Introduction To Operations

Management
Latest Techniques & Methods
Introduction
 Production Operations Management is
managing of productive resources (Men,
Material, Equipments & Facilities) Efficiently &
Effectively.
 MBA graduates are expected to help
organizations gain competitive advantage by
excelling in meeting customer needs.
 Whether you are in Marketing, Finance or
Operations; effectively serving customers will
need knowledge of Operations Management.
Serving customers means meeting the
requirement in time, with exceptional quality
at lowest cost.
Introduction
 Production Operations Management
provides interesting career
opportunities – Directly supervising
Operations OR Operations Management
specialists like (SCM) Supply Chain
Management, ERP ( Enterprise Resource
Planning), QA (Quality Assurance),
Purchasing.
 Production Operations Management is
defined as the design, operation &
improvement of the system that creates
& delivers firm’s primary products &
services.
Introduction
 Production is the process by which
goods & services are produced.
 Manufacturing management brings
together Men, Machines & Material to
provide goods & services. There by
satisfying customer needs.
 Operations includes both Manufacturing
as well as Service Organizations.
 Operations may be defined as process
of changing input into output; thereby
adding value.
Service & Goods
Production
 Service is intangible while goods is
a physical output.
 In service direct customer
involvement in creating output is
essential.
 Customers are on the ‘shop floor’
when consuming service. Shop
floor may be called front office,
dinning area, passenger cabin.
Introduction
 Effectiveness of production process can
be efficiency with which input is
converted into output.
 Productivity=output/input.
 Essentially production/operations
management is concerned with
management of productivity.
 Reduce conversion cost, idling
resources, defective goods, lower
throughput time.
Functions of Manufacturing
Management
 Planning:
 Product selection & design.
 Process selection.
 Facility location, Material handling.
 Capacity planning.
 Forecasting.
 Organizing:
 Work-study & job design.
 Controlling:
 Inventory control, Quality control.
 Cost control, Production control.
 Introduction

T2

T1
T2
Warehouse
OEM Retailer Customer
T2 Distributor
T1 Dealer

T2
Supply Chain Distribution Network

Production Operations Management is concerned with managing all

these individual processes Effectively
Introduction
 Within Operations Management
the decisions can be divided into 3
broad areas.
 1) Strategic:
 Long term decisions
 How to make the product?
 Where to locate the facility?
 How much capacity to be created?
Introduction
 2) Tactical Decisions:
 Medium term.
 Decisions made at strategic stage become
preconditions.
 How many workers do we need?
 When do we need the material?
 How much inventory do we hold?
 3) Operational Planning & Control Decisions:
 Day to day planning.
 Scheduling, Priority
 What job to do?
 Whom do we assign?
Production System
 Production system uses resources
to transform inputs into some
desired output (Product or
Services).
 Inputs may be raw material;
customers or finished products
from another system.
Transformations
 Physical--manufacturing
 Locational--transportation
 Exchange--retailing
 Storage--warehousing
 Physiological--health care
 Informational--telecommunications
Production System
System Primary Resource Primary Desired
Input s Transformatio Output
n Function

Hospital Patients Doctors, Healthcare Healthy

Nurses, Individuals
Medicines,
Equipment
Restaurant Hungry s
Food Well prepared, Satisfied
Customers items, Well served Customers
Chef, food
Waiters,
Automobile Sheet Metal, Environme
Tools, Fabrication, High quality
Manufacturin Steel, Parts nt
Equipment Assembly. cars.
g s, Workers
Production System
System Primary Resources Primary Desired
Input Transformati Output
on Function
College, High school Teachers, Imparting Educated
Universit Pass outs Books, Knowledge, Individual
y Classrooms. Skills s

Departme Shoppers Stock of Attract Sales to

-ntal goods, shoppers, satisfied
Store Display, Promote customer
Sales products. s.
persons
Airline Travelers Aero planes, Move to On time
Crew, Fuel. destination safe
delivery
to
destinati
Historical Development of OM
Year Concept Originator

1910’s Principals of scientific management. F.W.Taylor

Time & motion study. F.W.Taylor
Economic Order Quantity (EOQ). F.W.Harris
Conveyor Line Henry Ford
!930’s Quality Control, SPC, Sampling Walter
Shewhart

1970’s Wide spread use of Computers in IBM

business.
Historical Development of OM
Year Concept Originator

1980’s JIT, Kanban, Lean Manufacturing Taichi Ohno,

TPS
1990’s Total Quality Management (TQM). Japanese
Business Process reengineering Manufacturers
Supply chain Management SAP
2000’s E – Commerce; B to B; B to C Amazon,
Yahoo.
E Bay
Typical Organization
Structure

Operations

Manufacturing Quality Assurance Materials Management

Maintenance PPC
Introduction To Materials
Management
 Value of supply chain has been
recognized long back. In 401 BC a
Greek General while addressing his
army of 14,000 men; fighting 1,300
miles away from Greece said “ The
survival of the Greek army depends not
only on it’s discipline, training & morale
but also on it’s supply chain”.
 Today survival of most firms depends
on intelligent supply chain decisions. Lot
of brain power & technology is applied
to improve supply chain performance.
What Is A Supply Chain
 Supply Chain consists of all parties
involved directly or indirectly in fulfilling
customer request.
 It includes Manufacturer, Transporter,
Warehouses, Retailers & Customers
themselves.
 Within Manufacturing it includes all
functions involved in receiving &
fulfilling customer request.
 Functions included are New Product
Development, Marketing, Operations,
Distribution, Finance & customer service.
Supply Chain
 Customer walking into a retailer to
purchase a detergent.
 Customer Retailer 3rd party
logistic Distributor
Logistic Manufacturer
Tier1 supplier Tier 2 supplier.
Supply Chain
 Draw Supply Chain for :
 Supplier walking into a Super
Market.
 Online purchase like Dell
Computers & Amazon. COM.
 Online booking of Air ticket.
 Purchase of vegetables, fruits at
Reliance fresh.
Supply Chain
 Supply Chain is dynamic.
 Involves constant flow of product,
information & funds.
 It is a Network or Web of many
suppliers & distributors.
Objectives of a Supply
Chain
 Maximize overall value generated.
 Value is the difference between
finals product’s worth to the
customer & cost supply chain
incurred to fulfill customer
requirement.
 Value is correlated to supply chain
profitability or supply chain surplus
( Total profit to be shared by all).
Objectives of a Supply
Chain
 Cost of supply chain includes cost
of production, storage,
transportation, cost to convey
information, Funds transfer …. Etc.
 Success to be measured in terms
of supply chain profitability & not
individual stage.
 Focus on individual stage may lead
to reduction in overall supply chain
Measuring SC performance
 Inventory turns =
Cost of goods sold p.a.
Average aggregate
inventory value

 Inventory in Number of days =

365* Average aggregate inventory
value Cost of goods sold