Operations Management?

Now that I’ve completed the Introduction to Operations Management (OM) course, I wanted to share a few things I learned and give you a flavour of what it’s all about.

OM principles are not exclusively applied to factory production lines — the course uses examples from Subway, Dell, Starbucks, Benetton, airlines, call centres and doctors’ waiting rooms, too. Prof. Terwiesch is keen to use data taken from real world situations, and must have made a right nuisance of himself observing the customers and staff in his local sandwich bar. This gives the problems authenticity, but can make for unfriendly numbers and peculiarities that confuse the issues he’s trying to teach.

Once you’ve completed the course, you’ll understand the benefits of pooling capacity; the efficient frontier; the seven sources of waste; overall equipment effectiveness; line-balancing; ideal batch sizes; the true cost of inventory; lean operations and Six Sigma.

You will appreciate the implications of Apple and McDonalds’ ‘make to stock’ approach compared with Dell and Subway’s preference for ‘make to order’. You will learn a few words of Japanese along with the principles of the renowned Toyota Production System.

The course teaches how to identify bottlenecks; calculate waiting times; measure utilisation, efficiency and the number and cost of defects. You might even be able to answer some of the questions in the final exam.

You will see how Benetton’s ‘delayed differentiation’ makes an efficient single production line of uniform items, which are only coloured at the end, meeting current demand. The same principle explains why the region-specific power cord is packed separately when you buy a new printer and why the final customisation of your Toyota is carried out by the dealer.

I was delighted to discover the Erlang loss theory, published in 1917 by an engineer at the Copenhagen Telephone Exchange who had to calculate how many circuits were needed to cope with demand. He recognised the relationship between arrival times, length of process and number of resources and how it affected the probability of callers dropping out of the queue.

Which reminds me: although I will never be a customer, I was amused by Starbucks’ reaction to the risk of customers quitting their queue at busy times. Did they take action to reduce the waiting time? No. They took payment before customers could drop out. Brilliant.

If you’re considering taking this course, don’t think it must be easy because it’s only an introduction. My maths is a little rusty, and it was a shock to lock horns with coefficients of variation, factorials, probability, standard deviation and normal distribution. The good news is that MS Excel can crunch the numbers for you.

To be critical for a moment, the downloadable course materials are not the most helpful. Many slides pose problems that the professor goes on to solve on-screen with a digital pen. The downloadable slides show only the original problem.

The course comprises 5 modules spread over 6 weeks with 45 videos of 10-20 minutes each. There are 43 homework questions, which count for half the available marks, the other half potentially coming from the final exam, which is untimed and includes 46 fairly tough questions. The content is challenging enough to give a sense of satisfaction when you pass, and anybody with a little numeracy and dogged determination should be able to hit the 50% pass mark.

If you like the idea of a free, online course, but this one does not appeal, take a look at what else is available at Class-Central.

Reference: Matching Supply with Demand: An Introduction to Operations Management by Prof. Christian Terwiesch of the University of Pennsylvania (and delivered via Coursera)

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