplished by an information flow (to coordinate the activities), and a cash flow (to support and reward them).
Production and Service Systems Simulation Analysis
These production systems and service systems processes can be analyzed systematically as part of whole organization workflow through simulation to identify potential bottlenecks and efficiencies improvements. Simulation enables users to explore maximizing organization output subject to minimizing delays through reducing/eliminating waiting times, improving labor and equipment utilization, etc.
Process Simulation Methods
Creating a simulation experiment to investigate production (product manufacturing) effective capacity, and capacity decisions related to creation and delivery of value to customers involves:
Simulation informs decisions on the optimum configuration of processes such as:
The process view of operation shows how the resource portfolio is utilized and allocated to activities with the intent of adding value. Processes are structured, recurrent activities that transform inputs into outputs. A process is a network of activities with specific precedence relationships among activities - the relationships that specify which activities must be finished before another activity can begin. The process view considers an organization (or any of its parts) to be an activity network or a collection of processes. A process can refer to detailed workflow, such as billing a customer, or implementing an engineering change order, or to aggregate activities of new product development, or customer service. Adopting a process view means that we visualize instances of work, called flow units (e.g., consulting engagements, hospital patients, barbershop patrons, hotel guests, or orders) flowing through a network of activities and buffers. The primary workflow is typically accomplished by an information flow (to coordinate the activities), and a cash flow (to support and reward them).
Production and Service Systems Simulation Analysis
These production systems and service systems processes can be analyzed systematically as part of whole organization workflow through simulation to identify potential bottlenecks and efficiencies improvements. Simulation enables users to explore maximizing organization output subject to minimizing delays through reducing/eliminating waiting times, improving labor and equipment utilization, etc.
- Production systems' processes create and deliver products and parts to customers. The capacity of these processes is defined in terms of the output of products/parts per some specified interval. The production and/or service system processes define a network of production and/or service centers connected and coordinated by the processes. Production work centers are augmented with WIP inventory stores that act as buffers to bottleneck resources and work centers that constrain the flow of products through the system.
- Service system processes offer services to customers. The service process capacity is defined holistically in terms of the throughput of the flow of customers (e.g., in retail, patients in health care, clients in barbershops/salons, guests in hotels, etc.) per specified time interval, Servicing centers are augmented with waiting areas; waiting areas may be introduced to act as buffers to bottleneck service centers that constrain the flow of customers in the service network. Anything that eases throughput by releasing the bottleneck potentially adds value to the system.
Process Simulation Methods
Creating a simulation experiment to investigate production (product manufacturing) effective capacity, and capacity decisions related to creation and delivery of value to customers involves:
- Creating product demand forecast model for products and services - This includes information about the average rates at which customers request for products and/or services including the breakdown of customer order request types (e.g., for a coffee shop regular coffee vs. espresso, for a barbershop haircut vs. shaves, etc.) – at different times of the day, and the orders' sizes
- Creating configuration model for the production and/or service delivery functional unit including the configuration model of the people and equipment resources.
- Creating configuration model for the products and services mix offered by the organization
- Creating configuration model for the workforce (people) and their roles as well as their schedules
- Creating configuration model for the equipment including operations and maintenance schedules
- Creating schedules for the organization's operating times and holidays.
Simulation informs decisions on the optimum configuration of processes such as:
- Supply or Sourcing Decisions - These decisions specify which activities are performed internally, and which activities are outsourced, and how to manage suppliers. Decisions involve defining the process boundaries and interfaces. It includes strategic sourcing decisions, vertical integration, and supply network configuration.
- Technology Decisions - These decisions characterize how to process inputs into outputs. It includes the methods and systems employed, as well as the know-how and intellectual property. The technology decisions can be grouped into the following key categories: a) coordination and information technology decisions such as assignment of responsibility, incentives, measurement, and control; b) product technology decisions in product philosophy, product architecture, and product capabilities; c) process technology decisions on how to structure the conversion processes and methods used in execution; and d) transportation technology decisions on how goods are exchanged among different activities in the network.
- Demand Forecast Decisions - These decisions specify how to match demand to available supply. These decisions characterize the interfaces and relationships with customers and include demand planning and forecasting, as well as tactical capacity allocation and order management. Demand management is an important driver in inflexible supply processes that cannot quickly adapt to changes in demand such as the core processes in airlines, hotels, hospital wards, and car rental companies, It also relates to service and customer relationship management.
- Improvements and Innovation Decisions - These are decisions on characterizing the processes and incentives to improve and innovate products and processes.
