Operations Management: Suhas Rane

Introduction to Operations Management
Suhas Rane
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Business
Whats the purpose of business ? Why are we in business ?
to create wealth
(Adam Smith )
ranesuhas@hotmail.com 22
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SIX BASIC FUNCTIONS OF BUSINESS
1.
CREATION FINANCE
Product Selections / Idea Generation
2.
: Managing Resources, Capital Acqn., keeping Financial Records. H.R., Labour Relations. : Buying of required Changing Raw Materials to Economic Goods.
ranesuhas@hotmail.com
5.
PERSONNEL : PURCHASING CONVERSION/ : (PRODUCTION) DISTRIBUTION :
7.
(Eqpt. + Material + Services)

5.
6.
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Selling & Marketing (reaching the
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O. M. Definition
Operations Management is the effective and efficient management of processes. A PROCESS has an input and value added output. The objective of a process is to add value by conversion from input to output.
Operations as a Transformation Process
INPUT Material Machines Labor Management Capital
TRANSFORMATION PROCESS
OUTPUT Goods Services
Feedback
Transformation Diff. forms

Physical : as in manufacturing operations Locational : as in transportation operations Exchange : as in retail operations Physiological: as in health care Psychological: as in entertainment Informational: as in communication
Is there any Business / Industry /Enterprise where an operation is not involved?

Scope of Operations Mgmt.

Long Term / Strategic Decisions
Product Selection & Design Process Selection & Planning Facilities Location Facilities Layout Capacity Planning
Short Term / Operational Decisions

1. Production Planning & Control 2. 3. 4. 5. Inventory Control Quality Control Method Study / Work Study Maintenance & Replacement
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Agenda OM what ? Why should I know ?

Six Basic Functions of Business O M. Definition Scope of Operations Management
Historical Development of OM
Taylor, Henry Ford, Hawthorne Studies Operations Research, Computers & Adv. Opn. Technology.
Mfg. Industry v/s Service Industry Production Systems

Input Transformation Output Relationships Productivity Measurements Decisions & Activities in OM
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Historical Development of OM
In olden days, did Production Systems exist ?
Egyptian Pyramids, Taj Mahal Village Potter-man, Carpenter .
Features of Old production activities

Cottage System Hand Work Unorganized Unique.
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Evolution of OM
Phases in evolution of OM
Craft Production Mass Production Lean Management Mass Customisation
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Features of Diff. Prod. Systems

CRAFT System : Skill based, Manual, Small Qty., Customisation, Low Cap. Investmt., but high unit cost of prodn. (MH Husain Painting, DC Car, Space-Lab)
Mass Production : Low skill, More automation,

Large Qty. Standardisation, High Cap Invst., but low unit cost of prodn. (Tata Salt, HUL Lux, Nano, SSC Course)
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Features of Diff. Prod. Systems

LEAN System : All muscle, No fat (of mainly inventory) : Leopard Multi-skilled staff, TQM, Quick change-over (SMED), Single Pc. Flow, Kanban (Toyota Prod. System)
Mass Customization : High Flexibility

Limited Customization at affordable extra cost (Dell, Asian Paints, Godrej Furniture)
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Historical Evolution of OM
F.W. Taylor (1856-1915)
Father of Sc. Management Each worker to be trained for suitable job (according to his skill, strength, and learning ability Divn. of Labour Synergy Effect ) Standard Output Norms set per worker. Instructions Card, Routing Sheets, Material Specs -All Standardized. Supervision . Not for keeping watch, but to arrange facilities. Incentive for motivation & increasing productivity
Historical Evolution of OM
Henry Ford (1913)
Moving Assembly Line concept

Standardized product design Mechanized assembly line Specialized labour Interchangeable parts
Result : Av. labour per chassis reduced from 12.5 hrs to 93 min.
Mfg. v/s Services Whats the difference?