Simulation Output Analysis & Visualization
The Production and/or service systems simulation enable managers and key operations staff to gain insight into the "real world" capacity problems facing the company, and improves their understanding of the factors that affect production and service delivery performance. The simulation and visualization informs decisions on:
- Demand Management - Specifying how to match demand to available resources; and tactical allocation of capacity.
- Process Network Structure - Decision of the layout of the activity network in terms of locations of activities, buffers and interconnections. For example, processes can be organized by activity, or by product line; job shops such as consulting companies, and tool-die-shops often have a functional or process layout, while flow shops such as assembly plants, and chemical processing plants usually have a product layout.
- Coordination and Information technology decisions on how to coordinate, communicate, and plan execution throughout the network. Coordination is typically a managerial activity and includes assignment of responsibility, incentives, measurements and control.
- Product architecture decisions on structure and parts to facilitate production.
- Transportation technology decisions on how goods are exchanged among different activities in the network. This is a key driver in logistics and supply chain management, as well as how insurance policies are moved between the different processing steps.
Competency View of Operations and Competency Decisions
The competency view characterizes the abilities of the assemble of the organization's resources, processes, and values. The specific choices of resources and processes affects what the operations system can and cannot do well. Besides resources and processes, values are the third factor that affects what an operation - and thus the organization - can and cannot do. Values are the standards by which employees set priorities. Some priorities are embodied or programmed into a process, but many are not. Examples include judging whether an order or customer is attractive or not, whether a suggestion to improve a product or process is attractive or marginal, and whether an investment is worth making or not. The competencies determine the set of outputs, products, and services that the operation will be particularly good at providing.
The competency view characterizes the abilities of the ensemble of the organization's resources, processes, and values. Competency determine the set of outputs, products, and services that the operation will be particularly good at providing. Competencies can be measured along multiple dimensions including:
The competency view is the most "outward looking" and begs the important question: which competencies should an operation have, nurture, or develop? This naturally connects to competitive strategy.
The competency view characterizes the abilities of the assemble of the organization's resources, processes, and values. The specific choices of resources and processes affects what the operations system can and cannot do well. Besides resources and processes, values are the third factor that affects what an operation - and thus the organization - can and cannot do. Values are the standards by which employees set priorities. Some priorities are embodied or programmed into a process, but many are not. Examples include judging whether an order or customer is attractive or not, whether a suggestion to improve a product or process is attractive or marginal, and whether an investment is worth making or not. The competencies determine the set of outputs, products, and services that the operation will be particularly good at providing.
The competency view characterizes the abilities of the ensemble of the organization's resources, processes, and values. Competency determine the set of outputs, products, and services that the operation will be particularly good at providing. Competencies can be measured along multiple dimensions including:
- Cost - The marginal and total cost of operating, including variable and fixed costs are particularly important in competitive markets such as commodities and low margin businesses. Cost is a relevant factor in all activities, but this competency most naturally reflects scale economies (capacity sizing), and complexity costs (capacity types).
- Time - The total flow, response, and lead times characterize the time needed to transform inputs into outputs, to fill a customer order, to receive inputs, respectively. Flow time and lead time determine working capital requirements and forecasting accuracy; responsiveness is important in service and convenience-driven businesses, as well as in rapidly changing environments.
- Quality - Quality refers to the degree of excellence of the process, product, or service. It has design related dimensions such as performance and features, as well as process related dimensions such as durability and reliability. Quality is a key differentiator in luxury and high precision businesses, and a required competency in mature industries.
- Flexibility - Flexibility measures the ability to change inputs, activities, volumes, or outputs? Flexibility has several dimensions such as scope - scope flexibility is the selection or range of products and services offered, including the level of customization, volume flexibility, and robustness. It is also a key risk mitigation driver.
- Innovation - This is the ability of the operation to change, improve, and innovate.
The competency view is the most "outward looking" and begs the important question: which competencies should an operation have, nurture, or develop? This naturally connects to competitive strategy.
Operations Simulation Output Analysis
Operations simulation enables management to analyze and evaluate operations output with respect to the relevant competency measures such as cost. time, quality, etc. Analysis involves evaluating and assessing the impact (cost/benefit) on production capacity plan (or schedule) optimization of different alternative resource schedules/plans.
Operations simulation enables management to analyze and evaluate operations output with respect to the relevant competency measures such as cost. time, quality, etc. Analysis involves evaluating and assessing the impact (cost/benefit) on production capacity plan (or schedule) optimization of different alternative resource schedules/plans.