Business Organization
Mfg. Industry
Service Industry Providing Services Operations Mgmt
Creation of Goods Productio n Mgmt

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Maximizing Value Addition in Operations
Click to edit Master text styles Second level Third level Fourth level Fifth level
Input Transformation Output Relationships

System Automobile Factory Hospital Primary Inputs Sheet steel, engine parts Patients Resources Tools, equipment, workers MDs, nurses, medical equipment Transformation Fn.(s) Typical Desired Output
Fabrication and Assy. of cars High-quality cars (physical) Health care (physiological) Healthy individuals
Restaurant
Hungry customers
Food, chef, wait- Well-prepared, Satisfied customers staff, Well-served food; Stimulating environment environment Teachers, books, Imparting knowledge and classrooms skills (informational) Displays of goods, sales clerks Storage bins, stock-pickers Attract shoppers, Promote products, Fill orders (exchange) Storage and redistribution Educated individuals
College or university Department store Distribution Centre
High school graduates Shoppers
Satisfied customers
SKUs
Fast delivery, availability of SKUs
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Strategic issues in Operations Management
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Operations 80-90% Hidden

Click to edit Master text styles
Second level

Third level Third level

Fourth level Fourth level Fifth level Fifth level
The Value Equation

Performance Value = price
Quality + Timeliness + Flexibility + Innovation Value = price
Q +T + F + I Value = P
Strategic Priorities
Type Cost Quality Delivery Flexibility Priority Providing low price products. Controlling costs across the board. Providing high quality products. Focus is on product and process quality. Providing products reliably and quickly. Providing a wide variety of products (mass customization). How fast a firm can produce a new product line. Providing value-added service. How products are delivered and supported.
Service
Productivity
Concepts
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Production & Productivity
Production
Output (in No of Units)
Output Productivity ------------ No. of pcs./hr. Input

Three Main Productivity Indices
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Productivity Measures
( Output in terms of Input)
Out put per Machine Hour Machines Men -
Out put per Man Hour - No of units produced per input of R.M. (e.g. - No of Screws per Kg of wire)
Materials
Power Boiler
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No of Pcs. per KW Unit of El. Power Kgs. of Rubber cured / Kg of steam used
Productivity of an Organization
Sugar Mill -
Kg. of sugar produced /
Ton of sugar-cane crushed
Fabrication - Tons of Fabrication / Kg. of Welding Rod
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Productivity of a Service Function
Transporter - Ton-km / Vehicle/ Month. OR Ton-km / 1000 Lit. Diesel
Pharma. Marketing Div. Rs Order booked / MR /Month

Service Industry : Productivity Measures

Business Restaurant Retail Store Chicken farm Utility plant Paper mill
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Productivity Measure Customers (meals) per hour Sale per Sq. foot Kg. of meat per kg. of feed Kilowatts per ton of coal Tons of paper per ton of wood

Operations Management: Suhas Rane

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Introduction to Operations Management

SIX BASIC FUNCTIONS OF BUSINESS

Product Selections / Idea Generation

PERSONNEL : PURCHASING CONVERSION/ : (PRODUCTION) DISTRIBUTION :

(Eqpt. + Material + Services)

Selling & Marketing (reaching the

Operations as a Transformation Process

INPUT Material Machines Labor Management Capital

OUTPUT Goods Services

Transformation Diff. forms

Is there any Business / Industry /Enterprise where an operation is not involved?

Scope of Operations Mgmt.

Short Term / Operational Decisions

Agenda OM what ? Why should I know ?

Mfg. Industry v/s Service Industry Production Systems

Features of Old production activities

Features of Diff. Prod. Systems

Mass Production : Low skill, More automation,

Features of Diff. Prod. Systems

Mass Customization : High Flexibility

Mfg. v/s Services Whats the difference?

Service Industry Providing Services Operations Mgmt

Creation of Goods Productio n Mgmt

Maximizing Value Addition in Operations

Input Transformation Output Relationships

College or university Department store Distribution Centre

High school graduates Shoppers

Fast delivery, availability of SKUs

Strategic issues in Operations Management

Operations 80-90% Hidden

Third level Third level

Fourth level Fourth level Fifth level Fifth level

The Value Equation

Production & Productivity

Output (in No of Units)

Output Productivity ------------ No. of pcs./hr. Input

Three Main Productivity Indices

Kg. of sugar produced /

Ton of sugar-cane crushed

Fabrication - Tons of Fabrication / Kg. of Welding Rod

Productivity of a Service Function

Transporter - Ton-km / Vehicle/ Month. OR Ton-km / 1000 Lit. Diesel

Pharma. Marketing Div. Rs Order booked / MR /Month

Service Industry : Productivity Measures

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